Monday, October 23, 2017

30 Years Ago...

Monday, October 23, 2017 - The Dow Jones Industrial Average crossed the 23,000 mark for the first time this past Tuesday, about two months after an historical 22,000 milestone. The blue-chip index saw gains powered by UnitedHealth and Johnson & Johnson, both reporting higher than expected earnings. Another late week boost resulted from the Senate’s passing of a $4 trillion budget resolution, a major step forward for a monumental tax reform. The 51-49 vote sets the stage for a dramatic overhaul, cutting rates for corporations and diminishing trillions of dollars’ worth of tax-breaks, a priority from President Trump’s campaign. Even Bitcoin, which many believe to be a bubble on the verge exploding, rose to an all-time high of over $6,000.

This week calls for reflection. Most financial veterans recognize last Thursday as the 30th anniversary of Black Monday, October 19th, 1987, when the Dow Jones Industrial Average fell 508 points and the S&P 500 saw a one-day loss of 20.5%. The market has certainly come a long way since then, having weathered two more bear markets and continuing on a path to reach all-time highs. From a global standpoint, Equities rallied, despite constant geopolitical noise. Japanese stocks also hit their highest level since 1996. Eurozone industrial production came in strong, but as a whole, this third quarter has slowed after a fast start.

Perhaps an editorial viewpoint:  Given the current equity market environment in which valuations are at record highs and volatility remains seemingly mythological, many investors worry the next bear market may be looming. It has been theorized by some market technicians that markets are about to peak, what Elliot Wave theorists call the fifth wave progression and therefore want to wait for a more optimal time to put money to work. However, trying to time the market with this strategy essentially means times not participating in the market and a portfolio’s value depends more on long-term returns rather than which day or time period you choose to invest.

ETFG Weekly Select List - This week we saw consistency in our ETF Global Weekly Select List.
  • In Geographic leaders, there was not much movement with all the leaders remaining atop their respective geographic categories.

Thank you for reading the ETF Global Perspectives!


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_____________________________________________________________
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Friday, October 20, 2017

ALTSO Rock For Good - October 26th!

Friday, October 20, 2017If you haven’t already heard, ALTSO’s Hedge Fund Rocktoberfest is celebrating it’s 14th Anniversary this year at the Hard Rock Cafe in Times Square on October 26th and you don’t want to miss out!

For more than a decade, Hedge Fund Rocktoberfest has gathered colleagues, friends, current and prospective clients for what has been recognized as one of the most unique, highly anticipated and effective events in the charitable and finance sectors. 

Hedge Fund Rocktoberfest on October 26, 2017 will gather 1,400 colleagues, friends, current and prospective clients for a night of rock & roll and acoustic music performed by industry leaders.

A Leg To Stand On (ALTSO) is a 501(c)3 non-profit that provides free orthopedic care such as prosthetic limbs, mobility aids and wheelchairs to children with untreated limb disabilities in the developing world. ALTSO has provided treatment to more than 16,000 children across Asia, Africa and Latin America to-date!

To Register - click here -  ALTSO-Rocktoberfest Tickets

Thank you for reading the ETF Global Perspectives!

_____________________________________________________________
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Thursday, October 19, 2017

New-to-Market: GraniteShares COMB & COMG

Thursday, October 19, 2017 - New-to-Market:  This blog series highlights ETFs that have recently gone public and reflect those strategies currently most in demand by investors. While ETFs are not eligible for ETFG Risk Ratings until traded for 3 months and ETFG Reward Ratings for 12 months, our goal is to highlight cutting-edge investment strategies that have recently embraced the ETF structure – we hope you enjoy this special series of posts!

Something we’ve frequently talked about over the years is how the explosion of investor interest in Exchange-Traded-Products has resulted in many newly launched funds simply being attempts at “building better mousetraps” for whichever sector or investment theme is in demand this month.  Whether it’s a momentum fund with quarterly reconstitution instead of semiannual or an equity income fund that weights by dividends instead of market cap, all these tweaks in the end add up to a fund that’s more “evolutionary” than “revolutionary” and which is one reason why we get so excited for the truly novel, new fund. The only thing more exciting than an innovative new fund is whether a fund sponsor takes the risk to a bring a new product to a challenging sector. If there’s any sector held in less regard than commodities, we haven’t found it. So for this edition of our “New-to-Market” series, we focus on a pair of funds from GraniteShares, a new player in the commodities sector and which we think could herald a major rethink for all commodity funds going forward.

We could dwell on how commodities have to be the least loved sector of the investment universe, but a quick glance at the performance of one of the largest commodity ETPs, the iShares S&P GSCI Commodity-Indexed Trust (GSG), since the start of the equity bull market, would tell us all we need to know. Linked to the S&P GSCI Commodity Index, GSG last outperformed the S&P 500 in 2007 and since then has been nothing but disappointment for buy-and-hold investors as the fund has racked up a trailing five-year return ending September 30th of -15.11% compared to a -14.38% for the S&P GSCI and a positive 14.22% for the S&P 500. Although major commodity indices enjoyed a strong 2016, that weak long-term performance has led to serious asset outflows resulting in only a handful of specialized product launches over the past few years and little to no analyst coverage as even heavyweight Morningstar no longer has analyst coverage on any ETPs in that space.

If you’re shocked that a new ETF issuer would pick such a downtrodden sector for its first funds, wait until you hear what sort of products they’ve brought to market.  In a time when new ETPs rely on such intricate strategies that their names require at least three lines and two commas, GraniteShares has chosen to go back to the basics by introducing not one, but two, broad-based commodity funds, the GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF (COMB) and GraniteShares S&P GSCI Commodity Broad Strategy No K-1 ETF (COMG). That’s right, instead of developing a niche strategy investing in specific commodities while relying on some long/short momentum strategy, GraniteShares has decided to go back to the basics by offering products focused on large and small investors who are looking for broad exposure to the asset class, with familiar reference indices and at a reasonable cost and hey, why not solve one of the biggest headaches with investing in commodities while you’re at it?

As their names imply, COMB and COMG offer not just broad exposure at a reasonable price (more on that later) but do so without generating an additional K-1 form investors need to keep track of for when tax season rolls around. The promise of ETPs was always that they offered a cheaper and more direct means to invest in different themes or asset classes, but the fact is that most commodity funds were structured as limited partnerships, requiring fund sponsors to send out a K-1 to every holder of the fund.  While that did allow them to directly own futures contracts, it has proven a major inconvenience for smaller investors and offered another reason to overlook the sector. The mechanics of how it does it is relatively straightforward; both COMB & COMG are ‘40 Act’ funds but instead of directly holding futures contracts, they instead invest up to 25% of their assets in a Cayman Islands subsidiary that will provide the commodity exposure through futures while the remainder of the fund’s assets are invested in variety of short-term Treasury bonds with a maturity of up to 2 years. Another benefit of “40 Act” funds is that they have a Board of Directors who represent the interests of the fund shareholders, something those commodity ETPs, structured as partnerships or ETNs, do not have and making it potentially easier to do things like raise management fees as the PowerShares DB Commodity Index Tracking Fund (DBC) has done in the past.

That work around allows more straightforward tax reporting for those looking at a more long-term play and an increasing number of fund sponsors are taking the same approach for new product offerings.  In fact, GraniteShares wasn’t the first group to offer K-1 free funds, an honor belonging to the First Trust Global Tactical Commodity Strategy Fund (FTGC), an actively managed product that adjusts its positions to achieve a target volatility. Although others were quick to understand the opportunities opened up by the K-1 free structure, ProShares Advisors offered its first K-1 free fund, the ProShares K-1 Free Crude Oil Strategy ETF (OILK), in September of 2016 while PowerShares filed a prospectus last fall in preparation to roll out three single-commodity strategies and ETF Securities has also moved into the space with passive benchmark replication.

If you’re wondering how GraniteShares sees itself standing out from the crowd, it’s by focusing on those long-term investors looking for the low-cost solution in a space where even passive strategies often charge relatively high fees. Expense ratios in the commodity space remain relatively high compared to other sectors and many of the most well-known funds in this space are also the oldest names with high legacy fees like the DBC charging .89% or GSG at .75%, comparable to what some newer, actively managed strategies in the space will charge. Investors looking for the lowest cost way to invest with the two most widely tracked commodity benchmarks should love that COMB and COMG carry management fees of just .25% and .35% respectively, something made possible by relying on an in-house portfolio management team instead of outsourcing to third party providers like other firms. That focus on keeping costs to a minimum should result in something important to index trackers everywhere, very low tracking error to their benchmarks, which along with avoiding the K-1 hassles, should make these two funds an easy pick for any investor’s shortlist.

While ultimately the commodities sector still has a long way to go before it can make its way back into the hearts of asset allocators, and more important their portfolio’s, GraniteShares is betting that the commodity bear market is behind us and that now is the time to bring some of passive investing’s best practices to the commodity space. Nevertheless, we think the rise of “no K-1” funds offering easy and cheap exposure to the sector is sure to catch the attention of more fund sponsors and lead to a new attitude towards product development going forward. Whether evolutionary or revolutionary, that’s still something about which to get excited.

Thank you for reading the ETF Global Perspectives.

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Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Monday, October 16, 2017

Healthy Markets - Healthy Earnings?

Monday, October 16, 2017 – U.S. stock markets seemed hesitant this past week but continued into record territory. The Dow Jones Industrial Average and S&P 500 Index saw small gains of less than a percent but still in the green for the fifth consecutive week. The small-cap Russell 2000 Index lagged and recorded a humble loss for the week. Consumer Staples performed well, boosted with help from a surge in Walmart following their announcement of a massive repurchase program and a strong rise in online sales as the holidays draw near.

As of late, stock valuations have seen record setting highs and are forecasted to continue to grow with earnings on the rise. This week brought the first releases of major 3Q earnings reports. Major banks like JP Morgan Chase and Citigroup declined Thursday after reporting lower trading revenues and frequent credit card losses. Wells Fargo reported an earnings decline on Friday, further impacting the broader financials sector. Broadly, we have seen investors side with Industrials, Tech and other resilient sectors in response to this strain on Financials. This can be observed first hand on the ETF Global Scanner.

Even with the turbulent political environment, a series of positive economic reports may have helped compensate for the disruption in Washington. Initial jobless claims during the previous week rebounded, as the impact of hurricanes Harvey, Irma, and Maria on the labor market appeared to be dissipating. Retail sales also jumped in September, clearly showing further resilience in the face of the natural disasters. In fact, consumers entered October feeling better about the economy than they had in over a hundred years, according to the University of Michigan’s gauge of consumer sentiment, which was released Friday.

In ETFs, some of the biggest news included President Trump’s first key piece of legislation in regards to ETF research. Current securities laws offer legal protections for broker-dealers that issue public research reports on some asset classes. Research reports on exchange traded funds (ETFs), however, aren’t protected under current laws. Under the new law, ETF research reports won't be considered offers under securities law, even if the brokers or dealers take part in the registered offering of the investment fund’s securities.

In our ETFG Quant Movers, we saw a shift out of domestic health care centered ETFs and gains in global volatility tracking funds. As expected, winners included PowerShares FTSE RAFI Developed Markets ex-US Small-Mid Portfolio, iShares Edge MSCI Min Vol Europe ETF, and Legg Mason Low Volatility High Dividend ETF, which all gained close to 20% this week alone. We saw similar effects in the opposite direction with CSOP FTSE China A50 ETF and Vanguard Health Care ETF which slid 20.46% and 18.19% respectively. Concerns are also warranted for AGA, BOM, and BLNG, which have popped up on ETF Global Liquidation Watch List – October 2017 with an AUM of under $1 million.

Thank you for reading the ETF Global Perspectives!

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Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Monday, October 9, 2017

Columbus Day & the New Normal Continues

Monday, October 9, 2017 - The new normal continued last week with major indices hitting record highs as the Dow gained 368.58 points, or 1.6%, to 22,773.67, the Nasdaq gained 1.5% to 6,590.18, a record high, while the Standard & Poor’s 500 index, which hit a record high on Thursday, rose 1.2% to 2,549.33.

This all happened while political uncertainty continued to rise including a horrific act of violence against concert goers in Las Vegas. The VIX index, which is used to measure the fear of investors, continued to hit record lows. Wall Street even shook off a weaker than expected jobs report, mainly placing blame on the two devastating hurricanes that hit the nation, on the drop in payroll numbers.

In ETFs, some of the biggest news included the potential relaxing of restrictions around custom baskets. If granted, “the applications, would permit index ETFs, including what are commonly referred to as “self-indexed” ETFs, substantially more flexibility to customize their baskets”. More specifically, the ETFs could sell and redeem creation units using different baskets, neither of which is a pro rata slice of the portfolio (generically, “Custom Baskets”); provided that the ETF’s Board, including a majority of its independent directors, approves it as being in the best interest of the ETF written policies and procedures detailing.”

In our ETFG Quant Movers, we saw a shift out of multi-national ETFs and gains in single-nation tracking funds. Losers included the Columbia Sustainable International Equity Income ETF (ESGN), iShares Global Timber & Forestry ETF (WOOD) and ProShares MSCI Europe Dividend Growers ETF (EUDV) which lost, 7.39 7.23 and 6.89 points to their overall scores respectively. Gainers included the WisdomTree India Earnings Fund (EPI), Guggenheim U.S. Large Cap Optimized Volatility ETF (OVLC) and the iShares MSCI Chile Capped ETF (ECH), which all added 10.49, 9.30 and 9.13 points to their overall scores respectively.

Our ETFG Select List saw some of the biggest changes in the large-cap strategy portion of the list with only one name remaining from last week, the Direxion Nasdaq 100 Equal Weighted Index Shares (QQQE). The new additions to the section were the Guggenheim U.S. Large Cap Optimized Volatility ETF (OVLC), also the second highest Quant gainer, the First Trust Dorsey Wright Peoples Portfolio ETF (DWPP), the Guggenheim S&P 100 Equal Weight ETF (OEW) and the Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE).

We will see if the markets can continue on their high rising streaks throughout a month that has historically set some new trends, such as the end of the tech bubble bear market in 2002, the end of the bull market in 2007 and end of the 2011 bear market.

Thank you for reading the ETF Global Perspectives!

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_____________________________________________________________
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.


This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Tuesday, October 3, 2017

4Q Rebalancing - ETFG Dynamic Model Portfolios

Tuesday, October 3, 2017 - With the beginning of the new quarter yesterday, the ETFG Dynamic Model Portfolios (4 Base Portfolios and 8 “Tilts”) were reconstituted and rebalanced - this always occurs on the 1st Monday of each calendar quarter.  The turnover within each allocation group was relatively low this quarter with only a few new products added.

Most of the changes within the Domestic Equity allocation involved relative ranking changes with the JPMorgan Diversified Return US Mid Cap (JPME) moving down while the Guggenheim S&P Smallcap 600 Pure Value (RZV) moved up a slot. The PowerShares DWA SmallCap Momentum (DWAS) fell out of the portfolio and was replaced with the VictoryShares US Small Cap High Dividend Volatility Weighted (CSB) ETF. The new selection continues two trends within our models, overweight to Small Cap exposure vs. Large Cap exposure and the selection of “Strategic” Beta products over Market Cap based ETFs.

The Developed International allocation continues to slightly overweight value but with a slightly different tilt with the switch out of the iShares MSCI EAFE Value (EFV) into the VanEck Vectors Morningstar International Moat (MOTI) ETF. The iShares Edge MSCI Multifactor International (INTF) and iShares MSCI South Korea Capped (EWY) remain the top multi-region and single country ETFs respectively. The iShares MSCI Canada (EWC) ETF was replaced with the iShares MSCI Spain Capped (EWP) ETF giving the portfolios a slight overweighting to Europe.

The Emerging Market allocations stayed the same with the portfolios holding the Franklin LibertyQ Emerging Markets (FLQE) ETF and the First Trust ISE Chindia Index (FNI) for the more aggressive models.

Over the past few quarters, we continue to see Strategic Beta products being selected into the portfolios across all of the equity allocations. This is not a discretionary process driven by the research team but rather, the selection of products driven by our rules based process that utilizes the ETFG Quant Model. It will be interesting to see if this trend continues.

About ETFG Dynamic Model Portfolios
Each ETFG Dynamic Model Portfolio is comprised of the top ETFs as ranked by the ETFG Quant Model and the firm’s Research Policy Committee and reselected each quarter. The eligible selection pool for the Model Portfolios is the universe of U.S. Listed ETFs and thereby represents the broadest range of industry groups, sectors and geographic regions.


All information including Selection Process, Components, Asset Class, Geographic and Focus exposure for the ETFG Model Portfolio Program is available under the "Model Portfolios" tab at www.etfg.com and can be actively tracked and downloaded by signing up for the 21 Day Free Trial

Thank you for reading ETF Global Perspectives!

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_____________________________________________________________
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.


This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.

Monday, October 2, 2017

And Into 4Q We Go.........

Monday, October 2, 2017 - The start of the new quarter brings some new hopes to Investors and continued strength throughout the US markets. It also brought along some big news in the ETF industry as Invesco PowerShares announced that they agreed to buy Guggenheim’s ETF business for $1.2B. Guggenheim’s ETFs have about $33B in AUM which will certainly add a lot of value to the fourth largest US ETF issuer.

All three major indices are up for the quarter and got a nice boost with the announcement of the new tax plan that the Republican party is trying to put in place.

One of the most favorable parts of the new proposed tax plan is the corporate tax cut from 35% to 20%. That can add multiples to the P/E ratios of many of the large-cap stocks and have an even greater impact on the small and mid-cap ones which tend to pay a higher rate.

Though still early in the process, it did not stop investors from pouring money into small-cap names and some ETFs were there to ride the wave – one of the most notable was the Russell 2000 ETF, IWM, which added 3.57 points or 2.46% this week. The iShares Russell 1000 Growth ETF, IWF also had a positive week adding 1.74 points.

Taking a look back at the quarter, there were 7 ETFs that added over $1B to their AUM. To no surprise, four of the seven, IVV, IEFA, LQD and HYG are iShares funds, two of the seven, XLF and SPY, are from StateStreet and the last, VEA is from Vanguard. Check out the chart below to see the flows.

Ticker
3Q Net Fund Flow
% of AUM
AUM
$3.82B
3.12%
$126.29B
$2.92B
9.22%
$34.56B
$1.57B
4.23%
$38.58B
$1.37B
2.25%
$61.99B
$1.25B
7.30%
$18.33B
$1.24B
4.95%
$26.19B
$1.02B
.41%
$249.39B

In our weekly Quant Movers, names like the iPath S&P MLP ETN (IMLP), WisdomTree Dynamic Currency Hedged Japan Equity Fund (DDJP) and WBI SMID Tactical Value Shares (WBIB) made the largest gains to their scoring adding 12.03, 11.27 and 10.07 points respectively. On the opposite end of the scoring spectrum, the “dogs” of the week included the ALPS International Sector Dividend Dogs ETF (IDOG), PowerShares Cleantech Portfolio (PZD) and PowerShares India Portfolio (PIN), which lost 12.03, 10.09 and 10.04 points to their overall score respectively.

Also, since it is the beginning of the quarter, be sure to look out for the rebalance and reconstitution of the ETFG Model Portfolios. To learn more about them, check out: http://www.etfg.com/about-model-portfolios.

Thanks for reading the ETF Global Perspectives!

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_____________________________________________________________
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.  ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.

ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision.  ETFG’s opinions and analyses do not address the suitability of any security.  ETFG does not act as a fiduciary or an investment advisor.  While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.  Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.  Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested.  Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.  Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.