With Ride of the Valkyries blaring from loudspeakers, Bill Dudley flew the Fed’s helicopter to its lower Manhattan fortress with the message that investors don’t get it, easy money is here for a long time so get on your surfboards, it’s risk on!  As you paddle out to pick your wave, ETF Global^sm is here with analytics and selections which have been keeping you on the sweetest rides for the last year.  We covered the countries in Quant’s top 100 ranked funds yesterday and will look at the sectors today.

8 energy funds appear on the list with three (OIH, XOP, XLE) in the top 10 giving the sector the highest average Quant Score of 69.9.  Their average Red Diamond Risk Rating comes in barely below 4 but those three are all above that level.  Technology gets 6 funds on the list with IYW and VGT both in the top 10.  The sector scores slightly lower on average Quant Score but with a higher average Green Diamond Reward Rating and a 3.5 average Risk Rating.  Industrials get the next highest average Quant Score within the top 100 at 68.7 and an even lower average Risk Rating of 3.35.  The sector’s highest ranked fund is PSCI in 12th place.  When we did this exercise last month, basic materials was Quant’s favorite sector driven by the gold mining funds, proving even an algorithm as good as ours is going to take some occasional incoming fire.  4 of them are among the sector’s 8 funds on today’s list led by GDX in 16^th place.  The average Quant Score of the 8 is 67.3 with a high average Risk Rating of 6.48. 

Health care has been a strong sector this year but has not been among Quant’s favorites even though 6 ETFs make today’s top 100. Three of them are biotech funds, 22^nd place PBE, 25^th place IBB, and FBT tied at 99^th.  Only 2 financial funds appear today, XLF in 26^th place and IYF in 83^rd.  The consumer sectors have also done well without catching Quant’s affection but 1 of each appear on our list, Vanguard’s Consumer Staples Sector Fund (VDC) tied at 99^th place and the cyclical EGShares Emerging Markets Consumer Fund (ECON) in 33^rd place.  There is one utilities fund, UGEM in 61^st place, but no telecomm funds in today’s top 100.

Today is the last day of our first year and our monthly performance updates will show it to be a propitious one.  ETF Global^sm has brought you quantitative models that have heretofore been the exclusive province of billion dollar hedge funds and we thank you for placing your trust with us.  Please send any questions to support@etfg.com and have a nice weekend.

Calm waters surround Wall Street this morning as equities take solace in a slower economy than previously thought.  In the age of financial repression, bad news is good, even if Bernanke’s rotor blades stir things up sometimes.  Sailing the seas brings plenty of opportunities where bad news is already discounted.  22 foreign funds appear in Quant’s top 100 today, close to last month’s high for the year but still below levels we saw last fall.

Setting our compass to the Far East we see emerging markets rising among the top ranked foreign funds.  Two China funds, GXC and FXI, are in the top 25 at 7^th and 17^th place and India’s INXX holds 9^th place while the SPDR S&P Emerging Asia Pacific Fund (GMF) has climbed up to 22^nd place from 140^th on June 17^th.  Other emerging markets funds appear including ECON, UGEM, EEM, VWO, and ADRE in order of rank ranging from 40^th to 88^th place.  Malaysia and Egypt see EWM and EGPT at 35^th and 85^th place and China also gets PGJ and HAO in the bottom half of the top 100.  Australia’s 83^rd place EWA isn't emerging but is classified as Asia-Pacific and the iShares MSCI All Country Asia ex Japan Index Fund (AAXJ) in 55^th place shows Quant likes Asia but not Japan.

Maybe you are like Chip Starnes and long for the West in which case the three European funds in the group may be appealing.  They are led by Switzerland’s EWL in 24^th place, followed by Italy’s EWI in 67^th and Germany’s EWG at 80^th place today.  Riding the easterlies further west, we see the Market Vectors Latin America Small-Cap Index Fund (LATM) scoring as well as it ever has in 53^rd place after already sustaining a year to date bear market.  Looking at those calm waters this morning we thought we saw a black swan but it turned out to be a Canadian goose.  They like it calm and Quant likes Canada with EWC in 4^th place, CNDA in 17^th and EWCS in 46^th.  There are also a handful of global sector funds which we will cover another day.

The forecast calls for stormy weather so set your bearing and batten down the hatches for the quarter’s end.  We hope those funds provide some ideas for your portfolios aside from the models’ continued US stance.  Thanks for reading; we’ll close out the week, quarter and our first year tomorrow.

Thousands of people are feared dead from the worst Indian monsoon season in decades and more rain is in the forecast.  The benchmark Bombay Sensex Index has held up better than most emerging markets this year, down about 4%, but if you bought it with US dollars it has been much worse as the Indian Rupee has been washed out with the rain.  Quant doesn’t analyze weather or currencies but the EGShares India Infrastructure Fund (INXX) has risen with the flood levels up to today’s 4^th place.  It ranked as low as 213^th place on June 7^th before the rains.

Calling bottoms is tricky and INXX is at the lowest point of its almost three year life as other India funds struggle to hold above their 2012 lows.  Its 57.4 technical score is evenly balanced across the three timeframes but is nothing to get excited about.  Sentiment is better at 68.6 as bears watch the water rise and the Rupee fall.  Global Theme and Quality scores are below 50 which contribute to a higher than average 6.37 Red Diamond Risk Rating so keep a close on eye on this one if you put it in your portfolios.  The reason Quant has highlighted INXX is its 97.2 Fundamental Score with high 90s across all four fundamental categories.  That accounts for half of the Green Diamond Reward Rating which comes in at 9.77, today’s second highest. India’s government knows they need to do more to develop their infrastructure and announced plans yesterday to ease caps on foreign direct investment.

That should help to support the Rupee as companies rush in to help rebuild that infrastructure so their planes, trains and autorickshaws can reach more of the country’s 1.2 billion people.  India’s travel and telecommunications infrastructure was famously inadequate even before the monsoon washed so much of it away and the 30 companies in INXX should benefit from the rebuilding efforts. Our thoughts and prayers go out to the suffering people in India but Quant is a cold, heartless algorithm lacking any such sentiment.  INXX is one of several higher risk names reaching the upper ranks which may suggest a bullish reversal, or it could be these names have just gotten too washed out.  If you think emerging markets are due for a bounce, take a look at INXX but don’t forget to also keep an eye on the Rupee.

A month ago, the talk was all about our low tail risk environment where earnings either improve or Fed liquidity would make up the difference.  Then we began last week by breaking through a month long down-trending resistance line and it looked like the 3.5% correction was about as much as we would see.  We also heard talk then about Boston in 6 and it looked like Tuuka Rask would make it happen in 7 as late as 2 minutes to go last night.  But like a puck contacting Jonathan Toews’ hockey stick, Mr. Market has a way of upsetting the conventional wisdom.  Now equities are back below that resistance line as well as a rising support line from November.  Bruins fans are stunned to watch the Blackhawks hoist the silver in their Garden and we are all looking at the risks we are taking in our portfolios.

ETF Global’s^sm predictive scores and ratings have a proven ability to identify the best performing equity ETFs but our reflective Risk Ratings apply to all exchange traded products.  Appearing under the Analytics button, the ETFG Red Diamond Risk Ratings^sm  page breaks out every product’s full rating into six sub categories.  Volatility and Deviation are both compilations of various industry standard metrics with emphasis on downside deviation.  Country Risk is an example of our Diamond models borrowing from Quant but separating risk from reward.  Structure also borrows from Quant and adds further proprietary data points.  A large diverse fund gets a lower Structure Risk score than a small one that owns futures; swaps are scored even higher and with risk, lower is better.  Liquidity also borrows from Quant addressing trading volume and spreads, and Efficiency looks at tracking error and expense ratios.

We break them out because managers want to emphasize certain risks at certain periods.  Some will want to stitch up their faces like Andrew Shaw and get back on the ice to ride any rebound as far as it can go.  They can sort to see those products with the highest Volatility Risk by double-clicking the header.  Whatever kinds of risk you are managing, the ETFG Red Diamond Risk Ratings^sm give you the information and analytics you need to decide how to play the puck.  Thanks for reading and congratulations to the Chicago Blackhawks for getting some more of their names on Lord Stanley’s Cup.

A new week to open a new season and close out the quarter, we would like to see some change but Quant’s top ranked funds look the same.  Foreign markets also look the same with red across our screens as everything is being sold.  BRICS, MIST, VISTA and BROOMS are all getting swept aside and if you have to hold an equity allocation, the US has been the best place to hide.  Quant’s top ranked funds led on the way up this year and have withstood the selling better than most.  Not only do those funds look the same as last week but they also look similar to the end of the last quarter.  That was before the last leg up and some of those gains have still held.  The relative outperformance could be in a bullish or bearish environment as the current configuration has worked in each.

That configuration sees large caps tracking the S&P 500 (IVV and IVW) and Russell 1000 (IWF) alongside small caps in the Russell 2000 (IWO), three of the four are the growth versions of those benchmarks.  The NASDAQ is represented by our friend PWO holding all 10 Green Diamonds again.  The other 5 members of today’s top 10 include the Canadian broad market EWC, and Vanguard’s VGT and VDE bookending the group with technology and energy at 1^st and 10^th place.  Those sectors are also represented with IYW and OIH holding 3^rd and 4^th place. 

Entering that group of 10 into a Portfolio Tearsheet shows an average Green Diamond Reward Rating of 8.79 and a low average Red Diamond Risk Rating of 3.69 compared to today’s all equity ETF average of 4.52.  Lower Risk Ratings are preferable, especially in times like these.  Not surprisingly, the sector pie charts show more than 34% in technology and 25% in energy with consumer discretionary and healthcare the next highest weights at about 8% each compared to their 12% weights in the broad market.  You can enter up to 12 tickers, at any weights, in the Portfolio Tearsheet function to see how your portfolios look from a bird’s eye view.  It is another way that ETF Global^sm is providing the most powerful tools to manage ETF portfolios in today’s challenging environment.  Your questions have improved our offerings so please keep them coming to support@etfg.com. Thanks for reading and good luck this week.

Traders thought it was the last two days, but today is the year’s longest, happy summer solstice.  Recent volatility forces us to shine some sunlight on our portfolios to see what has held up best.   ETFs are accounting for a larger percentage of market volume and ETF Global^sm has identified the best ones through a few shifts over the past 12 months.  It was Europe last summer and emerging markets in the fall before our predictive models focused on US broad market funds since last December.  Those have been among the best on the way up as well as the correction over the last month and managers using our selections are outperforming their peers.  Our sector selections have been mostly limited to energy and technology and while the former have lagged somewhat, the technology names have mostly outperformed.  No other ETF has dominated our Green Diamond Reward model like the PowerShares Dynamic OTC Portfolio Fund (PWO) which is today’s 10 Green Diamond fund again.

With half of AUM in technology, this smart beta fund makes quarterly selections from the NASDAQ  and our June 12^th post takes you through the various times we have highlighted it.  It got its first 10 Green Diamond rating on January 4^th and has almost doubled the S&P 500’s return since then.  You would be hard pressed to find a time from any of its 51 days atop the Diamond model when it has not outperformed the market.  On many of those days, it dominated the model so much that there were no 9 Green Diamond funds, forcing us to shine some sunlight to make sure we were calculating correctly.  It dominates to a similar extent today as there are only a few 9s which you can see by sorting the ETFG Scanner output by Reward.  A typical distribution would see about a dozen 9s. 

If you have yet to consider a smart beta product, PWO is worth a look.  Check out the ETFG Tear Sheet for it or any exchange traded product and as you shine some sunlight on your equity ETFs, see how they score in Quant and our Green Diamond Reward models.  You won’t be disappointed with their proven selection processes. Please send questions you have on anything you see at ETFG^sm to support@etfg.com, we are here to help.   Have a nice weekend, we have all earned it this week.

No brakes in Bernanke’s racecar, the only question is how hard to press the accelerator and the markets demand pedal to the metal.  The mere mention of easing up for the turns was like throwing marbles on the racecourse and like we suggested yesterday, a glance at our home screen provides an interesting view of the worldwide reactions.

Interesting to us anyway, because our finely honed machines handled the adverse conditions splendidly.  The Geographic Indices show Latin America and Middle East & Africa both down more than 3% while Europe and Asia-Pacific each lost more than 2%.  In that context, the US broad market funds that have been dominating the ranks look like winners losing less than 1.5%.  Under the Sector tab, all 10 were down on the day but the Energy and Info Tech Indices kept their losses to less than 1% and readers know those have been leading the recent sector recommendations of our Quant and Green Diamond Reward models.  The yellow flag must be out because those same funds mostly continue in their positions.

International funds provided accurate price discovery for their markets that had yet to open as overnight trading has largely confirmed yesterday’s moves in the US based ETFs.  Today brings another lap of racing and we will be watching the iShares MSCI Canada and Italy Index Funds (EWC and EWI), the only foreign names in today’s top 10 at 2^nd and 9^th place.  Quant doesn’t make short term calls but both have decent Fundamental Scores and elevated sentiment readings for that extra kick of octane.  Both of our Dynamic indices contain 4 foreign funds which mostly outperformed their peers helping their indices outperform the S&P 500 in yesterday’s smashup.

The ETFG^sm models do not predict market direction, you need other race engineers for that and there are plenty out there.  However, our daily rankings of over 700 equity ETFs have a proven ability to identify the best performers over the intermediate term.  Consider us your pit crew making sure the vehicles you choose are the best on the track.  We may trim an occasional wing too far but ETF Global^sm will shave seconds off your time.