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Preparing for the Unexpected with Commodity Futures ETFs
Three straight years of negative returns for broad commodity benchmark indices, such as the Dow Jones-UBS Commodity Total Return Index, have led some investment advisors (and their clients) to begin questioning the rationale for including commodity futures ETFs1 in their asset allocation models. Relatively tame inflation expectations seem to support these doubts, as commodities are often thought of as a hedge against inflation.
2013 - A Strong Year for ETFs
US-listed ETF1 net inflows totaled $185.5 billion in 2013, setting a new record. While the largest percentage of net inflows remained concentrated among a relatively small group of the 1521 US-listed ETFs, investors broadened their horizons more in 2013 than in previous years, as 312 ETFs had net inflows exceeding $100 million.
A Decade of Low Volatility with High Dividends
Over the past few years, both low volatility and dividend strategies have resonated with ETF investors, many of whom were seeking more conservative approaches by which to increase exposure to stocks. Adding further demand for these strategies is a growing body of evidence that suggests an association between both factors and improved risk-adjusted returns.
Navigating Opportunities in Senior Loan and High Yield Corporate Bond ETFs
In this newsletter, we will consider how senior loan and high yield corporate bond ETFs may be utilized by investors to pursue a higher level of income while seeking to mitigate the impact of rising interest rates. Well discuss why we believe benchmark indices are flawed investment strategies for gaining exposure to these asset classes, and well highlight how First Trust utilizes active management to seek better risk-adjusted returns than passive senior loan and high yield corporate bond index ETFs.
In the wake of the Facebook IPO last spring, and the ensuing public relations debacle, many investors have become more wary of newly minted stocks. Even before this event, the public perception regarding IPOs was heavily influenced by the IPOs of the late 1990s that helped fuel the dot-com bubble. For many, the primary motivation for investing in IPOs has been the potential to receive a short-term surge in price, irrespective of a stock's longer term potential for success or failure.
ETFs for Tax Planning
Exchange-traded funds are often regarded as more tax-efficient than traditional mutual funds largely due to the fact that many ETFs have been able to avoid the annual capital gains distributions that often frustrate investors in traditional mutual funds. As we progress toward the end of another tax year, many investment advisors are also finding ETFs to be effective tools for tax planning purposes.
Technology Dividends: Oxymoron No More
In recent years, equity income ETFs have gained in popularity, as investors seeking growth and income have poured billions of dollars into these strategies. While each of these ETFs takes slightly different approach for selecting and weighting stocks, there is one common characteristic shared by all: an underweight position in the technology sector relative to broad equity benchmarks. While this allocation may seem intuitive to some, we believe it's time to include technology stocks in equity income strategies.
The Case for Community Banks
The most difficult decisions for investors often involve overriding the emotional residue of past mistakes, and reconsidering the merits of a stock or industry with which one has had negative experiences. This was the case for many investors following the bursting of the technology bubble in the early part of the last decade, as they avoided or severely underweighted tech stocks, and ultimately missed out on the tremendous growth experienced by the sector over the last decade.
ETF Deathwatch List Revisited
On a fairly regular basis, we hear grumbling about the rapid growth of the ETF industry. One of the concerns thats often raised is that there are simply too many ETFs. This is generally followed by a dire prediction of massive industry consolidation and ETF liquidations, referencing a handful of recent ETF closures, and citing the ETF Deathwatch list which is published by Ron Rowland. Together, these fears are often presented as evidence that investors should avoid smaller ETFs, and stick with funds that meet a certain threshold for Assets Under Management (AUM) or trading volume.
Driving Forward: A Case for Autos in 2012
The fallout from the credit crisis and subsequent bear market in equities from 2008 through Q109 cut deep, but few industries faced challenges as profound as the auto manufacturers. Frightened consumers simply stopped buying cars. Banks implemented stricter lending standards for those still interested in purchasing a vehicle. These were unchartered waters to be sure. But the worst appears to be behind us.
Innovation Fueling Growth: The Case for Natural Gas
Over the last century, the US natural gas industry has vacillated between periods of scarcity and periods of oversupply, often the result of government regulation and price controls. Today, the US marketplace is once again awash in natural gas supply, but this time around, its causes are much healthier. Gains in productivity, driven by innovation and fostered by the repeal of price controls two decades ago have proven to be a game changer for the industry. Cheap, clean, and domestically abundant natural gas now fuels a powerful, long-term investment thesis for natural gas ETFs.
Biotechnology Then & Now
In light of the risks associated with owning individual biotech companies, many investors have turned to ETFs for diversification. Some might be surprised to learn of the wide dispersion of returns among biotechnology ETFs in recent years. For example, over the last 5 years the best performing biotech ETF, the First Trust NYSE Arca Biotechnology Index Fund (FBT), provided an annualized return of 16.4%, while the worst performing biotech ETF provided an annualized return of 6.4%. Not surprisingly, these differences are closely tied to the underlying indexes upon which their ETFs are built.
12 results found.