Saturday, March 11, 2017

ETF Global® Portfolio Challenge - Spring 2017 Leaderboard

March 10, 2017 - Three weeks have elapsed in the Spring 2017 ETF Global Portfolio Challenge and our student participants are already locked in a fierce competition. Let’s take a look at some of our top performers thus far…

Spring 2017 ETF Global Portfolio Challenge – Top 10 through 3/9/17

Name
School
Portfolio Return
Dan Dang
St. John Fisher College
19.99%
Catherine St. Clair
St. John Fisher College
17.91%
Edwins Lee
Rutgers University
16.54%
William Ryan
St. John Fisher College
15.53%
Ethan O’Donnell
St. John Fisher College
14.59%
Kolten Rossignoli
Wilfrid Laurier University
14.24%
Phat Huynh
St. John Fisher College
13.57%
Steven Barber
Rochester Institute of Technology
13.33%
Sam Vemisaje
Wilfrid Laurier University
13.28%
Kelsey Michener
St. John Fisher College
13.05%

As illustrated in the table above, our leaders have generated impressive returns within a three-week span. Notably, St. John Fisher College and Wilfrid Laurier University boast multiple students in the top ten - students from Rutgers University and RIT round out our top ten.

Looking under the hood of our leaders’ portfolios reveal a common theme that has underpinned then; bearish bets on precious metals and oil and long positions in natural gas products. Positions in ETPs such as Direxion Daily Junior Gold Miners Index Bear 3X Shares (JDST), ProShares UltraShort Bloomberg Crude Oil (SCO), VelocityShares 3x Inverse Silver ETN (DSLV), and VelocityShares 3x Long Natural Gas ETN (UGAZ) were popular holdings amongst our leaders.

With an impending Federal Reserve rate hike, precious metals, like gold and silver, have lost their appeal as safe haven assets and suffered sharp price declines this week. Additionally, despite OPEC production cuts, American shale producers continue to flood the market. Oil glut concerns resurfaced this week, causing prices to tumble below $50 a barrel as U.S. stock piles swelled to record levels. These developments allowed our leaders to capitalize on their downward movements by contrarian bets in inverse ETPs. Conversely, upward natural gas movements provided a boost to our leaders with long, leveraged exposure to the sector.

While leverage allowed our leaders to generate outsized returns this week, we must stress the inherent dangers of these products. Leveraged ETFs are speculative investment funds that, through the use of derivatives, attempt to deliver multiples of the performance of the index or benchmark they track. Leverage amplifies losses just as it does gains. Leveraged ETFs reset daily, meaning that they are designed to achieve their stated investment objectives on a daily basis. This daily reset feature can cause an ETF's returns over weeks or months to diverge wildly from that of the benchmark, rendering these ETFs highly risky and inadvisable as long-term investment vehicles.

The performance of Kolten Rossignoli, who is currently 6th overall, illustrates that outperformance can be achieved through a well-constructed portfolio that eschews the use of leverage. Kolten’s portfolio is equally weighted, consisting of FDIS, SPY, VBK, and XLF - ETFs that have all benefited from the prospects of fiscal stimulus and regulatory rollback under our new administration.

As you consider re-positioning your portfolio before this week’s rebalance date, we encourage you to review the risk and reward profile of your portfolio, provided to you in your ETFG portfolio tearsheet. We also encourage you to peruse our Select List. Developed by the Research Policy Committee at ETF Global, the ETFG ETF Select List features the 5 most highly-rated ETFs by Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.

If the first three weeks of the performance period is any indication, the Spring 2017 ETF Global® Portfolio Challenge will be deeply competitive and we look forward to continue watching the competition unfold!

Thank you for reading ETF Global Perspectives!

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