News Mentions & Press Releases
Large U.S. stocks have notched a mostly stellar performance since their post-financial-crisis rebound, beginning in March 2009. However, the same can’t be said for emerging market stocks.
The Financial Times Stock Exchange emerging index has declined about 15 percent over the past five years. The index tracks large- and mid-capitalization stocks based in 21 emerging markets.
The largest emerging-market country weightings in the FTSE index include China, India, Taiwan, Brazil, Mexico and South Africa. The index also tracks countries in Eastern Europe and the Middle East.
A number of factors determine whether a market is considered developed or emerging. For example, emerging nations often have fewer financial-market checks and balances, relative to those in developed countries. Banking and regulatory systems often lag, and these nations may be politically and economically unstable, at least to some degree. That adds up to investors demanding a higher return for taking more risk than with Apple (ticker: AAPL), Exxon Mobil Corp. (XOM), Microsoft Corp. (MSFT), Johnson & Johnson (JNJ) or General Electric Co. (GE).
CLS Investments, LLC (“CLS”), a third party money manager and a leading manager of exchange-traded funds (“ETFs”), is proud to announce that two more of its portfolio managers have earned the prestigious Chartered Financial Analyst® (CFA®) designation, the most respected and recognized investment credential in the world. The newest recipients include Josh Jenkins, CFA, Portfolio Manager and Joe Smith, CFA, Senior Market Strategist.
The charter is recognized globally by employers, investment professionals, and investors as a definitive standard by which to measure the competence, integrity, and dedication of serious investment professionals.
“The CFA charter remains the gold standard credential for our industry, and I’m thrilled that two more of our portfolio managers have become charter holders,” said Rusty Vanneman, CFA, Chief Investment Officer of CLS Investments. “At CLS, we pride ourselves on continuing education for our team members. Earning the CFA charter demonstrates that they have the necessary work ethic, perseverance, knowledge, skills, and experience needed for investment analysis and management in today’s global markets.”
Recipients of the CFA charter have successfully completed the CFA Program, a graduate-level, self-study curriculum and a series of three intensive examinations taken sequentially, which, in total, takes most candidates between two and five years. Candidate surveys report that preparation for the three exams typically requires at least 900 combined hours of study.
While the trading and tax advantages of ETFs are typically well known, the ability to trade options on an ETF is an underutilized benefit of these flexible funds. Option strategies are typically reserved for professionals, but I’ll run through a few basic strategies below that can be implemented by anyone investing in ETFs.
Basic option strategies may be used to manage risk and/or enhance income in an investment portfolio. These strategies are built with put and/or call options.
A put is an option contract that gives the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time. The buyer of a put option estimates that the underlying asset will drop below the exercise price before the expiration date.
A call option is the flip side. It gives the owner the right, but not the obligation, to buy (under the same conditions above). The buyer of a call option estimates that the underlying asset will rise above the exercise price before the expiration date.
So why use option strategies with ETFs?
In recent years, we’ve emphasized Exchange Traded Funds (ETFs) that invest in “high quality” corporations. While this sounds like something one should always do (and there is an argument for that), we believe there are better times to emphasize high quality stocks and there are times to emphasize low quality stocks. We believe we are in the former environment. Toward the tail end of mature bull markets (and during market corrections), high quality stocks tend to outperform.
What defines a “high quality” company? Quality, much like beauty, is often defined in the eye (or the spreadsheet) of the beholder, but common characteristics of high quality stocks include higher and more consistent profitability, stronger balance sheets (i.e., less debt), and higher dividend growth.
Tactical Allocation portfolios seek to provide capital appreciation and income by actively shifting allocations between asset classes. These portfolios have material shifts across equity regions, and bond sectors on a frequent basis. To qualify for the Tactical Allocation category, the fund must first meet the requirements to be considered in an allocation category. Next, the fund must historically demonstrate material shifts within the primary asset classes either through a gradual shift over three years or through a series of material shifts on a quarterly basis. The cumulative asset class exposure changes must exceed 10% over the measurement period.
*Source: U.S. News, as of 08/05/2015. The list highlights top-rated funds based on the ratings of leading fund industry researchers. The CLS-managed protection fund was evaluated in the Tactical Allocation fund category, which included 102 funds, and given a U.S. News Mutual Fund Score of 7.0 out of a max 10.0. The U.S. News Mutual Fund Score produced using an equal weighting of the overall ratings provided by their data sources (Morningstar, Standard & Poor’s, Lipper, Zacks, and TheStreet.com). Individual fund rating systems are normalized to a 100-point scale based on point totals assigned to individual scoring systems. For Morningstar’s and S&P’s five-star ranking and Zacks five-point scale, each star or point awarded would receive 20 points. In TheStreet.com’s A-to-E scale, a highly rated “A” fund would receive 100 points, while a low-rated “E” would receive 20 points. The five Lipper Leader categories are each worth a total of 20 points, giving 4 points to each 1-to-5 point scale assigned to each section of the Lipper rankings. The U.S. News score is calculated by dividing total points awarded according to the above system by the number data sources (5). The combined U.S. News Mutual Fund Score ranks funds numerically based on this score. Funds with identical scores to one decimal place are awarded the same numerical ranking.Funds must be ranked by all five data sources to receive a U.S. News Mutual Fund Score.
Lipper rankings are comprised of five unique measures (Total Return, Consistent Return, Preservation, Expense, and Tax Efficiency), each with a 1-to-5 score. While the U.S. News Mutual Fund Score combines all five equally weighted category scores to achieve its weighting in our score, Lipper intends its measures to be used as individual assessments of a fund’s ability to meet specific goals, rather than as a cumulative measure of fund quality. The U.S. News Mutual Fund Score groups funds by their Morningstar fund category. However, some systems use different categorizations when ranking funds. To learn more about the U.S. News Mutual Fund Score methodology, click here.
Certain other CLS-managed funds also qualified for U.S. News Mutual Fund Scores and were ranked in respective categories. No other CLS-managed fund was included in the Tactical Allocation category. CLS is not affiliated with U.S. News or the listed industry researchers. Investing involves risk. Past performance is not a guide to future results.
The health care sector has provided stellar investment opportunities in recent years.
Over the last five years, the iShares U.S. Healthcare ETF (IYH | A-94) has outperformed the broader Dow Jones U.S. Index by more than 8 percent. Health care has increased more than 22percent per year while the broader U.S. market has increased at 16 percent per year.
Removing the annualized returns, IYH is up more than 177 percent in five years, while the Dow Jones U.S. Index has basically doubled. Both returns are very impressive. The question for health care investors is, will the outperformance continue?
More Upside Potential
The analysis below leads to the conclusion that health care stocks have potential for further upside, but most of the outperformance in the sector has already occurred.
As the Federal Reserve gets closer to raising short-term interest rates for the first time in nearly a decade, your bond portfolio might need a quick check-up. That’s because higher interest rates generally don’t bode too well for bonds. Yields and prices move in opposite directions.
But before you panic, keep in mind the first rate hike is likely to be small, totaling 25 basis points (0.25%). Subsequent rate hikes are expected to be slow and gradual.
“The Fed has told us that they are going to be extraordinarily cautious,” said Priscilla Hancock, global fixed income strategist at J.P. Morgan Asset Management, based in New York. “A small rise in rates at the front end of the [yield] curve is already priced into the bond market. We strongly believe in diversification.”
Rising stock-market volatility is proving especially costly for retail investors who typically buy and sell stocks soon after the market opens—often the most perilous time of the trading day.
ETF strategist firm CLS Investments likens portfolio performance to playing with a yo-yo while going up stairs. “In the end, the yo-yo is ultimately higher than when it started, but on the way up it can experience sharp ups and downs,” senior portfolio manager J.J. Schenkelberg wrote in a weekly market review on Aug. 25.
At the time of her report, exchange traded funds tracking major U.S. indexes had posted their worst weekly decline since September 2011. The Dow and S&P 500 each dropped nearly 6% that week. They’re still 8% and 10% off their 52-week highs, respectively.
But “keep things in perspective,” Schenkelberg says: Both indexes are still above the lows seen in October, less than a year ago.
Here’s how two ETF strategists — who put together managed portfolios with at least 50% of assets in ETFs — are positioning products.
Read More At Investor’s Business Daily: http://news.investors.com/investing-etfs/091415-770941-etf-strategists-favor-international-stocks-hold-commodities.htm#ixzz3lq4rRlzh
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