ETF Articles & Reports
Written by Dani, May 15th, 2013
Last week we discussed five good ETFs to watch for growth, and as promised, today we’ll offer five ETFs to look at for income investors.
- BOND – low volatility in the bond market, manages risk well
- IYLD – 50% exposed to fixed income, 5% yeild
- AMLP – good to watch, but not a good investment right now
- SDIV – international dividend ETF
- EEMV – low volatility stocks in the emerging markets
We’ll be discussing these in depth at the Money Show, and we look forward to seeing you in Las Vegas this week, or having you join us on the live webcast.
As always, if you have questions about the state of your portfolio or how to use ETFs, email questions or concerns to askdoug(at)dougfabian(dot)com.
This is a podcast summary. For more information, please listen to the entire broadcast here.
Written by Dani, May 14th, 2013
Doug is presenting live this week at the Money Show in Las Vegas. To get tickets or watch a live webcast, check out moneyshow.com
During his presentation, he’ll address the following concepts:
New (bull market) opportunities, such as:
- Natural gas (FRAK and FCG are both good ETFs to watch)
- Clean energy (BPW is a good ETF to watch)
- Japan
He’ll also be talking about managing risk, hedging strategies and watching for new bull markets. It’s going to be a great presentation and a good Money Show, so we look forward to meeting you there!
Written by Dani, May 10th, 2013
We like to pick growth Exchange Traded Funds that are tied to some long-term cyclical positives around the world. We think that the following ETFs are either good investments or good ticker symbols to put on your watch list as you manage your portfolio.
Here are our five favorite ETFs for growth:
- FRAK – small, focused on natural gas infrastructure
- PBW – clean energy
- VEGI – global food companies
- DXJ – Japanese stocks
- EEMV – conservative stocks in the emerging markets
As always, if you have questions about the state of your portfolio, how to use ETFs or market action, email questions or concerns to askdoug(at)dougfabian(dot)com.
This is a podcast summary. For more information, please listen to the entire broadcast here.
Written by Dani, April 11th, 2013
ETF Quick Facts:
- ETFs globally hold about 1.7 Trillion dollars in assets.
- Over 1400 ETFs available for U.S. investors
- Pros of ETFs: low cost, low trading fees, liquidity and transparency
- Most ETfs are index-based
We believe that ETFs are excellent vehicles and we use them for the majority of our client portfolios.
However, there are some very good mutual funds out there, as well, and we encourage you to not get locked into only one investment style. If there’s a mutual fund that manages risk and implements a strategy that cant be duplicated with an ETF, we will definitely use it if it’s reasonably priced.
So, don’t get sucked into a ETF vs. Mutual Fund debate. Both can be used effectively with the right education, goals and portfolio outlook.
This is a podcast summary. For more information, please listen to the entire broadcast here.
Written by Dani, January 16th, 2013
This is a recap of our recent (Tuesday, January 15, 2013) teleconference titled: Opportunities and Risks for Investors in 2013. If you missed the presentation, we encourage you to listen to the audio recording and download the handout, as well as read this blog for more information.
The purpose of this teleseminar is to help you with a thoughtful investment process. This is for general information and education, not personal investment advice.
Investor psychology – setting up for success in 2013
Don’t let news and fear dictate your investments. When opportunities come, be prepared to act, don’t wait. Many people are worried about their money, and they delay investment decisions because of this. There are trillions of dollars sitting on the sideline because of this. Worry is a negative emotion – nothing positive comes from it. Worry can cause bad decisions.
These are our four themes for 2013 (and the charts for them, below):
- S&P 500
- China
- Global economy (agricultural commodities will be important because of an increasingly global economy and rising international middle class)
- Precious metals. Money printing by central banks is a reason to own gold. Gold doesn’t need inflation to move higher, and will present opportunities.
(Click on any chart to enlarge)
Opportunities for growth
Download our ETF report here. See all of our available ETFs, categorized by type and themes. We think that ETFs are the easiest way to invest in these sectors.
Asia: China and Japan have both been under performing for many years, but may be emerging into a new bull market soon. Japan has significantly lowered their currency value via their central bank, which is good for their exports and equities. We believe that Asia will present some very nice opportunities in the year to come. Ticker symbols to watch: FXI, HAO, FCA, EWJ, SJC
Agriculture: If you were looking for a country that has the best, most productive agriculture abilities, you would look at the U.S. The U.S. has abundant farmland, water, and technology. Businesses are way ahead of commodities, so commodities are a better short-term opportunity, but businesses could be a great opportunity later in the year as well. Ticker symbols to watch: DBA, RJA, CORN, SOYB, CANE, WHET, MOO, PAGG, CROP
Precious Metals: We know that there is strong support for gold, because every time it gets down to $1500, people buy it. It can certainly fall below that, but it wouldn’t surprise us if it did test that support by falling briefly below $1500, then shooting straight up. Central bank and money printing make gold attractive for many people. Ticker symbols to watch: GLD, IAU, SLV, GDX, GDXJ, SIL
Energy: There are huge natural gas reserves here in the U.S., which is a good thing. Energy companies and master limited partnerships are not currently at a good price point, but this is a great sector to be watching for corrections and opportunities. Ticker symbols to watch: AMLP, IEZ, XOP, FRAK
Dividend Equities: Companies that are paying dividends are on very solid footing, have been around a long time, which makes them a good investment. Dividends are still taxed at a favorable rate for most Americans. We think it needs a sharp correction to really be a good value for investors, but keep an eye on it. Ticker symbols to watch: DDY, SPLV, XLU, IYR, DEM
(Click on any chart to enlarge)
Opportunities for income
We think that there are still a lot of reasons to own bonds around the world. We think that bonds are still a good investment and we are not concerned about a bond bubble right now.
Star Bond Fund Managers: Such as Vanguard, PIMCO, Double Line Funds, Really like using these top fund managers. They know what they’re doing and are performing very well for investors. Ticker symbols to watch: DLTNX, BOND
Short Term Bonds: Don’t have huge yields, but can be a good solution. These are easy to use and great for high-cash or income portfolios. Great for holding money short-term while you wait for opportunities.
Municipal Bonds: Cuts or shutdowns with debt ceiling could give buying opportunity for municipal bonds. If you have a lot of income right now and want good tax-free income, this is especially good to keep on your watch list.
Emerging Markets: Bonds of emerging market countries and companies are great opportunities for this next year. Remember that this is not necessarily an option today, because we’d like to see correction before buying, but a great sector to watch.
Dividend Equities: Telecommunications, utilities, etc. Nice yields right now, and might present us with opportunities as the year continues, but again, not today. Good to watch and on your buy list when you see weakness in the market.
Risks for investors in 2013
Today, we purposefully decided to talk about risks after we discussed opportunities. You need to stay positive and think opportunity first, so that you are ready for it. Manage risk, but don’t be a slave to it. Don’t obsess about politics and their outcomes, we aren’t in charge and we’re just going to have to watch and see what happens. Remember that the following risks are not predictions, just possibilities.
- Political risk
- Inflation
- Deflation
- U.S. – higher taxes, slowing economy, recession
- European sovereign debt crisis
Strategies to manage risk:
- Asset allocation – know where your investments are and how much risk you have
- Sell discipline – have a goal and a designated sell point
- Entry point – buy wisely and watch for opportunities, not worry
- Put volatility to work for you!
- Vigilance in monitoring – know what you have and why, and have a watch list
Finally, let’s make an action plan:
- Have a written goal for your investments – income or growth – whatever you decide on is valid, but you have to write it down and create a plan to make it happen
- Invest based on what you and your family needs
- Take inventory of your allocations and overall portfolio – decide what to do about risk and how to plan for this year.
- Reallocate – look at some starter positions and some new ideas – maybe some of the ideas we discussed today.
- Prepare for corrections, opportunities and sell points
As a thank you for participating in our seminar we would like to offer you a free consultation to discuss your portfolio and strategies to achieve your financial goals. This includes an in-depth analysis of all the holdings in your portfolio. We will share with you the unique strategies we are using for our clients right now and how active portfolio management can be of benefit to you.
This offer is available for goal-oriented investors with more than $250,000 in their investment portfolios. Contact us for a brief introduction and to schedule an appointment to review your accounts.
To schedule your free Portfolio Assessment, call us at 800-391-1118.
Written by Dani, November 14th, 2012
This is a recap of our recent teleconference (Tuesday, November 13, 2012) titled: The Election, Your Money, Your Future. If you missed the presentation, we encourage you to listen to the audio recording and download the handout, as well as read this blog for more information.
The purpose of this teleseminar is to help you with a thoughtful investment process. This is for general information and education, not personal investment advice.
Here are the main points we want investors to think about in this season:
- The elections are over, and it’s time to remove politics from your investment thinking.
- Think before you act. Make good investment decisions, follow good strategies.
- Avoid speculation. No one can predict, guess or bet on what will happen next. There’s a lot of noise out there, so be wary of fear-mongers.
- Think about solid investment ideas to build upon.
First, let’s discuss the things that we are certain of, that will absolutely affect our money and our decisions:
- Obama re-election, Congress remains the same.
- Obamacare implementation, taxes, and regulation.
- Higher taxes
- Recession in Europe is worsening
- Recession in Japan
- New leadership in China
Next, examine those things which we are less sure of. These are not news items we should be speculating about or making decisions based on, because we simply do not know their outcome. Be aware of these items but not panicky about them:
- Fiscal cliff outcome
- Greece to exit the euro and deal with current cash needs
- Spain also has severe cash needs
- New policies from China
- Potential global recession
Again, we are not making investment decisions based on things we don’t know. We need to be prepared for worst-case scenario, but not investing our of fear or an end of the world scenario. For your continued education and information, we will be having another teleseminar on Tuesday January 15, 2013 in order to update these uncertainties and continue moving forward, so mark your calendar!
Fixed-Income Review and Outlook
Bond market uptrend still in place, which makes bonds a good place for your money right now. There are a lot of people predicting bond market collapse, but we think this is inappropriate speculation, and we want our clients to know that we believe the bond bull market to be still intact.
(Click on chart to enlarge – Key to charts: AGG = Aggregate tripleA rated bonds, LQD = Large corporate bonds, TFI = National municipal bonds, EMB = Emerging market bonds)
Speculation continues that interest rates will rise in the next year, but for right now, these price trends are clearly in place. Obama being elected is an affirmation of Ben Bernanke and the Federal Reserve’s monetary strategy, which is keeping interest rates low. We want to dispel the myth that worries about the strength of the U.S. dollar right now. We believe that the dollar is doing just fine, currently in a short-term uptrend, and is stable. We are monitoring it and global faith in our currency, but we are not seeing anything to worry about in that area right now.
U.S. Indices Review and Outlook
(Click on chart to enlarge – Key to charts: DIA = Dow Jones Industrial Average, QQQ = Nasdaq 100, SPY = S&P 500, IWM = Small-cap stocks)
The longer we stay below the 200-day moving average, more probability of a longer and more serious correction in the markets. We believe that there is still a great deal of short-term risk in the market, but that this will present good opportunities for smart investors. We are defensive with our portfolios but looking for opportunities, and hoping to be buyers in this climate.
International Review and Outlook
(Click on chart to enlarge – Key to charts: EFA = 800 stocks of large international companies (no U.S. exposure), IEV = Europe, EEM = Emerging markets, FXI = 25 largest companies in China)
Opportunities for Income and Growth Investors
Income:
- Mortgage backed security strategies
- Emerging market bonds
- Invest in securities that create a monthly income stream
- Dividend equities (could be a good opportunity for purchase in a panic)
Growth
- Equities that pay income stream (we like utility stocks and real estate investment trusts right now)
- China
- Precious metals, mining.
We want to remind our listeners and readers that position size is very important when making investment decisions. We are in defensive positions right now, but alert to buying opportunities. We are not speculating or panicky, but wise and ready for our next investment move.
Personal Finance Post-Election Strategies
Taxes
With President Obama, tax issues are coming in 2013. California taxpayers, Prop 30 is retroactive, so there will be a large tax bill coming to California taxpayers that you need to be aware of and prepared for. Obamacare taxes will begin, as will fiscal cliff negotiations, and this all means that you should look closely at your taxes and meet with your CPA so that you can be prepared for the impact of this political and fiscal climate.
Income
This is the investment area where most people make big mistakes. Before you do anything, declare the kind of investor you are, and make a plan for that investment goal. The mistake that income investors most often make is chasing yield. We encourage you, do not chase speculative or volatile investments in order to get higher yields. It’s not worth it. Your entry point is critical, and it’s important to pay attention and put your money to work at the right price and right time.
Growth
We’re in a secular long-term bear market. Have a shock absorber for volatility. Look for equities that pay income and avoid risk.
Legacy
Everyone is going to die at some point, and how do you plan to take care of your spouse, family, heirs and other causes when that happens? Do you have a relationship with a competent investment adviser? You need professional help in order to insure that your goals and dreams are realized, both for you and your loved ones.
To close, we have some essential takeaways for all investors:
- Know that short-term risk is high.
- Revisit investment objectives.
- Revisit asset allocation.
- Prepare for buying opportunities.
As a thank you for participating in our seminar we would like to offer you a free consultation to discuss your portfolio and strategies to achieve your financial goals. This includes an in-depth analysis of all the holdings in your portfolio. We will share with you the unique strategies we are using for our clients right now and how active portfolio management can be of benefit to you.
This offer is available for goal-oriented investors with more than $250,000 in their investment portfolios. Contact us for a brief introduction and to schedule an appointment to review your accounts.
To schedule your free Portfolio Assessment, call us at 800-391-1118.
Written by David, October 25th, 2012
One of the exchange-traded funds (ETFs) that I have talked about many times in the past is the Market Vectors Gold Miners ETF (GDX). This ETF is one of the biggest and most widely held gold mining funds in the world.
This ETF seeks to replicate, as closely as possible before fees and expenses, the price and yield performance of NYSE Arca Gold Miners Index (GDM). GDM is a modified market capitalization-weighted index that gives investors exposure to publicly traded companies primarily engaged in gold mining. Stocks represented in the index include a diversified blend of small-, mid- and large-capitalization public companies.
GDX’s top five holdings, as of Oct. 23, were: Barrick Gold Corp. (ABX), 13.4%; Goldcorp Inc. (GG), 11.96%; Newmont Mining, 9.19% (NEM); Yamana Gold Inc. (AUY), 5.19%; and Silver Wheaton Corp. (SLW), 5.15%.
Gold mining stocks and gold itself offer ways to protect your savings against inflation. Gold is a tangible asset that holds its value, if not appreciates, during times of inflation or the threat of inflation.
The tendency for gold to retain its value has led to the precious metal’s description as an “inflation hedge.” However, the gold price historically exhibits long periods where it moves without any apparent link to inflationary trends. For example, in the early 1980s the real price of gold jumped to more than three times its very long-run average. In the 1990s, gold endured a lengthy bear market in which its price fell well below its long-term average. So, you need to understand that investing in gold carries risk.
Nonetheless, gold’s price tends to rise in inflationary periods, as well as during times when particularly risk-averse investors see limited growth prospects in the stock market. A key reason for the latter tendency is gold’s fairly low correlation with other assets. If you want your portfolio to shine, consider gold or gold mining funds as a nice inflation hedge.
Written by Dani, October 19th, 2012
A few things happening are happening in the world of Exchange Traded Funds, which are very beneficial for investors:
- Many ETF companies are cutting fees
- Some ETF providers are cutting or eliminating trading fees
- Vanguard is second-largest ETF provider and is changing many of their indexes in order to lower expenses
- Charles Schwab is also jumping into the ETF world, and doing so at a very low rate, at least for now
To put this in perspective, this is good deflation. Costs of goods and services coming down in price is good for investors and this makes it much easier to get involved in the investment process.
Right now on our website, you can download the third quarter Exchange Trade Funds report, located in the special reports section. This has comprehensive coverage of all 1200 ETFs including the three areas discussed before that are high on our radar, and we encourage you to print that out. As always please call 800-391-1118 or email askdoug(at)dougfabian(dot)com with any questions.
(If you read this blog and enjoyed it, listen to Doug’s podcast this week for even more details on this topic, and please share this information with others who might benefit from our perspective.)
Written by David, August 23rd, 2012
If you are like me, the low interest rates that banks are paying on federally insured deposits are causing you to look elsewhere to put your money. In fact, German government bonds have begun to pay negative interest rates. One alternative that I see on the immediate horizon is the high-yield SPDR S&P500 Dividend ETF (SDY), which could be a golden ticket to higher dividend payments this year. To that end, SDY is yielding 4.89%, while banks uniformly seem to be paying depositors less than 1% interest
The SPDR S&P500 Dividend ETF (SDY) seeks to replicate the price and yield of the S&P High Yield Dividend Aristocrats Index, investing in stocks of companies that are within the S&P Composite 1500 and have followed increasing dividend policies for 25 years. Diversified across several different sectors, SDY’s $9.27 billion in assets primarily are invested in large value companies. As of Aug. 20, five sectors comprised 74.1% of SDY’s assets: Consumer Staples, 21.13%; Industrials, 16.45%; Financials, 15.85%; Consumer Discretionary, 10.74%; and Materials, 9.93%.
The relative strength of the underlying stocks in SDY is reflected by the fund’s low beta of 0.98, indicating low volatility in rough market conditions. SDY’s top five holdings, as of yesterday, were: Avon Products Inc. (AVP), 2.94%; Pitney Bowes Inc. (PBI), 2.82%; AT&T Inc. (T) 2.50%; Leggett & Platt Inc. (LEG) 2.34%; and HCP Inc. (HCP) 2.24%.
Despite using a diversification strategy, SDY’s portfolio turnover rate is a surprisingly high 52%. This higher-than-average turnover rate signals concerns about reduced potential returns from so much trading. Still, with a strategy of holding stocks that are consistently increasing their dividend payments, the ETF’s risk may be worth the reward.
While SDY’s total annual operating expense rate of 0.52% is slightly higher than similar ETFs, SDY’s holdings could give investors relief from volatile markets and offer returns that otherwise are difficult to find in these times of anemically low interest rates.
There still is reason for concern about the stock market. Today, the non-partisan Congressional Budget Office (CBO) released new warnings that the U.S. economy could slip into recession. The CBO reported that the U.S. economy would contract by 0.5% in calendar year 2013 if the George W. Bush-era tax rates expire and automatic spending cuts are implemented. The CBO also cautioned that unemployment could rise to 9.11% in 2013, compared to 8.2% now. A benefit of owning SPY is that dividend-paying stocks and funds typically do not fall as much as non-dividend payers when the market drops.
Written by David, August 02nd, 2012
Dividend stocks are all the rage on Wall Street these days and David Fabian, Vice President of Fabian Wealth Strategies, was recently quoted in an article on www.tradingauthority.com about two dividend paying equity ETFs on his watch list. With interest rates near rock bottom levels, many investors are seeking new ways to increase their total return by incorporating blue chip dividend stocks in their portfolios. Click here to read the full article.
