Wednesday, March 30, 2016

Next Wednesday - Spring 2016 ETP Forum - Registration Closing Soon

Spring 2016 ETP Forum-NYC on Wednesday, April 6th at The New York Athletic Club -  Registration will be closing soon!

To register, please visit: Register
For all event information: www.etpforum.org

Featured Speakers:
Chris Romano, Director of Research, ETF Global
Jason Trennert, Managing Partner, Strategas Research Partners
Kevin Kelly, Chief Investment Officer, Recon Capital Partners
Jay Rhame, Portfolio Manager, Reaves Asset Management
Conor Platt, Co-Founder-& CEO, Etho Capital
Andrew Chanin, Chief Executive Officer, PureFunds
Nick Cherney, Head of Exchange Traded Products, Janus Capital Group
Norm Champ, Partner, Kirkland & Ellis
Brad Vopni, Director Capital Markets, Nextshares
Robert Trumbull, Head of Asset Owner ETF Sales, SSgA
John O’Brien, Faculty Advisor, Haas School of Business
Sean O’Meara, ETF Trading, Abel Noser
Matthew Goulet, Vice President, Fidelity SelectCo
Eric Pollochav, Managing Director – ETFs, Charles Schwab & Co
Taylor Lukof, Founder, CEO, ABR Dynamic Funds
Deepika Sharma, MD Research, Astor Investment Management
Joseph Smith, Senior Market Strategist, CLS Investments
A. Seddik Meziani, PhD, Professor of Finance, Montclair State University
Ray Potter, Emerging Market Debt, Stifel
Eric Metz, Chief Investment Officer, SpiderRock Advisors
Steven M. Ivcic, Managing Director Drexel Hamilton
Jay Hatfield, Co-founder and President, Infrastructure Capital Advisors
Karl Snyder, Chief Market Strategist, Garden State Securities
David Perlman, ETF Research, UBS
Sebastian Mercado, ETF Research for the Americas, Deutsche Bank
Michael Jabara, Head of ETF and Closed-End Fund Research, MS WM
Paul Kim, Managing Director - ETF Strategy, Principal Global Investors
Ken Shoji, Founder/Managing Principal, Stissing Lake Advisors
Eric Alexander, Investment Committee Chairman, Emerson College
Anne Ford, Director Client Relations, Gatemore
Jeffry Haber, Controller, The Commonwealth Fund

See you there and thank you for reading ETF Global Perspectives!

ETFG 21 Day Free Trial:  https://www.etfg.com/signup/quick

_____________________________________________________________
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, March 28, 2016

The Dollar and Shifting Expectations

What a difference even a short trading week can make because while Friday’s strong GDP report may have been released to an empty room, it was the perfect way to end a week that saw a major shift in the market’s expectations regarding the Fed and its rate hike plans.  St. Louis Fed President James Bullard joined the chorus of non-voting presidents who obviously read our last posting and are now calling for the FOMC to recognize the improving economic outlook and even consider doing something once thought unthinkable by professional Fed watchers; hiking rates at April’s FOMC gathering despite the lack of a pre-arranged press conference.  As ludicrous as that may sound to people who spend 24/7 trying to predict the Fed, the CME FedWatch Tool shows traders are now forecasting a 12% chance that they hike in April and according to Marketwatch article on March 23rd they were only forecasting 7% in mid-March.

We can already hear you saying “big whoop” but for wary Fed watchers (which should be everyone in this bull market) will note that Bullard’s comments have already started a major adjustment in some parts of the market.  Given how much this rally has depended on hopes of keeping monetary policy nice and easy, we’d be surprised if investors weren’t watching every tick of the PowerShares DB US Dollar Index Bullish Fund (UUP) which continues to find strong support at the $24.60 level and racked up a strong 1.2% gain for the week.  The strengthening dollar might be just one reason why the S&P 500 closed down for the first time after racking up five straight weeks of gains, but more on that later.  Meanwhile, a weak dollar has been the lynchpin behind most of this rally’s biggest winners so if the dollar has been finding its feet then all those unhedged international equity and gold mining funds we’ve talked so much about were the big losers with the Market Vectors Gold Miners Fund (GDX) down almost 5.6% while the iShares MSCI EMU Index was down 2.37% compared to a 2% loss for the broader MSCI EAFE and a mere .87% draw down for the iShares MSCI Japan Fund (EWJ.)

Bringing up the rear performance-wise were those EM and Latin American equity funds with the iShares Latin America 40 ETF (ILF) down 3.3% for the week while the iShares MSCI Brazil Capped ETF (EWZ) was off 4.18% although mostly on political and economic issues with its hedged counterpart, DBBR, down 4.04%.  Normally, with a strengthening dollar and serious losses after a strong run-up you’d expect to see ILF and EWZ headlining a list of “biggest behavioral losers” on our ETFG Quant Movers Report but instead you’ll find both funds and seven other EM or commodity dependent economies on our Behavioral Top 25 list with EWZ still the top ranked behavioral scorer while ILF currently sites at #16.  While ILF’s behavioral score did shift lower over the last four trade days, EWZ’s score continues to skyrocket thanks to high short interest and incredibly high implied volatility which is something it has in common with nearly every other country or EM fund on that list.

Breaking down the “Why,” both the iShares MSCI Australia ETF (EWA) and the iShares MSCI All Peru Capped ETF (EPU) reported positive in-flows and given their less-than-stellar returns last week it’s probably safe to assume that traders are gearing up for more gains by Uncle Buck and thus more pain for the short dollar crowd.  We’ve talked before about using the Behavioral List as a contrarian indicator but in the current situation with the Fed it’s hard to tell who’s playing with fire this time and like everything else in this market, it all depends on what shakes out with the next FOMC gathering in April.  Doubting the Fed’s willpower when it comes to hiking rates has been a pretty sound strategy over the last few years but if April’s meeting comes and goes without a hike or even substantial change in the released statement, those going long the dollar could suddenly find themselves on the wrong side of the trade.  Then again, if the economy stays strong then time is likely on the side of the dollar bulls and whether rates rise now or later is only going to be relevant to the very nimble trader although some are already looking for the exits for other reasons.

Our chartist friends will be quick to point out that with Thursday’s close, the S&P 500 has now formed a lovely descending channel and that if the rally is going to live on, the market needs to close above 2040 this week.  The only problem with that is that although we haven’t approached last fall’s levels, most sectors are trading close to (or above) their October highs, so a strong close above these levels to break out of the channel might be a bridge too far for investors who were glad to make back some losses and move on.  The obvious losers who are in the still in the red include financials, energy, consumer discretionary and health care names which represent a fairly significant chunk of the market.  The catalyst for a move one way or another will be a series of speeches by Fed officials this week including Janet Yellen on Tuesday, so be prepared for more shifts in the road ahead.

Thank you for reading ETF Global Perspectives!

ETFG 21 Day Free Trialhttps://www.etfg.com/signup/quick

_____________________________________________________________
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.

Wednesday, March 23, 2016

Registration Closing soon - Spring 2016 ETP Forum NYC - 4/6/16

Here is the list of Confirmed Speakers for the upcoming Spring 2016 ETP Forum-NYC on Wednesday, April 6th at The New York Athletic Club!  ETFG will again Chair this terrific event which will feature another all-star lineup.

To register, please visit here: Register
For more information, please visit www.etpforum.org

Featured Speakers

Chris Romano, Director of Research, ETF Global
Jason Trennert, Managing Partner, Strategas Research Partners
Kevin Kelly, Chief Investment Officer, Recon Capital Partners
Jay Rhame, Portfolio Manager, Reaves Asset Management
Conor Platt, Co-Founder-& CEO, Etho Capital
Andrew Chanin, Chief Executive Officer, PureFunds
Nick Cherney, Head of Exchange Traded Products, Janus Capital Group
Norm Champ, Partner, Kirkland & Ellis
Brad Vopni, Director Capital Markets, Nextshares
Robert Trumbull, Head of Asset Owner ETF Sales, State Street Global Advisors
John O’Brien, Faculty Advisor, Master’s in Financial Engineering, Haas School of Business
Sean O’Meara, ETF Trading, Abel Noser
Matthew Goulet, Vice President, Fidelity SelectCo
Erick Pollochav, Managing Director – ETFs, Charles Schwab & Co
Taylor Lukof, Founder, CEO, ABR Dynamic Funds
Deepika Sharma, Portfolio Manager, Astor Investment Management
Joseph Smith, Senior Market Strategist, CLS Investments
A. Seddik Meziani, PhD, Professor of Finance, Montclair State University
Ray Potter, Emerging Market Debt, Stifel
Eric Metz, Chief Investment Officer, SpiderRock Advisors
Steven M. Ivcic, Managing Director Drexel Hamilton
Karl Snyder, Chief Market Strategist, Garden State Securities
David Perlman, ETF Research, UBS
Sebastian Mercado, ETF Research for the Americas, Deutsche Bank
Michael Jabara, Head of ETF and Closed-End Fund Research, Morgan Stanley WM
Ken Shoji, Founder/Managing Principal, Stissing Lake Advisors
Eric Alexander, Investment Committee Chairman, Emerson College Board of Trustees
Anne Ford, Director Client Relations, Gatemore
Jeffry Haber, Controller, The Commonwealth Fund

See you there and thank you for reading ETF Global Perspectives!

ETFG 21 Day Free Trialhttps://www.etfg.com/signup/quick

_____________________________________________________________
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, March 22, 2016

New-to-Market: ETHO

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 the most cutting-edge investment strategies that have recently embraced the ETF structure – we hope you enjoy this special series of posts.

When was the last time you thought of the word “innovative” when thinking about America’s once great manufacturing hubs in the rust-belt?  If you said “almost never,” you’re not alone but that image of slow decay is being erased thanks to the presence of strong academic institutions that help foster new growth.  Albany, NY may have become a center for nanotechnology and Buffalo, NY a hub for biomedical research, but America’s “Steel City” of Pittsburgh, PA is staking a claim to be at the forefront of financial innovation thanks to Carnegie Mellon University.  For the latest in our series of “New-to-Market” reviews, we feature the Etho Climate Leadership U.S. ETF (ETHO) from Etho Capital.  Solar power will probably never take off in rainy Pittsburgh, but the latest evolution of socially responsible investing for ETF investors isn’t about building a better solar or utility fund, but about bringing the same spirit of responsible growth from the fringes to the heart of your portfolio.

We know that when you hear terms like climate change and socially responsible investing (SRI), your eyes begin to glaze over but before you look for the exit signs, consider how far both “impact investing” concepts have come before you write ETHO off as just another solar fund.  SRI is hardly a new innovation and despite the fact that for many investors it conjures up images of Bernie Sanders and over-priced asparagus water at Whole Foods, even its most fervent adherents couldn’t have imagined how quickly investors would have warmed to it.  While most of us over the last few years have become obsessed with the Fed and macroeconomics, SRI has grown from a just a handful of early adopters and institutional investors to over $6.5 trillion in assets according to the most recent report from Forum for Sustainable and Responsible Investing!  Putting that into perspective, $6.5 trillion would mean that nearly 18% of the $36 trillion in managed assets tracked by Cerulli Associates are invested in accordance within the principles of SRI, a 13.1% compounded growth rate since 1995!

At some point you may have wondered just what exactly defines SRI and how climate change funds fit within that definition?  The concept of SRI has evolved from a core concept of avoiding certain industries and practices into an expansive umbrella for a broad variety of investment philosophies that focus on using environmental, social and governance (ESG) factors to help develop a sustainable strategy. In fact, the concept of sustainable investing has grown to the point where Morningstar, recognizing just how much money is at stake, has begun making ESG scores available to interested investors.  And while SRI, thanks to eliminating whole sectors like energy and defense stocks, has long been held to have a detrimental impact on portfolio performance, the results seem to favor the granola crunchers with the longest running SRI index, the MSCI KLD 400 Social Index, running neck and neck with the S&P 500 TR Index.  Over the last three years ending February 29th, the index was up 10.68% compared to 10.75% for the S&P and up 10.09% compared to 10.13% for the market over the last five years.

While socially responsible investing has only grown in popularity over the years, ETFs espousing the same philosophy have struggled to find a place in investor portfolios.  The first funds to appear on the scene were largely focused on climate change with the PowerShares WilderHill Clean Energy Portfolio (PBW) being the first to appear in 2005.  At first glance, buying into a climate change fund would seem like a no-brainer because after all, when was the last time you heard a presidential candidate talk about opening new coal fired power plants?  Leaders across the globe have long since decided the costs of switching to renewable energy will be a fraction of the potential economic disaster of further climate change and just since 2010 coal has gone from generating 44% of America’s electricity to around 30% while the contribution from renewable resources has gone from less than 5% to nearly 10% according to a July 2015 report from the U.S. Energy Information Administration.  Yet where some see progress, many see an industry that couldn’t survive without government incentives or mandated use while the increasing affordability of solar panels has driven profit margins to low levels.  All of this hasn’t helped make a strong case for investing in climate change or clean energy funds where it hasn’t been a fantastic experience.

PBW was just the first in a series of clean energy ETFs which share a number of common elements that have limited their use in a portfolio while simultaneously making investors regret ever investing in the space.  PBW along with the iShares Global Clean Energy ETF (ICLN) and a host of solar energy funds are all highly concentrated portfolios that share large cross-holdings in a handful of micro and small-cap names that populate the space, resulting in portfolios with an average market cap just over a $1 billion and a strong international focus leading to lower correlations with domestic equities (but are highly correlated to each other) and higher volatility.  So while potentially useful for macro traders looking to play a “theme,” clean energy funds just by the nature of their construction have only a very limited role in most portfolios and it shows.  By the end of 2015, PBW’s ten-year annualized return was -10.49% compared to a 7.31% gain for the S&P 500 - so no wonder Morningstar still puts “clean energy” funds into their “miscellaneous” category.

ETHO and a handful of other new funds including SPDR S&P 500 Fossil Fuel Free ETF (SPYX) and the iShares MSCI ACWI Low Carbon Target ETF (CRBN) are hoping to change that by using an emphasis on climate change to help bring the principles of SRI to a broader universe of stocks.  ETHO’s focus is on investing in companies who are “carbon leaders,” that is, organizations whose total greenhouse gas emissions from the entirety of their business operations (sourcing through final sales), divided by their market capitalization are at least 50% lower than the average for their industry.  Sorting out carbon footprints sounds like a herculean task which is why the index provider uses third-party source Trucost PLC to help simplify the process.  Using a 50% rule might seem arbitrary, but it helps keep the fund from having too narrow of a focus, say only large banks located next to hydroelectric dams, and helps provide a more balanced portfolio although the fund’s prospectus does point out the risk that the portfolio may have high sector concentrations depending on how their screening process shakes out from any one year to the next.

And how large is their universe of potential stocks from which to choose?  Unlike SPYX or CRBN, ETHO doesn’t have a well-defined reference benchmark so essentially the entirety of the U.S. stock market with a market cap above $100 million is open to them with the exception of several sectors consistent with socially responsible investing including: energy, defense contractors, tobacco and gold and silver miners.  Reconstituted annually each November and before they can implement that 50% rule, they first need to determine industry averages and since averages are “touchy” things, they do it twice.  The first pass will result in companies with larger greenhouse gas emissions dragging the average higher so the index provider will start by reviewing greenhouse emissions for a universe of approximately 5,000 names, calculating the industry averages and then eliminating any company whose carbon impact is more than 10x the average before recalculating again.

Only once that has happened can they screen out a select list based on the carbon footprint to average market cap ratio to find those who meet their 50% rule.  They will also eliminate the companies with the five largest greenhouse gas emissions regardless of industry before reviewing the survivors for known ESG issues and then whittling the list down further through an even more exhaustive review by outside groups of NGOs, academics and other professionals to determine whether any of the companies that made the short list have any outstanding ESG issues that aren’t easily quantified or captured by their process.  While all that may sound expensive, the fund’s expense ratio is .45%, which is above the .2% charged by CRBN and SPYX but remains significantly below that charged by dedicated solar funds such as the Guggenheim Solar ETF (TAN) or PBW.

If you’re thinking that a process that involved should produce a short list of banks and tech names, think again as their prospectus states that somewhere between 400 and 430 names should make the final cut each year with industrial names currently holding down the largest spot in the portfolio compared to financials for CRBN and tech stocks for SPYX.  Once that final list of names for the portfolio is determined, they will use an equally-weighted system to produce a portfolio that should have more of a mid-cap feel compared to broad market index funds.  Currently ETHO’s portfolio runs the gamut from micro-cap stocks where the smallest company in the fund is Fuelcell Energy Inc (FCEL) with a market cap of approximately $165 million and a .1% allocation to those mega-cap names like Apple who is the reigning giant in the line-up although that equally weighted allocation means it only takes up .36%.  In fact, those industrial names along with a domestic focus have helped the fund slightly outperform not only the rest of the mid-cap growth space in 2016 with ETHO up .24% through March 18th compared to a 3.22% loss for the iShares Morningstar Mid-Cap Growth ETF (JKH) but its socially responsible peers with a .45% loss for SPYX and a 1.03% loss for CRBN.

So if socially responsible investing makes you think about the Grateful Dead, Vermont and underperforming solar stocks, it might be time to expand your horizons and consider putting ETHO on your watch list.

Thank you for reading 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.

Monday, March 21, 2016

Gas on the Fire

Another layer of snow for the Eastern Seaboard on the official start date of spring means that Mother Nature, like the FOMC, is now also in danger of running behind the curve.  Most Fed watchers will tell you that Janet Yellen and the rest of the FOMC are walking a fine line right now, fearful of keeping monetary policy overly accommodative and further skewing attitudes towards risk while simultaneously trying to avoid raising rates too precipitously and sending the economy on a downward spiral.  And we get that being “data dependent” means the Fed will always run the risk of being late to the party but we’re starting to wonder if the Fed is concerned about tightening too quickly and repeating the economic relapse of 1937 that it’s clouding how they view the present.

While economic output remains below the pre-Lehman levels, fuel prices have begun to stabilize and a falling dollar is boosting commodity prices, which along with the recent news that core CPI is running at well over 2% would seem to indicate that inflation is above the Fed’s target or at least that headline CPI will be above 2% in the not-so-distant future.  All of which makes the latest dot plot from the FOMC further undercutting their rate hike plans for 2016 a real head scratcher unless the specific goal is to put more downward pressure on the dollar and thus boost the prospects for even more inflation.  Whatever the reason, the markets loved the dovish outlook but comparing some of the best performing funds last week to our latest ETFG Quant Movers Report and our list of Behavioral Top Performers, we’re wondering if everyone was a little too quick to throw in with the Fed.

At the risk of oversimplifying our situation (even more than we already have) into a simple binomial, the Fed ultimately will either be right or wrong about holding off on raising rates at their most recent gathering, but given the fortunes lost in the last seven years by betting against their willingness to keep rates low, it would stand to reason that investors would embrace the new dot plot and our biggest quant movers last week would be beneficiaries of the Fed’s recently adjusted outlook.  The PowerShares DB US Dollar Index Bullish Fund (UUP) was hit hard by the plan to scale back the anticipated rate hikes and is now back to last October’s lows but despite that loss you won’t find some of the year hottest performers like the Market Vectors Gold Miners ETF (GDX) on our list of biggest movers despite notching a strong 3.15% gain for the week.

In fact, take it as a sign of how far the emerging market and natural resources rally has already come that only one commodity fund, the Global X Copper Miners ETF (COPX), made Friday’s list of top behavioral movers while only country fund directly tied to the commodity complex, the iShares MSCI Chile Capped ETF (ECH), made the weekly list after underperforming most Latin American ETF’s over the last month.  The “why” is fairly straightforward; we’ve talked before about using the top behavioral scorers as a sort of contrarian indicator and most Latin American funds or any fund offering exposure to materials and mining names or countries that depend heavily on natural resources (and offer negative dollar exposure like Australia or Canada) are already in the Behavioral Top 100.  There’s no denying that the funds making up the top 100 have been some of the primary beneficiaries of the Fed’s actions with ILF or the iShares MSCI Emerging Markets ETF (EEM) having gone from being oversold to overbought in just two months and were already showing signs of flagging before last Wednesday’s announcement as their prices encounter their still declining moving averages.

But if many ways all the Fed did on Wednesday was to breathe a little life back into a slowly ebbing fire into some EM funds, their actions were more like pouring gasoline onto a pile of oily rags in the China A-share market where the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (ASHR) kicked its own rally into higher gear with a 6.84% advance last week.  Most were quick to believe that the rally in China was ignited by comments made by Chinese Premier Li Keqiang at the National People’s Conference on the need to continue economic reforms while at the same time arguing the government still has the firepower to ensure GDP growth above 6.5% but we’re not so sure that it’s just a coincidence.

It’s no secret that Chinese reserves have been under pressure for years with some of the most bearish investors debating whether the government has already passed the point of no return while Moody’s recently downgraded their outlook on Chinese debt.  Given that nearly every hedge fund manager thinks the Yuan will continue to lose ground, it stands to reason that anything that simultaneously reduces the allure of the U.S. dollar to Chinese investors and eases the burden on the PBoC is welcome news to the China bulls.  And looking to kill two birds with one stone, the biggest behavioral gainers for the week were EM funds that offer both heavy China and Latin American exposure with the PowerShares S&P Emerging Markets High Beta Portfolio (EEHB) and Guggenheim BRIC ETF (EEB) seeing their behavioral scores surge last week while the other side of the column was populated with Japanese funds hit by a surging Yen.

In fact, the only outlier in our Quant Movers report seemingly not affected by dollar woes is the healthcare sector where the spillover from Valeant Pharmaceuticals 61% drop last week continues to afflict investor sentiment and sent investors scurrying for the exits.  The pullback in pharmaceutical names has been so intense that even broad-based funds like the iShares Healthcare ETF (IYH) saw a 34% pullback in its behavioral score last week while no domestic healthcare funds make the Behavioral Top 100.  That alone might make it tempting to offer a contrarian argument in favor of healthcare stocks given that the sector still makes up more than 14% of the value of the S&P 500 and could be a good “tag-along” bet if equity sentiment continues to improve, but if there’s one lesson to be learned from the fallout in energy names, it’s that cheap stocks can always get cheaper.  Sometimes, there’s something to be said for sticking with the herd.

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, March 14, 2016

Super Mario to Save the Day

The bulls had another reason to say “thank God, it’s Friday” as the latest stock rally celebrated its one month anniversary by sending the S&P 500 up 1.6% on the day and taking the one-month return to over 10.8%!  They even pushed the market over its 200 day moving average for the first time in 2016!  Yes, the market is firing on all cylinders and we have “Super Mario” to thank yet again.  After a sideways Thursday, it turned out traders just needed a full day to digest Mario Draghi’s and the ECB’s latest “final” plan to help jumpstart lending and provide financial salvation to Europe so after trying to wrap their heads around the ECB’s conflicting statements and who stands to win from TLTRO II, they decided to just go with their gut and buy-buy-buy.  And while it’s safe to assume that hedged international equity funds were the obvious losers on Friday, our ETFG Quant Movers Report shows that one of the market’s largest sectors has finally decided to get into the game and was just what the doctor ordered to keep the rally alive for another week.

Traders weren’t the only ones who needed a full-day to pick apart the details in Mario Draghi’s latest plan to save the EU but even we could figure out that the biggest winners were going to be those EU banks that have felt their net-interest-margins being squeezed on both ends and ultimately the funds that hold them.  Two of the biggest winners on Friday were the iShares MSCI Germany ETF (EWG) and the iShares MSCI EMU Index ETF (EZU), whose behavioral scores rose 40% and 44% respectively thanks to their large exposure to European financial institutions which, along with unhedged currency exposure, have been holding back both funds since the start of February’s rally.  Despite the idea of “cheap-money” behind the first TLTRO program, lending has remained anemic in Europe while the ECB’s policy of negative rates on large deposits and excess reserves led investors to rightly conclude that with profits being squeezed to the bone, the very survival of the European banking system was in doubt (not to mention that TLTRO I actually was supposed to be repaid in the immediate future.)  The fallout was intense with some of the Union’s largest and more strained banks feeling the pinch with Deutsche Bank dropping over 50% before stabilizing in February.

Fortunately TLTRO II is seen as being much more open-ended than its predecessor and allows for effectively rolling over any TLTRO I funds still outstanding and all EU banks need to do to cut the interest rates they pay into negative territory is to either slightly increase their lending or in the case of some banks, simply slow the rate of their loan contraction.  All in all, it was a pretty huge win for the banking sector (and an equally big acknowledgement that negative rates haven’t worked) that sent DB soaring up over 7% on the day while here at home one of the biggest winners was the iShares MSCI Europe Financials ETF (EUFN), up over 4.5% on Friday despite not having DB in its portfolio.  If you’re wondering why EUFN wasn’t on our short-list for biggest movers, the fund’s behavioral score experienced a slip dip at the start of the week while short interest and the put-call ratio remain relatively subdued.  U.S. financials were also feeling the love as Draghi’s intention to put a floor into the negative rate environment was seen as capping just how low the Euro can go and thus freeing Janet Yellen’s hand in raising rates here at home and giving American banks the reassurance that rates will likely rise again in the near future although the strong action in bank stocks wasn’t what put the market over the top.

What really helped domestic equities over the finish line on Friday was strong participation by healthcare stocks that have largely sat this rally out with the Healthcare Select Sector SPDR (XLV) coming in third-to-last with the fund up 7.9% compared to 15.29% for the Energy Sector Select SPDR (XLE).  It’s easy to understand why investors have been so adverse to the sector; the fallout in biotechnology and pharmaceutical names, especially Valeant Pharmaceuticals, is still fresh in our minds not to mention how much upside can be left after the sector lead the market higher for five straight years.  But Friday’s biggest mover in the healthcare sector was the iShares U.S. Medical Devices ETF (IHI) with a nearly 70% increase in its behavioral score driven in no small part by a nearly 10% allocation to Abbot Laboratories (ABT.) However, now that even healthcare stocks have started to rally, we can’t help but wonder if we’re near the end of this bull cycle for U.S. equities before we could return to the old highs.

It seems hard to believe, but at this time last month investors were demanding that the Fed abandon its plan to continue hiking rates in 2016 and instead were speculating on when they might need to announce another QE program, sending Treasuries spiraling to their 2011 lows while investors rekindled their love affair with gold.  Fast forward to the present and investors have begun returning to equity funds with nearly $4.6 billion flowing back after nine weeks of outflows according to Lipper.  But consider how far we’ve come in the last month; nearly 90% of S&P 500 components are back above their 50 day moving average with nearly 55% above their 200 day!  We know that sounds unimpressive but considering that a month ago less than 20% of stocks were above their 200 and just 10% above their 50, not to mention these are the same levels where stocks stalled out in October, there needs to be more than a sentiment shift to move this rally higher.

So while the consensus among forecasters is that Fed will hold its fire in March, it now seems the best that the Doves can hope for in the near future is language recognizing that the global economic environment remains weak and that the Fed will need to remain “data dependent” going forward.  But with earnings growth negative and subsequently both prices and multiples back to recent highs, we can’t help but wonder if the six week bull cycle we witnessed last October will repeat itself yet again?

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, March 7, 2016

Déjà Vu All Over Again

Diligent chart watchers are surely starting to develop a serious case of what the great Yogi Berra would’ve referred to as “déjà vu, all over again.”  Raise your hands if this seems familiar to you; after a pullback of somewhere around 10%, the S&P 500 finds support and begins a six to seven week rally where it seems each week the market closes at its high while the low is only just below the prior week’s close?  It should seem familiar because it’s happened twice now in the last two years, first following the “Taper Tantrum” of 2014 then again last September in the build-up to the first rate hike.  Like some distant moon, the market seems to be tidally locked into an unchanging pattern thanks to Janet Yellen’s policy of “data dependency” as it digests major economic releases approaching a major FOMC meeting, looking for clues to whether tighter monetary policy will continue.  Last Friday’s employment report was no exception and from slight changes in our Quant Report, we can’t help but wonder if the market will be stuck repeating this same pattern for a third time.

Given the origins of this rally which has pushed the S&P 500 not just back above its 50 day moving average but within just 24 points of the 200 day, it wasn’t much of a shocker that our list of Behavioral Gainers is dominated by “johnny-come-lately” emerging market equity funds that so far have been overlooked by investors.  The market didn’t begin to find its legs until approximately the same time as the Citi Economic Surprise Index dropped to within a few points of its 2015 lows while economists debated whether the Fed might have to abort its plan for hiking rates.  So in that “bad news is good news environment”, no one suffered from shifting expectations as much as the PowerShares DB US Dollar Index Bullish Fund (UUP) with close to $300 million, or 26.2% of the fund’s assets, leaving in the last three months.  And while the iShares MSCI Emerging Markets Fund (EEM) has benefited strongly from the dollar’s rout, the biggest winners are those Latin American ETFs that we discussed on January 25th just before the rally began in “Just More Pillow Talk” with three of the top ten behavioral scorers coming from that category while a host of other EM markets help round out the list.  So again, it’s no wonder that the tiny KraneShares FTSE Emerging Markets Plus ETF (KEMP) saw a 175% increase in its behavior score while the iShares India 50 ETF (INDY) and the iShares MSCI Emerging Markets Minimum Volatility ETF (EEMV) were also big movers on the week, but are investors just playing the old game of “buy high, sell low?”

Economic forecasting is a tough gig but the recent improvement in expectations is undeniable and Friday’s employment report was just the icing on the cake as the Citi Economic Surprise Index has gone from a score approaching -60 at the start of February to almost positive territory on Friday with the question on everyone’s mind being how does that play out in the heads of the FOMC?  Most commentators will point out that the current make-up of voting members still has a Dovish leaning with the big concern over whether the transmission of expectations from Wall Street to Main Street could be derailing the recovery.  It’s easy to make a case for the Fed choosing a “wait and see” approach at their gathering next but the more important question is whether the Fed can continue to stall if the economic situation doesn’t reverse itself in the near future.  With stabilizing oil prices, rising personal income and spending, rising employment and with the year-over-year change in core CPI above the 2% rate not to mention that the headline unemployment rate is perilously close to the 4.7% lower boundary the Fed pegged in their last dot-plot, it’s becoming hard to see how a supposedly data-dependent body could not continue hiking rates later this year.  Putting it all together, it could mean a serious reassessment of equity risk and a return to the stronger dollar that followed both of the last rallies.

But emerging market funds aren’t the only ones that have benefited from a weakening dollar and investors in another of 2016’s biggest winners are already taking profits and moving on.  The Employment report didn’t do much to dent the iShares MSCI Brazil Fund’s (EWZ) upward momentum as it closed the day up 5.27% but even that was just a drop in the YTD bucket.  In fact, EWZ has gone from being oversold on January 21st to being overbought on March 4th while not only moving to the top of the ETFG Behavioral Score List but also racking up a 44.2% gain in the process!  Now contrast that with the recent performance of the Market Vectors Gold Miners Fund (GDX), up over 52.6% in that same period and which started Friday with a strong gain only to see it erode throughout the day into a slight loss which is becoming all too familiar as the fund has seen its momentum ebb since mid-February.  Gold bugs will argue that any pullback in the miners is a temporary setback (don’t they always?) as further easing by the Fed is inevitable, but if the simplest answer is the correct one, it’s more likely that the recent improvement in economic data is likely to boost rates and lend further support to the dollar.  If that does prove to be true, then the weakness in the highly volatile miners was just the canary in the coal mine.

But to continue quoting that great man, “it ain’t over, till it’s over” and with a light schedule for the week, the market should find little to dent its upwards march besides a speech by Fed Vice-Chair Stanley Fischer on Monday afternoon.  A push higher would continue that well-established cycle we seemed doomed to repeat as the last two rallies both entered their 4th week around 2030 and proceed to march higher.  But there the narrative in our story begins to change because in 2014, the S&P pushed its way to a new high while in 2015 the market stalled out just beneath that level after losing steam as it passed beyond the 50 week moving average which currently sits at 2034.  Will this time be different or is it really just déjà vu all over again?

Thank you for reading 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.

Tuesday, March 1, 2016

Registration now Open - Spring 2016 ETP Forum-NYC on 4/6/16

Registration is now open for the Spring 2016 ETP Forum–NYC on Wednesday, April 6th - please join us!

Register here:  http://etpforum.org/etp-forum/registration
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ETF Global will again Chair the upcoming Spring 2016 ETP Forum–NYC on Wednesday, April 6th at The New York Athletic Club!  This one day symposium convenes some of the most widely recognized experts in Exchange-Traded-Funds and the brightest minds in Capital Management.  The ETP Forum features renowned speakers addressing cutting-edge topics within a vibrant and intimate learning atmosphere.  Video footage from the most recent ETP Forum is available on Expert Series TV at Expert Series TV

All information will be available on the event site at www.etpforum.org 

We look forward to seeing you there and thank you for reading 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.