Tracking the Markets on Fed Day

Now that even Larry Summers is for easy money do we have anything to fear on this Fed day?  Six weeks ago, Chairman Bernanke said the only relevant question is how hard to press the accelerator yet world markets sensed a potential tapering and went into withdrawal spasms.  What will he say today and how will markets react?  The answer to the second question can be found on our home screen where we slice the international ETF markets into various asset class, geographic and sector indices.

It begins with our benchmark ETFG Global 500 Index, the world’s first that crosses regions and asset classes.  It represents the largest 500 exchange traded products excluding leveraged or inverse.  As more managers take advantage of ETFs to gain access to all regions and asset classes, they now have a benchmark that is relevant to their portfolios.  Below that and across the tabs are indices relevant to various slices of their portfolios.  Each of the asset class indices contains all those applicable products and we do the same thing by geography and sector.  Tomorrow morning, each of them will reflect how their group reacted to the Fed’s statement. 

The benchmark ETFG Global 500 is calculated real time on the home page as are the smart beta indices under the Dynamic tab, the Quant driven ETFG Quant Equity 10 and 12.  The former contains the top 10 ranked equity ETFs selected monthly and the latter is the top 12 that meet certain liquidity thresholds.  Both contain today’s top ranked SPDR S&P Metals and Mining Fund (XME).  The three indices are published and quoted widely beyond our home page under the tickers ETFG500, ETFGQE10 and ETFGQE12.  Despite lagging the S&P 500 year to date, they just celebrated their one year anniversary and both dynamic indices beat that benchmark as well as the MSCI ACWI index.

We provide data on the ETFG 500 free of charge to managers who want to benchmark against it and the others on a contractual basis.  We have more under development including a market neutral index that gained more than 10% in its first year.  We also construct indices according to client specifications; please contact us to learn more.  With our reflective indices and predictive scores and ratings, nobody makes navigating the international ETF markets easier than ETF Global^®.  Thanks for reading and please send any questions to support@etfg.com.

Something for Everyone Today

US funds are shining atop Quant’s ranks with 6 sector funds representing 6 unique sectors in today’s top 10.  China hasn’t faded as FXI takes the 10 Green Diamond distinction back from GXC which is tied for Quant’s 10^th position with FCHI.  Emerging markets fund ADRE and the global gold miners in GDX round out the top 10 providing something for everyone today.

The 6 sector funds are led by SPDR’s S&P Metals and Mining Fund (XME) and S&P Oil & Gas Exploration & Production Fund (XOP) in 1^st and 2^nd place.  They share high 90s yield scores but PE scores in the low to mid 40s.  Technical scores are decent in the mid 60s and bearish sentiment pushes that score up to the low 70s for each.  XME wins out on its 96.5 price/cash flow score.  iShares sees their US Telecommunications Fund (IYZ) in 3^rd place and their US Technology Fund (IYW) in 7^th. Both of those also see high 90s yield scores and IYZ gets a 98.5 P/E score while IYW gets a 96 price/book score.  The telecoms do better on the Behavioral side while the techs excel on the Fundamental side.  Powershares has their Dynamic Biotech & Genome Fund (PBE) and S&P Small Cap Industrials Portfolio Fund (PSCI) in 6^th and 8^th place.  Yield is most responsible again with both scoring 100 and 95s for cash flow scores.  Otherwise they are not very cheap but are trading well with technical scores around 69.  Both funds reached the top 10 for the first time earlier this month and are outperforming the S&P 500 since then.  PSCI has held its top 10 rank for most of the month with a Fundamental Score that has come down to 71.5 from 78 in late June.

If risk is on your mind you may want to steer towards the techs and telecoms with low Red Diamond Risk Ratings of 3.17 and 3.21.  The industrials are also lower than average at 3.47 and the biotechs’ 4.25 is close to today’s all equity ETF average of 4.52.  The energy and mining funds carry higher than average risk at 4.81 and 5.63 respectively.  The China and EM funds are all above 5 and the gold miners are above 6.  We hope there is something you like among that group, if you have any questions please send them to support@etfg.com .

3 China ETFs lead the Green Diamond Reward Ratings

As we begin the week that ends July, international markets are bracing for economic data and earnings in a difficult macro environment. Asian markets are adding to declines from last week but 3 China funds remain in the upper ranks.  GXC, FXI and FCHI rank 4, 2, and 12 in Quant and 1, 2, 3 in the Green Diamond Reward model.  China’s Shanghai Composite Index looks ugly for the last couple of weeks but these ETFs sport nice charts leading the US market over the period.  The difference is US dollar weakness.

The difference between Quant and the Green Diamond Reward Ratings is the latter model is comprised of Quant’s two dominant categories, Behavioral and Fundamental, while much of the Global Theme and Quality calculations are incorporated in the Red Diamond Risk Ratings.  Behavioral is half of the Reward Rating and evenly split between technical and sentiment.  All three funds get decent high 60s technical scores with short term leading intermediate and long.   FXI has the highest sentiment score of the three at 82.1 but GXC saw its jump from 42.1 on Friday to 72.6 today accounting from heavy put buying.  That was enough to steal today’s 10 Green Diamond Rating away from FXI.  There are no options available on FCHI so it gets a default 50 put/call score but its short interest and implied volatility are enough to get it a 71.1 sentiment score.

On the Fundamental side, all 3 get high 90s price/cash flow scores where GXC and FCHI are sharing the wealth with 100 yield scores, FXI’s 61.6 yield score means it has had a higher yield about a third of its life.  FXI does better on the PE score with 62.4 compared to 56.6 for GXC and 51.6 for FCHI.  Price book scores are closer in the low to mid 60s for all 3.  The group has above average Red Diamond Risk Ratings in the high 5s with differences resulting from quality metrics as well as differences in country weights (Hong Kong scores higher than mainland China). 

Leading the ranks does not mean these 3 funds will be up today or tomorrow but that they are likely to outperform most other funds over the next couple of months.  GXC and FXI have ranked highly before and performed very well so we have high hopes this time too.  Thanks for checking in to ETF Global^® and good luck this week. 

It turned out the shift in yesterday’s elite ranks was not quite as remarkable as we remarked.  If you are among those wondering why the ranks we quoted here in Daily Perspectives were not reflected on our Quant page, let us explain.  After we posted, but before the market opened, we noticed some missing data in our calculations.  When we corrected the problem, 2 more US funds made the top 10 and 3 of the 6 we mentioned dropped about a dozen ranks and HAO landed in 20^th from 12^th (138th today).  The message is still remarkable however as the emerging markets and China continue to score and rank well.

As we drink our coffee and settle in at our desks, we see 2 China funds and 2 Emerging Markets funds in the top 10 and many more among the top 50.  So Quant may not be saying to avoid the US but if you are looking for international exposure it has plenty of Asian ideas for you.  Today’s top ranked China funds, 4^th place FXI and FCHI in 10^th lead the Green Diamond model where FXI is today’s 10 Green Diamond fund and FCHI is a close 2^nd with 9.99.  Emerging Markets funds ADRE and DEM each get Reward Ratings above 9.5 and are ranked 5^th and 9^th in Quant.  All 4 saw yesterday’s action favor their technical scores but 3 saw a ding to their sentiment score.  Yesterday’s other message was that the group saw elevated implied volatility scores and that remains the case today.  We mentioned that being an excellent secondary screen which means we have found that among the top ranks, the names with the best IV scores tend to outperform the others.

Yesterday’s hiccup was a rare enough event that we trust the ranks will look the same by the time you read this.  The quoted funds’ scores didn’t change much; it was more a factor of other funds scoring better when we re-ran the data.  As we gather all the vibes of the international equity markets, Quant has an uncanny ability to sort through the noise and highlight the best equity ETFs for the intermediate term.  There are plenty of twists, turns and bumps along the way but the message of the models has provided a sweet song for our users.  Thanks for being among them and have a nice weekend.

As we took a bird’s eye view of the regions and sectors in Quant’s top 100 ranked funds the last two days, there was a remarkable shift in the top 10.  The US dominance of those elite ranks has dwindled to only 2 funds, the 1^st place IYZ and Louis Navellier’s 10 Green Diamond RWV in 4^th.  There are 6 emerging markets funds, 3 of which are devoted to China and another BRIC.  We noticed this emerging shift when we took a similar bird’s eye view in late June and welcomed the separation from the US market again on July 1^st. Our July 17^th post also highlighted Asian funds emerging to the top ranks where more of them stand today.

China’s 3^rd place FXI and 8^th place GXC are familiar to this space but we have not written much about the 10^th place iShares FTSE China (HK Listed) Index Fund (FCHI) or the 12^th place Guggenheim China Small Cap Fund (HAO).  The latter 2 are at their highest ranks yet.  All 4 have decently balanced Fundamental, Behavioral and Quality Scores ranging from the 60s to the 80s but weaker Global Theme Scores.  Within their Behavioral Scores they also all show elevated implied volatility scores.  That is a proprietary ETFG calculation that has proven to be an excellent secondary screen. The other 3 EM funds also have elevated IV scores but weaker technical scores.  The 2^nd place WisdomTree Emerging Markets High-Yielding Fund (DEM), Powershares’ BLDRS Emerging Markets 50 ADR Index Fund (ADRE) in 7^th and SPDR’s S&P BRIC 40 Fund (BIK) in 9^th get there on high 70s Fundamental Scores but all three do see improving technical scores.

Our Quant page shows several other EM funds among the top 25 with a bias towards Asia.  One thing they all share is higher than average Risk Ratings which shouldn’t surprise anyone.  They also have similar price charts that show underperformance for the year but outperformance since the late June bottom.  Not many voices were highlighting these names for purchase a month ago; they were more focused on money flows out of the region.  Quant seizes such opportunities and today’s message says they are still buyable.  It is the kind of message that sets ETF Global^® apart from the competition and we are glad you recognize that and can profit from it.  As always, thanks for reading and please keep the questions coming to support@etfg.com.

Yesterday we looked at the geographic representation in Quant’s 100 top ranked funds and today we will look at the sectors.  There are 38 ETFs representing 8 sectors with financials and utilities not having any members in the group that has outperformed the S&P 500 on average.

There is only 1 telecom fund but it is the 1^st place iShares Dow Jones U.S. Telecommunications Index Fund (IYZ) with a 9.47 Reward Rating and a low 3.52 Risk Rating.  That is clearly the favorite fund but technology may be the favorite sector with 7 funds that have an average Reward Rating of 7.99 led by iShares’ IYW with 8.76 Green Diamonds and similarly low risk.  The 8 energy funds are close behind with 7.39 Green Diamonds on average and the 3^rd place SPDR S&P Oil & Gas Exploration & Production Fund (XOP) getting above 8 with market average risk.  The 12 basic materials funds also average above 8 Green Diamonds but they score a little lower in Quant.  The reason is that risk is separate in the Diamond model and these carry a high 6.18 average Red Diamond Risk Rating.  The gold miners in 8^th place GDX lead the group that contains other higher risk names including 4 other precious metals funds.  The consumer sectors each have 1 name; INCO is the higher rated and higher risk representing India’s cyclical sector while XLP gets less than 7 Green Diamonds but typical of a staples fund also has low risk with only 1.52 Red Diamonds.  Industrials and health care each have 4 funds spanning the top 100 ranks led by 13^th place PSCI and 21^st place XLV.  The lower ranked health care fund does better than the small cap industrials in the Diamond model.

In the interest of space we did not list every ticker but you can see them all in the ETFG Scanner under the Research button.  Select the fields you like displayed from the Filter button and sort the output by either the Quant or Reward columns to see the top ranked funds up top.  You can also export the full output to Excel.  We can assure you it will provide a better vision of the ETF marketplace than Anthony Weiner’s vision for New York (of which we have seen too much already).  As always, please send any questions (not of a personal nature) to support@etfg.com.

7 of today’s top 10 are US funds but a wide assortment of international names populates the rest of the top 100. Today we will take a monthly trip around the world.  It is a busy itinerary as there are 38 foreign funds in the group today, not including the 12 global funds.

We will begin in Europe with the SPDR DJ Euro STOXX 50 Fund (FEZ), our old friend from last summer in 16^th place; we hope it performs as well this time.  Other pan Europe funds include FEU and DFE in 51^st and 63^rd place but above those are France’s EWQ, Sweden’s EWD and Switzerland’s EWL ranked 32, 35 and 46. iShares’ International Select Dividend Fund (IDV)  in 57^th place has 41% exposure to the Euro and their EAFE fund (EFA) and Wisdom Tree’s DIM are tied at 75^th place with less.  You can cheer the future king with SPDR’s International Energy Fund (IPW) holding more than 60% of AUM in Great Britain and Canada.

Europe’s emerging markets are also represented within 14^th place DEM and ADRE gets 20^th as other emerging markets funds EEM, GMF and LGEM rank lower.   Asia is well represented with ADRA, AXJL and AAXJ also in the middle of the pack and Japan’s DFJ is tied at 20^th place.  Looking at particular countries, Malaysia’s EWM makes the top 10 at 7^th place followed by South Korea’s EWY at 16^th and Taiwan’s EWT and Indonesia’s EIDO a bit lower.  India has three names led by INCO in 26^th and INDY and EPI in the bottom half of the top 100.  China does better with GXC and FXI ranked 12 and 13 and PGJ, FCHI, and HAO also rank below 50. Even Russia gets 2 names with ERUS and RSX and Brazil makes 99^th place with EWZ.  You can buy that bunch or buy SPDR’s BRIC 40 Fund (BIK) in 19^th place.  Or you can celebrate Pope Francis’ homecoming to Latin America with ILF ranked 94. Coming closer to our home, we see Canada’s 9^th place EWC finally beginning to outperform after scoring well since the spring and small cap CNDA at 40^th place has had an even better bounce this month.

That is more international ideas than we have seen since late last year.  If you have been following Quant’s aversion from the international markets this year it may be time to venture back.  Thanks for taking our voyage, please send any questions to support@etfg.com.

Large US names are back up top and we are not referring to Phil Mickelson.  Atop today’s Quant leader board is the SPDR S&P Metals and Mining Fund (XME) followed by SPDR’s S&P Oil & Gas Exploration & Production Fund (XOP).  iShares has two US sector funds in the top 10 with their Dow Jones US Technology and Telecommunications Funds (IYW and IYZ) in 5^th and 7^th place.

The SPDR funds get 1^st and 2^nd place for different reasons with XME driven by a solid 75.9 Fundamental Score and XOP getting there on a 73.3 technical score and stronger, though lesser weighted, Global Theme and Quality Scores.  XOP has been a market leader since the spring and XME has been doing better since the beginning of the month after breaking back into the top 10 in early June.  The iShares funds are also more disparate than their close ranks suggest.  The tech names in IYW have a very strong 82.5 Fundamental Score which may come down when some recent earnings declines hit the data stream but they are still cheap on a historical basis.  The fund’s technicals have come down with poor price action last week but that has brought out the bears to boost its sentiment score with the two combining for a middling 57.7 Behavioral Score.  The telecoms in IYZ have seen their technical scores jump on the AT&T acquisition of Leap Wireless sending money flowing to the sector in hopes of similar deals.  It seems a realistic premise as the fund carries a solid 76.3 Fundamental Score and a Behavioral Score better than IYW at 61.2.

The four US large cap funds have brought the average Red Diamond Risk Rating of the top 10 down to 4.66, a little above today’s all equity ETF average of 4.49.  The SPDR funds have higher Risk Ratings with XME and its industrial metal constituents at 5.33 and XOP in line with the average at 4.48. The tech and telcom funds carry lower risk with IYW at 3.62 and IYZ at 3.32 Red Diamonds.  The big dogs have not completely displaced some of the newer names we have seen scoring well as the upper ranks still show a wide variety to choose from.  Congratulations to Phil Mickelson on winning the British open, the Brits don’t mind as they are focused on Duchess Kate.  Good luck to her today and good luck to you this week.

After two days of Bernanke and the Congress getting along so well, the S&P 500 is at a new high and markets around the world are rallying.  And earnings are up, above expectations anyway.   It is enough to put risk back on our minds and nobody offers more comprehensive risk analytics on exchange traded products than ETF Global^®.  Quant is undeterred as today’s top 10 are skewed towards higher risk issues bringing their average Red Diamond Risk Rating up to 5.53 compared to today’s all equity ETF average of 4.83, both numbers are higher than usual.  For example, today’s 9^th place EGShares India Consumer Fund (INCO) gets an excellent 9.61 Green Diamond Reward Rating but it carries high risk with a 7.72 Red Diamond Risk Rating.  That is in the neighborhood of leveraged and inverse funds which you can see on the Red Diamond Risk Rating page found under the Analytics button.

The page appears with the highest Risk Ratings up top but you can sort by any of the six subcategories or ticker or description.  Entering INCO in the search box will winnow the list to the products containing those letters (in this case including a bunch of income funds).  Behind the six sub categories are 15 proprietary calculations of dozens of daily metrics reflecting a product’s integrity and historical price data.

Looking closely at INCO we can see the biggest driver of its 7.72 Risk Rating is its high Liquidity Risk at 9.67 resulting from its wide bid ask spread and low trading volume, so use limit orders when trading it.  If you are more interested in price risk you will notice its 6.15 Volatility Risk is higher than its 4.9 Deviation Risk suggesting this would be a good way to ride a rally.  The elevated Country and Structure Risk reflect India’s quantitative ranking in our models and the fund holding only 30 constituents with one accounting for more than 10% of AUM.

ETFG^® Risk Ratings are reflective of a product’s composition and trading but not predictive like our Quant scores and Reward Ratings.  Also unlike the other models, the Risk Ratings apply to all exchange traded products like those leveraged and inverse ones in INCO’s neighborhood.  Only ETF Global^® breaks out risk from reward and offers such granularity in how we reach our ratings.  Please send any questions to support@etfg.com and have a nice weekend.

There have been so many new names scoring and ranking well recently that we neglected to mention the July ETFG^® Liquidation Watch List has been posted, as it usually is in the early days of each month.  This is where we summarize all exchange traded products that have existed for at least two years, have less than $5 million in AUM and have registered negative performance for the trailing twelve months.  Those are the criteria that we see as raising the risk that a sponsor will pull the plug on an underperforming ETP.  Different sponsors will have different reasons for termination so we like to say that inclusion on the list does not guarantee closure nor does exclusion guarantee longevity.

It has become a popular tool in advisors’ due diligence process, especially those who dabble in the more esoteric offerings out there.  July’s list contains a record 78 ETPs which is more than 5% of the population so it is becoming more important to make sure the ones you are considering will stick around for your timeframe.  There are 33 equity products which include 9 additions this month, mostly focused on emerging markets and basic materials sectors such as gold miners.  A few of them are top 100 Quant rankers.  The 26 commodity products from last month’s list all remain and are joined by another iPath ETN tracking lead.  The multi asset and currency categories each have the same 7 names from June’s list.  Despite the bond market rout in June, only 4 fixed income products appear and they are all inverse.  Most bond funds are above the AUM threshold and still have positive performance for the past year.

We also cover the list and general liquidation issues each month in a column at Wealthmanagement.com that can be seen here.  One issue we have covered is the consolidation occurring in the ETP marketplace that has produced record closure rates.  Sponsors have been introducing more esoteric products and closing underperforming ones at a quicker pace. The ETFG^® Liquidation Watch List helps you avoid the various difficulties that can attend a liquidation, so if an ETP you like is among the threatened 5%, check the ETFG^® Scanner for other products with similar exposure but better durability.  As always send any questions to support@etfg.com and thanks for being part of ETF Global^®.

Bernanke is likely to tell Congress today that he can’t maintain the Fed’s massive stimulus forever but plans to keep rates low for a long time, the Fed Funds rate anyway.  It remains to be seen if he will be able to keep long rates low without standing in the pits as the only buyer.  Quant is preparing for another taper tantrum as only 5 of today’s top 10 are US funds.  The other 5 are GDX and GRID in 2^nd and 5^th place (see July 8^th and 9^th posts) and 3 Asian funds closing out the top 10.  The SPDR S&P China Fund (GXC) moved down 6 places to 8^th as the iShares FTSE/Xinhua China 25 Index Fund (FXI) gained 5 places to 9^th.  Tied at 9^th place is the iShares MSCI All Country Asia ex Japan Index Fund (AAXJ).

The 3 Asian funds have spent 2013 giving up most of their gains from last fall but have held their lows from the summer and look ready to do it all again.  Technical scores are good but not great in the low 60s but 58.4 for FXI, and sentiment scores are better for all 3.  Fundamentals are most responsible for their high ranks with GXC scoring 80.5, AAXJ at 75.1 and FXI at 72.1.  China has already had its bear market, although GXC held its losses to less than 20%, and AAXJ was down almost 15% YTD in late June.  All 3 have bounced off their recent lows and put in higher lows which have boosted their technical scores by about 10 points over the last couple of weeks.  Fundamental Scores have also risen with some better reports.

On the Diamond models, GXC has the highest Green Diamond Reward Rating at 9.27 followed by FXI at 8.85 and AAXJ at 8.78.  Poor performance this year has hurt all three on the risk side with GXC carrying the most risk with a 6.33 Red Diamond Risk Rating followed by FXI at 6.18 and AAXJ more moderate but still above average at 5.28.   If you want Asia but lower risk, take a look at Malaysia’s EWM in 12^th place with a low 2.21 Risk Rating.  Several other foreign funds have remerged into the upper ranks and we can only hope they perform as well as they did last fall.  Please send any questions to support@etfg.com and thanks for reading. 

It is going to be 96 degrees in the shade on Wall Street again today, a good day to phone it in.  If you don’t want the NSA listening, you might call on a Leap Wireless prepaid phone.  AT&T thinks plenty of people are doing that so they offered twice the price to acquire the company which gave a leap to the telecomm sector and the iShares Dow Jones U.S. Telecommunications Index Fund (IYZ) in particular.  The fund had ranked in the lower half for most of the past year until it broke into the top 100 in late April, made 10^th place on May 31^st, and is today’s  new Quant leader.

The move in late April was driven by a rising Fundamental Score into the upper 60s even as the price rallied 10%.  By late May its technical score also rose into the 60s and a rolling over chart brought out the bears which boosted its sentiment score into the 80s.  The roll over gave back most of the April rally to June 24^th but the price held around its February high.  Bouncing off that level drove its technical score into the 70s, at a similar level to its Fundamental Score.  It is nice to see technicals and fundamentals rising at the same time and the moves were confirmed by the fund paying its highest dividend ever on July 2^nd.  Today we see its proprietary ETFG^® implied volatility score rising from 22.3 to 73.5 which gets its sentiment score up to 66.9.  It all combines for its highest ever Total Score of 73.1 and today’s 1^st place ranking.

Some of the leap in IYZ is attributable to the takeover of Leap Wireless accounting for almost 3% of AUM but AT&T accounts for more than 10%. The top constituent declined on the deal but held above a low from a few days ago which was higher than a low from the prior week so the market seems to be encouraging similar deals.  IYZ’s 26 constituents would be prime players in such a trend and combine for a 9.47 Green Diamond Reward Rating while carrying a lower than average 3.85 Red Diamond Risk Rating. Exhibiting a balance of strong Fundamental and Behavioral measures puts the fund in Quant’s sweetest spot today.  Take a look at this timely opportunity and thanks for taking a look at ETFG^® Daily Perspectives. 

A new week brings us a new 10 Green Diamond fund and financial services veterans are sure to recognize the name of Louis Navellier.  This veteran of the industry has been employing quantitative methods of security selection for more than 30 years with long term performance that most managers would welcome.  He has teamed up with Revenue Shares, known for their revenue weighted versions of popular indices, for the RevenueShares Navellier Overall A-100 Fund (RWV).  The fund’s quarterly rebalancings lead to high turnover so we put it in the smart beta category.

A look at the constituents on its tear sheet suggests a mid cap growth fund but it crosses categories and the variety of flags show about a quarter of AUM crosses regions too.  The sector chart has Energy, Consumer Discretionary and Financials accounting for more than half of AUM and the Sub-Industry chart shows those weighted to downstream refining and marketing, cable and satellite, and insurance.  That Sub-Industry chart has plenty of slices to ease diversification worries but the top 10 do account for a heavy 49% of AUM with almost three quarters in the top 25 out of 100 constituents.  The new performance tab on the tearsheet shows RWV performs well but can be volatile, like 2011’s third quarter drop and the one last month.  That leads to a higher than average 5 Red Risk Diamonds but as long as the market is rising, this looks like a good way to ride it.

Those two drawdowns have brought the fund’s 3 year performance below the S&P 500 and our models suggest it could be a good time to buy this manager with impressive long term credentials.  RWV’s long term technical score is its best at a solid 69.5 but even the low short term is still good at 63.1.  An overnight jump in its short interest score, from 15.4 to 84.7, accounts for a rising sentiment score of 61.5 which made the difference from almost 9 Green Diamonds on Friday to 10 today.  Most responsible for its place today is a very strong 87.1 Fundamental Score where its 60.2 PE score is the only sub score not in the 90s.  It all combines for its best rank and Green Diamond Reward Rating yet so we hope RWV gets Louis Navellier back to his winning ways.  Thanks for checking in and good luck this week.

The latest Green Diamond Reward Ratings performance report has been posted under the Analytics button and like their close cousin Quant, they have consistently identified the best parts of the international equity markets for the intermediate term.  The Diamond models break out the risk metrics from Quant so there are some differences.  Each day, one equity ETF gets the 10 Green Diamond Reward Rating identifying it as the fund with the best prospects for price appreciation; today it is the SPDR S&P China Fund (GXC). 

We also group all the 9, 8, and 7 Green Diamond funds each day, average their performance over the coming 1, 2 and 3 months and compare to the S&P 500.  You can see that the 10s usually beat the 9s which beat the 8s which beat the 7s.  Like Quant, these numbers got skewed by the washout in the gold miners fund, GDX, after it spent most of February with 9 or 10 Green Diamonds.  We hope you used stops if you bought it then although the performance data does not use such modifiers.  Since then, the model has favored the PowerShares Dynamic OTC Portfolio Fund (PWO) more than any other and it has performed splendidly.  Looking at all the days from last July through this June, our first full year produced 2,471 datasets where the ETFG^® groups beat the S&P 500 more than 55% of the time.  The SPDR S&P 500 Fund (SPY) was in those groups for all but one day with other US broad market funds dominating the ranks for much of 2013.

Today’s selection of GXC reminds us of last fall when that fund dominated the ratings and provided excellent outperformance.  Its rating quickly deteriorated in early January and it dropped below 7 Green Diamonds on January 18^th, the day before it peaked before suffering a 20% correction which bottomed on June 24th.  Having spent most of 2013 at 6 or 7 Green Diamonds, it got back up to 8 a couple of days before that bottom, broke 9 on July 9^th and is back to 10 today.  If you want to see all the funds in order of their Green Diamond Reward Ratings you can sort the Reward column in our Scanner.  Today that returns 150 equity ETFs rated 7 or higher which has proven to be an excellent selection list out of the 722 getting scored.  If you have any questions, please send them to support@etfg.com.  Thanks for reading and have a nice weekend.

Today we do what no other ratings service does, we report on the performance of our ratings.  Actually we will cover our Quant rankings today and our Green Diamond Reward Ratings tomorrow.  Found under the ETFG Quant^® button, the monthly performance reports go back to December 2012 but the data goes back to July 2, 2012.  It’s been one full year and we are not reporting the results on 7/11 because we have been lucky, Quant has been too consistent to be lucky.  We report the results grouped by Quant’s top 10, 25, 50 and 100 ranked funds each day where we average their performance over 1, 2 and 3 months and compare to the S&P 500 performance over the same rolling periods.  We welcome this report because it includes selections made in May which is when we began to see some separation from the US broad market funds that have dominated the ranks so much this year.

Despite being weighted towards the S&P 500 and similar funds for half of our existence, we have beaten the benchmark in more than 53% of the datasets; the other times were mostly when the benchmark was leading the international markets and our rankings.  Even with that, our top 10 funds have outperformed the S&P 500 by more than 25% for one month on average.  Quant has consistently kept our users in the sweetest parts of the international equity markets with a glaring exception of including gold miners this past winter.  That is why our 3 month numbers look worse than our 1 and 2 month but those data points are slowly getting diluted with Quant’s regular outperformance.  The model’s affection for energy funds had been looking like a mistake at times but with oil breaking to new highs it is looking more prescient now.  Today’s 1^st place SPDR S&P Oil & Gas Exploration & Production Fund (XOP) continues to lead the ranks and while it has lagged slightly, high oil prices should support it and Bernanke sounds like he’ll support the oil price.

A glance at the Quant page will show a variety of sector and theme funds which we expect will widen our outperformance numbers now that the top ranks are not so dominated by US broad market funds.  The US still rules the ranks but Quant is highlighting some interesting selections therein.  Take a look each day and thank you for taking a look at ETFG^® Daily Perspectives. 

The IMF reduced its emerging markets growth forecast yesterday and the emerging markets rallied.  Maybe because Citigroup forecast a 27% gain in the MSCI Emerging Markets Index for the next 12 months saying the bad news is already priced in.  That’s the index tracked by iShares’ Emerging Markets Fund (EEM) and it happens to be at 9^th place today, its highest rank this year.  It is no stranger to the elite ranks however, having first reached the top 10 on September 10, 2012 after a couple of months in the top 25.  It spent most of last fall in the top 10 which was a great call for Quant as the fund went on to outperform most others until it dropped out of the top 100 for the first time on December 21^st. 

We have had our eyes on it since the spring and are happy to see it back up top.  We mentioned it in April as it emerged back into the top 25 on strong sentiment scores.  The bears were right then as it went on to suffer another leg down in June.  Its sentiment score remains elevated at 82.2 today but it also now enjoys a healthy 70.1 Fundamental Score reflecting its better valuation after the June swoon.  We would prefer to see a technical score better than today’s 50.3 but it all combines with a mediocre Global Theme Score and a strong Quality Score for today’s Total Score of 68.  The Diamond models give it an 8.95 Reward Rating with a higher than average 5.47 Risk Rating driven by high volatility and deviation risk.

Asia leads EEM’s geographic exposure with 25% of AUM in South Korea and Taiwan and another 10.1% in China which may restrain it today.  The other BRICs make up about 25% but there are plenty of colorful slices on its pie chart showing ample diversification across geographies and industries.  Yesterday’s gain established the fund’s first higher low this year so we have high hopes for that technical score to improve along with higher prices.  Quant has called EEM very well and its 9^th place rank today suggests it may be time to dip your toes back in those emerging markets waters.  No offense to the IMF, but their predictions have not been as reliable. 

Regular readers are familiar with Quant’s fondness for energy this year as today’s 1^st place SPDR S&P Oil & Gas Exploration & Production Fund (XOP) has spent almost all of 2013 in the top 10.  It has lagged the S&P 500 but has turned in solid performance.  Two other energy related funds have emerged into the upper ranks and they may even appeal to those who choke on the carbon producing kinds.

News report yesterday said nuclear power companies have applied for permits to Japan’s new regulatory agency as the country is ready to re-embrace the energy source that has powered its economy for decades.  Quant noticed the iShares S&P Global Nuclear Energy Index Fund (NUCL) paid its largest dividend on July 2^nd boosting its yield score up to 100.  Its other fundamental scores are not great averaging in the mid 50s, but its sentiment and technical scores come in a little better in the mid 60s.  It is all good enough to generate a Total Score of 68 and 12^th place with an 8.72 Reward Rating and 5.71 Risk Rating.

Con Edison recently replaced our electric meter with a digital one from Itron which apparently makes it easier for them to generate brownouts on very hot days.  We notice Itron Inc. is the 9^th weighted position in today’s 3^rd place First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID), a smart beta product that adjusts its portfolio quarterly.  This global infrastructure fund reached the double digit ranks for the first time after also paying its largest dividend on June 28^th.  If you want to get your hands on some of that stimulus money, this may be your way as it sports a 97.5 price/cash flow score.  Other fundamental scores are in the 50s with better scores in other categories to generate a total score of 70 and a Reward/Risk spread of 9.42/5.56.  We hope Con Ed spends more money at other companies in the fund, NYC needs a smarter grid.

Bloodshed in the Middle East usually boosts oil prices and it is splashed across our front pages this morning.  Higher oil prices make innovation and alternatives more attractive and both of these global funds should benefit from such a trend as much as XOP.  We try to bring you timely ideas here at ETFG Daily Perspectives and Quant has provided some this morning.  Thanks for checking in.  

If you think a Brit winning Wimbledon is just the latest parallel to 1936, you might be interested in Quant’s top 10 today with 3 gold and silver mining funds.  Our old friend GDX is in 3^rd place followed by the Global X Silver Miners Fund (SIL) in 6^th and the iShares MSCI Global Gold Miners Fund (RING) in 9^th place. The 8^th place SPDR S&P Metals and Mining Fund (XME) tends to trade with that group but a closer look at its tear sheet suggests it is in fact very different.

We first highlighted the comparison of XME to GDX last year on October 23^rd.  A cursory glance shows each devoted to the basic materials sector, accounting for at least 80% of AUM, but half of GDX is headquartered in Canada while XME is almost all US.  Most providers of information on ETFs stop there which may explain why these funds tend to trade similarly; although GDX looks like a 2X version of XME down almost 50% year to date while XME is down almost 25%.  Both have elevated Risk Ratings with GDX showing higher risk with 6.26 Red Diamonds compared to XME’s 5.67, but GDX also gets a higher Reward Rating.  If you think trouble like 1937 lies ahead you may want to stick with those gold funds because XME holds an economically sensitive group of companies.  Only ETFG^sm shows sub industry exposure which reveals less than 20% of the miners in XME are mining precious metals.   Almost 35% are steel miners with another 17% mining coal and consumable fuels and 21% in the diversified metals and mining sub industry.  So you can see that XME is not a bomb shelter fund but could be a good choice if you think earnings and economic numbers will be surprising to the upside in the coming weeks.

Both funds get to the upper ranks on strong Fundamental Scores around 80, bearish sentiment which also scores well, but technical scores below 50 reflecting their poor performance this year.  Momentum players would probably not like either but value investors could like them both.  Bulls should prefer XME while bears may like GDX and those other precious metals mining funds.  We will let you decide as we try to dig out our old Fred Perry sneakers in honor of Andy Murray’s win on Wimbledon’s grass.  Thanks for reading and good luck this week.

For those lucky enough to be at their desks today, Quant remains patriotic with 9 out of the top 10 being US funds with mostly Canadian GDX rounding out the group.  Yesterday’s rally in Europe is not yet reflected in the US based products that Quant scores so we will have to assess that Monday morning along with the reactions to today’s jobs report.

We see some change in the Green Diamond model where PWO has passed the baton to the AdvisorShares TrimTabs Float Shrink Fund (TTFS) which gets the 10 Green Diamond distinction for the second time in 10 days.  Actively managed by Charles Biderman, the fund seeks to outperform the Russell 3000 by selecting an equal weighted portfolio of companies that have reduced their shares outstanding over time.  Secondary screens identify those companies that are doing so as a result of high cash flow and not divestment of assets or balance sheet engineering.  The fund has been a hot performer gaining more than 23% year to date but it still gets a 90.3 Fundamental Score.  It also gets a higher than average 5.24 Red Diamond Risk Rating, so keep an eye on it.

If you are looking for something to do today, put TTFS on your radar screen.  Those who own it are happy they do.  We have plenty to do today and hope the rest of your holiday weekend is a happy one, thanks for checking in.

We’ll keep it short on this shortened trading day where Quant is celebrating America’s Independence Day with the US holding 9 of the top 10 positions.  Not necessarily the broad market funds that have been so dominant this year but more niche and sector funds exposed to the world’s cleanest dirty shirt.

Energy leads with XOP in 1^st place while industrial small cap fund PSCI comes in 4^th.  IYW has technology tied with basic materials at 6^th place where mostly Canadian GDX proves all that’s gold does not glitter.  Basic materials also has industrial metal fund XME at 9^th place this morning.  Smart beta is well represented with PWO in 2^nd place and still getting all 10 Green Diamonds and First Trust sees their small and mid cap AlphaDEX funds, FYC and FNY, getting 9 Green Diamonds in 3^rd and 8^th place.  AdvisorShares has their actively managed Trim Tabs Float Shrink Fund (TTFS) in 5^th place which has become familiar territory for it lately.  And yes, we do have a US broad market large cap fund, OEF tracking the S&P 100, in 10^th place.

We wish you all a happy 4^th of July, safe travels and be careful with the pyrotechnics.  We hope to keep all our fingers intact for another brief post on Friday.  

Recent volatility around the world has exposed some actionable opportunities in the predictive ETFG^sm models.  When we look among Quant’s big movers this morning we see the SPDR DJ Global Dow Fund (DGT) rocketing 116 positions into 7^th place.  Moves like that usually result from a large option trade moving the sentiment score which can prove fleeting but this move results from the more durable Fundamental side.

The essence of our models is their integration of modern behavioral finance with traditional fundamental analysis.  They look at the former through two lenses; the technical scores are based on various relative strength and moving average statistics while the sentiment scores are contrarian views on option activity, short interest and volatility.  DGT does OK on the technical but nothing special at a blended 67.7 and even worse on the sentiment side with a 48.1 reflecting a lack of interest in this fund which has lagged the market this year.  They combine for a Behavioral Score of 57.9 which ranks 369^th out of the 726 funds getting Quant scores today.  However, as it has lagged, DGT has become relatively cheaper which helps its Fundamental Score. 

The four fundamental subcategories show some dispersion with its 64.2 P/E score suggesting valuation is better than most of its life since September 2000 but not spectacularly cheap.  Many of the dominant global brands which populate its constituent list have better looking balance sheets than income statements which we see in its Price/Book Value above 96, matched by its Price/Cash Flow score.  Today’s big move is a result of its largest dividend ever paid yesterday.  This dividend tends to be its highest of the year but yesterdays was the first to exceed the June 2008 dividend generating a yield score of 98.8, compared to yesterday’s 32.3.  The four combine for a Fundamental Score of 88.8 which leads to an 8.98 Green Diamond Reward Rating, its first above 8 since last fall which preceded a period of solid outperformance.

The fund tracks a committee based index with 150 constituents selected for future growth and rebalances to an equal weight every September.  Its pie charts show it covering plenty of bases with about 45% of AUM in the US and all sectors represented.  We hope DGT performs as well as the last time it got 8 Green Diamonds but keep an eye on its higher than average 5.83 Risk Rating.  And thanks for keeping an eye on ETF Global^sm. 

As we prepare to celebrate the birthday of the USA, today we are celebrating the birthday of ETFG^sm. We have actually been around longer but were not yet receiving all the voluminous data to fully run our models.  When European funds were ranking high early in the summer of 2012, we suspected something was wrong but when we got all the data and ran the algorithms on the first day of July, three of them were in the top 10 and several more populated the upper ranks.  They went on to outperform the rest of the world last summer and fall.  Then Quant began to suggests several emerging markets funds for the late fall which also raised doubts but provided stellar returns.  2013 has seen the models favor the US which makes it difficult to outperform the S&P 500 which we hope will continue when we publish our monthly performance reports next week.  We have been highlighting some emerging markets funds in recent days and see several nearing the upper ranks today.

The US still dominates for sure with 7 of today’s top 10 but below those elite ranks we see the WisdomTree Emerging Markets High-Yielding Fund (DEM) jumping 72 positions into 13^th place. China and India are tied at 14^th place with FXI and INXX, and Egypt’s EGPT is in 19^th place.  Vanguard’s Emerging Markets Fund (VWO) is a big mover today gaining 118 positions into 47^th place as it has been bouncing around the ranks for the last couple of weeks with an upward bias.  The Powershares BLDRS Emerging Markets 50 ADR Index Fund (ADRE) has seen a more steady move out of the 200s and up through the top 100 to today’s 34^th place.  Looking through our Quant page and clicking on tickers will bring up other funds devoted to particular emerging markets. 

We welcome the separation from the US market to hopefully pad our performance numbers like we enjoyed last year but are most concerned with continuing to identify the best areas of the world for your equity allocations.  Power to the people is spreading through those emerging markets with the masses demanding better economic conditions; Quant suggests there’s something happening there.  ETF Global^sm is the emerging name in the investment world bringing the power of big data and quantitative analysis to your portfolio management.  We thank you for being part of our inaugural year and promise even more powerful tools and analytics in our second year.