ETF in Focus

Submitted by ETF Digest Admin on 06-25-2015

Chicago, Ill. (June 25, 2015) — Hull Tactical Asset Allocation, LLC (“HTAA”), announces the launch of the Hull Tactical US ETF (“HTUS”), an actively managed exchange traded fund (“ETF”) designed by industry veteran Blair Hull. The ETF is designed to deliver hedge fund-type management and trading tactics to a broad investor audience.


Working in partnership with Exchange Traded Concepts, LLC, the white-label ETF issuer platform, the team at HTAA believes that the Hull Tactical US ETF will be attractive as the market for institutional-quality equity products continues to grow.


HTUS is constructed to perform under all market conditions, with an investment objective of long-term capital appreciation, guided by the firm’s proprietary, patent-pending, quantitative trading model. The model selects indicators that HTAA believes can best forecast the next six months of return of the S&P 500. It takes long or short positions in ETFs, leveraged ETFs or other securities that seek to track the performance of the S&P 500 based on the model with the remaining assets in the portfolio being held in cash.


“Investing in the S&P 500 can be an uncertain game, but a disciplined and systematic approach can help you to outperform on a risk-adjusted basis,” says Blair Hull, Founder of Hull Tactical Asset Allocation. “Our aim is to help investors avoid another 2008 in their portfolios, with a strategy not available in ETF form until now. We want to provide investors access to hedge fund-like investing. Investors need a strategy to gain lower volatility exposure to the equity market, especially in today’s volatile environment, and we believe HTUS delivers just that.”


Based on trading models that are proprietary to HTAA, HTUS is a new and differentiated product. As an alternative ETF strategy, HTUS is expected to be seen as a complement to an

 

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Submitted by ProShares on 06-25-2015

6-25-2015 1-28-15 PMBETHESDA, Md. – June 25, 2015 – ProShares, a premier provider of alternative ETFs, today announced the launch of two currency hedged equity ETFs: ProShares Hedged FTSE Europe ETF (HGEU) and ProShares Hedged FTSE Japan ETF (HGJP). Both are listed on NYSE Arca.

“Investors have poured billions of dollars into currency hedged ETFs to gain exposure to foreign equities while being hedged against local currency risk,” said Michael L. Sapir, cofounder and CEO of ProShare Advisors LLC, the advisor to ProShares. “With this launch today, investors who desire the benefits of currency hedged ETFs now have the option of obtaining them at a substantially lower cost than similar ETFs in the market.”

Investors had more than $47 billion in assets invested in currency hedged ETFs as of March 31, 2015. The asset-weighted average expense ratio for currency hedged European equity ETFs was 0.56% and for currency hedged Japanese ETFs was 0.47%. Expense ratios for HGEU and HGJP are 0.27% and 0.23%, respectively.

"With the strong demand for products that include built-in hedges, we are pleased to work with ProShares to offer the first currency hedged versions of our popular Europe and Japan equity indexes for U.S.-listed ETFs,” said Ron Bundy, CEO North America benchmarks for FTSE Russell.

About the Indexes

HGEU is designed to match the performance of the FTSE Developed Europe 100% Hedged to USD Index, a free-float-adjusted and market-cap-weighted index comprising large- and mid-cap European stocks. The index hedges against fluctuations between the value of the U.S. dollar and the currencies in which the stocks are denominated. Currencies represented include the euro, Swiss franc, British pound, Danish krone, Swedish krona and Norwegian krone.

HGJP is designed to match the performance of the FTSE Japan 100% Hedged to USD Index, a free-float-adjusted and market-cap-weighted index comprising Japanese large- and mid-cap stocks. The index hedges against fluctuations between the value of the U.S. dollar and the Japanese yen.

As is typical for similar ETFs, HGEU and HGJP will use currency forwards to hedge foreign currency exposure. The currency hedges will be reset on a monthly basis.

About ProShares

ProShares offers the nation's largest lineup of alternative ETFs. We help investors to go beyond the limitations of conventional investing and face today's market challenges. ProShares helps investors build better portfolios by providing access to alternative investments delivered with the liquidity, transparency and cost effectiveness of ETFs. Our wide array of alternative ETFs can help you reduce volatility, manage risk and enhance returns.

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Submitted by Dave Fry on 04-06-2015

4-6-2015 12-23-14 PM Metals

It seems timely to review the metals markets in the context of future market action since most precious metals have been, with the exception of silver, struggling in dollar terms thus far in 2015.

In non-dollar terms results have been better given the rise in the dollar over the past six months. Much of this struggle is linked to the possible increase in US interest rates. As US interest rates rise it puts pressure on commodity markets in general; gold, in particular.4-6-2015 2-48-05 PM Gold weekly4-6-2015 2-49-45 PM Gold Monthly

 

ETF Securities has focused almost exclusively on precious metals ETFs over the past six years. These include a variety of ETFs including: SIVR (Physical Silver ETF), GLTR (Physical Precious Metals Basket Shares), PALL (Palladium Physical Palladium Shares), and PPLT (Physical Platinum Shares). Other issues include Swiss and Asian Gold Shares SGOL & AGOL.

According to Mike McGlone, Head of Research US, one interesting assumption investors have made is US interest rates will rise propelling the dollar higher given its superior economic behavior against other currencies. This may have changed abruptly given last Friday’s much weaker Employment Report which no doubt will challenge this popular consensus view. In fact, prior to this report, the correlation between Fed Fund futures and gold is near the highest level ever at 80% on weekly basis.

4-6-2015 12-04-34 PM Gold

 

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Submitted by Dave Fry on 03-27-2015

3-26-2015 7-34-30 PM Muni

Whether yields are 2% or 7% investors will continue to buy municipal bonds.

Institutional buyers include banks and casualty insurance companies among others and do so dependent on their tax brackets.

This steady buying wasn’t lost on ETF where sponsors have created products.

One major hurdle has been creating indexes which can be dynamic enough for the ETF to track. Because pricing mechanisms for some municipals can be difficult, especially if some issues are small and may not trade daily, investors must trust that prices reasonably reflect reality. This inefficiency can lead to drift from published NAV or premiums and discounts. Absent other considerations, discounts should be purchased.

 

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Submitted by Dave Fry on 03-17-2015

3-17-2015 1-58-32 AM BW

My recommendation with new ETF products you may find attractive is to put them in your “watch” folder to see how they perform over a market cycle. This can be a few months to a few years clearly. As an investor you need to see assets under management and liquidity build. Then you can assess how the fund performed in accordance with their mission.

New ETF provider Lattice Strategies Founder and Managing Partner Thomas Lucas, a 26 year industry veteran, has developed what he terms an “upside-down” philosophy on risk and return. To create an effective new ETF is a hard thing to do with the space now so crowded. Therefore, each new issue on the same sector, in this Emerging Markets, must have a unique feature and approach to appeal to investors. Time will tell if this product performs as intended.

Lucas believes investors may been getting the notion of how we manage “risk” in our portfolios wrong lately or at least we may not be thinking about risk holistically enough. Investors were reminded again recently the toll that excessive volatility can have on a portfolio as volatility returned to markets driving the MSCI All County World Index down to -3.4% for the month.

Most investors are well diversified and the impact of this event on their portfolio was likely muted by the allocation across multiple asset classes. For years, investors who rely on diversification across asset classes as the source of risk management have been relatively well served. What investors haven’t been thinking about as much – or perhaps that they haven’t had the tools to do so – is how to manage risk at the “last mile,” in each of the individual asset classes within their portfolios.

Many investors own either the “market portfolio,” which is a passive portfolio weighted by the size or capitalization of companies, or they own an actively managed portfolio that is similarly benchmarked. Many investors may not be aware that these simple, low-cost approaches introduce all kinds of concentration and other risk distortions in their portfolios. For example, in emerging markets – a widely disparate group of economies – more than 60% of the index is composed of only five countries. As China, South Korea, Taiwan, Brazil, and South Africa go, so goes your emerging markets portfolio. Lattice Strategies asserts a different, perhaps better, risks be taken to broaden the opportunity. What affect might this have had on returns in the emerging markets portion of the diversified portfolios noted above? How about when applied across the entire equity component of the portfolio, which by some estimates account for approximately 90% of the risk in investor portfolios.

Lattice Strategies, a San Francisco-based investment management firm recently introduced a new suite of ETFs that they refer to as “risk-first ETFs.” The firm seeks to deliver capital growth by thinking first and foremost about how to “deliberately and intentionally allocate risk.” Three weeks ago, the firm launched its inaugural ETFs – Lattice Emerging Market Strategy (NYSE: ROAM), and also Lattice Developed Markets (ex-U.S.) Strategy ETF (NYSE: RODM), Lattice U.S. Strategy ETF (NYSE: ROUS).

“All too often, risk allocation is the consequence rather than the driving force behind portfolio composition,” Lucas said. “This can lead to inferior long-term growth potential and it undermines the most fundamental goal of investing – meaningful return.”

Here’s what Lattice thinks make their ETFs distinct – With upwards of 61% of capital allocated to only five countries (43% in the top 3), Lattice points to the “unintentional and inefficient risk allocation” that results from the capitalization-driven weighting.

“The majority of capital – and risk – is inefficiently allocated to larger, more developed emerging economies, leaving a relative sliver of capital to access the more compelling long-term opportunity in ‘true’ emerging markets,” Lucas said.

3-17-2015 6-03-21 PM ROAM

For investors who believe that growth could come from a wider array of emerging economies, they might put ROAM, which balances risk across such countries and companies, on their watch list. It increases exposure to smaller, more locally driven emerging economies that are difficult to access for most investors. The ETF tracks the Lattice Risk-Optimized Advancing Markets Strategy Index.

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