Liz Strauss

Facebook Blog

header photo

Tuesday's Etf Of The Day: Momentum Investing Outside The U.s. (piz)

December 20, 2013

Of the 100 stocks that make up the ETF, about half fall into the large-cap asset class and the other half are in the mid-cap space. The top ten holdings account for approximately 23 percent and the majority of the names will be unknown to U.S. investors. Because the ETF is not permitted to hold any U.S. stocks that are traded on a U.S.

Reminder - First Asset Can-Financials Covered Call front page ETF (FXF) Goes Ex-Dividend Soon

The ETF has 81 holdings, and the top ten components make up 59.3% of the overall portfolio. Sub-sector allocations include financial 95%, real estate investment trusts 3.4%, diversified financial services 0.7% and consumer non-cyclical 0.6%. RWW is up 1.5% over the past month, up 5.6% over the last three months and up 39.7% year-to-date. The broader financial industry is up 13.9% year-to-date.

One ETF Replaces Your Dividend Growth Portfolio

The ETF was recognized as the ETF vehicle that has had the biggest impact on the industry over the last 12 months. The ETF tracks an index that invests in the largest institutional leverage loans based on market weighting, spreads, and interest payments. A monthly dividend payment that equates to a 30-day SEC yield of 4.14 percent make the ETF an attractive investment option for income investors. See also: Fed Tapers, ETFs On The Move (SPY, GLD, TLT, UUP) Because the ETF invests in floating rate loans, a rise in interest rates will not have the same negative affect as they will on government and corporate bonds. That being said, 2013 was not a great year for BKLN based on performance versus the equities market. The ETF is currently down 0.7 percent, not including the dividends.

ETF Spotlight: RevenueShares’ Financials Sector

On 12/24/13, First Asset Can-Financials Covered Call ETF (TSX: FXF.TO ) will trade ex-dividend, for its quarterly dividend of $0.15, payable on 1/6/14. As a percentage of FXF's recent stock price of $10.30, this dividend works out to approximately 1.46%, so look for shares of First Asset Can-Financials Covered Call ETF to trade 1.46% lower all else being equal when FXF shares open for trading on 12/24/13. Below is a dividend history chart for FXF, showing historical dividends prior to the most recent $0.15 declared by First Asset Can-Financials Covered Call ETF: In general, dividends are not always predictable; but looking at the history above can help in judging whether the most recent dividend from FXF is likely to continue, and whether the current estimated yield of 5.83% on annualized basis is a reasonable expectation of annual yield going forward. In Friday trading, First Asset Can-Financials Covered Call ETF shares are currently trading flat on the day. Select the service that is right for you!

ETF Award Winners Announced (BKLN, PHDG)

Dividend growth investing largely ignores entire sectors (like technology) and anything smaller than the largest of mid cap stocks. This is a major flaw on the part of any investor, since studies have shown that small cap value stocks tend to outperform all other stocks , albeit with a little more risk thrown into the mix. Which brings me to the second point, and that's the fascination with the dividend. I often hear that dividend growth investors don't care about the price of an underlying security, and the only thing that really matters is the rising distribution. This seems fine on the surface if an investor's goal is income, but in reality is extremely shortsighted.

ETF Performance: Why do we see a renewed appetite for riskier assets?

Since many country ETFs have been trading only for a few years, EFA and EEM are used to represent the developed equity and emerging equity asset classes respectively. We see a similar pattern in the US Sector SPDRs, where traditionally more volatile sectors have performed better relative to lower beta sectors as one may expect in an extended bull market. For example, XLF (Financials Sector SPDR) has outperformed XLP (Consumer Staples Sector SPDR), with a YTD total return of 29% vs. 22% respectively.

Go Back