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ETF Commentaries

Are Factor Investors Getting Paid to Take on Industry Risk?
Mar. 15, 2017 - Morningstar, Inc. -  Industry tilts appear to pay off for momentum but are not integral to the success of value and low-volatility strategies.

S&P 500 Index Top-Line Growth Estimates
Mar. 14, 2017 - First Trust -  View from the Observation Deck
1. Today's blog post provides investors with a three-year look into the expected revenue growth rates of the companies that comprise the S&P 500 Index.
2. On 3/10/17,the S&P 500 Index stood at 2,372.60, or 0.97% below its all-time high of 2,395.96,set on 3/1/17, according to Bloomberg. The current bull market in stocks entered its 9th year after the close of trading on 3/9/17.

Will Actively Managed ETPs Meet Their Potential?
Mar. 08, 2017 - Morningstar, Inc. -  Several fund companies have submitted proposals with the SEC to launch actively managed ETPs that skirt daily portfolio transparency.

A Snapshot of U.S. Styles/Market Caps
Mar. 07, 2017 - First Trust -  View from the Observation Deck
1. Today's blog post is intended to expose potential opportunities within the growth and value styles of investing, as well as by market capitalization (market cap).
2. At any given time, the equities markets are likely being led up or down by one of the three market cap classifications (large-cap, mid-cap or small-cap).Often this leadership role can be held for a multi-year period.

Watch Reserves, Not Rates
Mar. 06, 2017 - First Trust -  As Washington DC melts down, entrepreneurs keep moving, people keep working and spending; the economy keeps growing. The Federal Reserve keeps meeting and speaking, too, but now it appears they will actually act.

U.S. Equities Have Boosted Their Global Standing In The Current Recovery

Feb. 28, 2017 - First Trust -  View from the Observation Deck
1. The current U.S. economic recovery commenced in Q3’09, according to the National Bureau of Economic Research.The last U.S. recession ran from December 2007 through June 2009.
2. As indicated in the chart,the total market cap of U.S. exchange traded equities rose from $12.73 trillion on 9/30/09 to $25.20 trillion on 12/31/16, or an increase of 97.96%.

Trade Is Not Our Enemy
Feb. 27, 2017 - First Trust -  We think it was Art Laffer who said it best. Let’s say the US invented a cure for cancer and China a cure for heart attacks. If China decided to ban the cure for cancer, should the US retaliate by banning the cure for heart attacks?

Morningstar's 5 Favorite Foreign-Stock ETFs
Feb. 24, 2017 - Morningstar, Inc. -  These are some of our favorite exchange-traded funds for investors seeking to add or augment their portfolio's international-stock exposure.

Not the Time for a Muni Run
Feb. 22, 2017 - Morningstar, Inc. -  Municipal bonds are still standing on firm fundamental ground.

Time for a Rate Hike
Feb. 21, 2017 - First Trust -  According to the futures market, there is a 38% chance the Federal Reserve raises rates when it meets in mid-March. If the Fed were to stand by what it has said the past several years, the odds should be much higher. But the market is used to the Fed finding reasons to put off justified rate hikes.

Some Perspective On The Performance Of The S&P 500 Index

Feb. 21, 2017 - First Trust -  View from the Observation Deck
1. Are U.S.stocks overvalued? While there are many metrics that can be used to argue one side or the other, we believe there is room for an eyeball test using historical returns.
2. The last bar in the chart (shaded gold) represents the average annual total return for the S&P 500 Index since 1926. Since it covers such a long period, it tends to change modestly with each passing year.

A Low-Cost Way to Make a Diversified Bet on Energy Stocks
Feb. 17, 2017 - Morningstar, Inc. -  Energy Select Sector SPDR ETF bundles energy stocks from the S&P 500 for a low fee.

Strategy and Structure Make ETFs Tax Efficient
Feb. 15, 2017 - Morningstar, Inc. -  ETFs can be a good choice for tax-sensitive investors, but remember they aren’t tax-exempt.

A Snapshot Of Fixed-Rate Bond Yields & Total Returns
Feb. 14, 2017 - First Trust -  View from the Observation Deck
1. The purpose of today's blog post is simply to show investors how traditional fixed-rate bonds have performed over the past 1-, 3- and 5-years.
2. We believe that the information in the chart can help investors establish realistic expectations with respect to fixed-rate bond yields and performance potential moving forward.

Keep It Simple, Stupid (KISS) 
Feb. 13, 2017 - First Trust -  The biggest tax debate in Washington right now is not between Republicans and Democrats, but between Republicans and Republicans. Both sides of the debate seem to understand that the US tax code, particularly the fact that the US has the highest corporate tax rate of any industrialized country, is harming the competitiveness of US companies.

A Snapshot of Growth vs.Value Investing
Feb. 07, 2017 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of one we do on an ongoing basis. Investors can compare today's snapshot to the one we did on 10/27/16 (click here to view).
2. Growth style investing tends to outpace value style investing when the earnings growth rates of companies accelerate faster than the broader market,such as right after the economy exits a recession

Room to Grow
Feb. 06, 2017 - First Trust -  The US economy has grown at an average annual rate of only 2.1% since the recovery started in mid-2009, far slower than during the economic expansions of the 1980s and 1990s.

Biotechnology Stocks Have Not Been This Cheap In A Decade

Jan. 31, 2017 - First Trust -  View from the Observation Deck
1. From 12/31/06 through 12/30/16,the S&P 500 Biotechnology Index posted an average annual total return of 13.92%, compared to 9.57% for the S&P 500 Health Care Index and 6.94% for the S&P 500 Index, according to Bloomberg.
2. Over that 10-year period,the average year-end P/E ratio on the S&P 500 Biotechnology Index was 19.00.As indicated in the chart, the year-end P/E estimates for 2017 and 2018 are significantly below the period average.

Unlocking Historic Value in Real Assets as the Economy Shifts Gears
Jan. 30, 2017 - Cohen & Steers -  With prices of U.S. financial assets near all-time highs, we believe real assets offer an investment opportunity in inexpensive assets poised to move higher. The two views of relative value shown below offer a similar takeaway: real assets appear significantly undervalued on a historical basis. We believe the combination of a strengthening economy, rising inflation prospects and attractive relative value signal a potentially compelling opportunity for allocating to real assets.

How U.S.& Other Developed Market Equities Have Fared Since Japan Peaked in 1989

Jan. 24, 2017 - First Trust -  View from the Observation Deck
1. China’s growth story has garnered a lot of attention from investors and the financial media over the past 10 to 15 years.Some pundits believe that China could one day supplant the U.S. as the world’s largest economy.We’ll see.
2. The same type of tale wasspun aboutJapan in the late 1980s.It did not come to fruition.In fact,China surpassed Japan to become the second-largest economy in the world in 2010, according to The Wall StreetJournal.The U.S. is still the largest.

Alternatives Update - 4th Quarter 2016
Jan. 23, 2017 - First Trust -  In the 4th quarter, Alternative Investment (“Alternatives”) returns were for the most part directionally the same as in the 3rd quarter with commodities being a notable exception by switching from negative to positive. The magnitude of returns were, however, generally more muted (see Figure 1). 

American Carnage?

Jan. 23, 2017 - First Trust -  A memorable part of President Trump’s inaugural speech pointed to mothers and children trapped in poverty, rusted-out factories, a flawed school system, and crime and gangs and drugs. He described these problems as “American carnage” and stated emphatically that it “stops right here and stops right now.”

Broad Muni-Bond Exposure at a Modest Fee
Jan. 20, 2017 - Morningstar, Inc. -  This ETF is a solid option for comprehensive exposure to the investment-grade municipal-bond market.

Sustainability-Focused Funds Garner Positive Flows in 2016
Jan. 19, 2017 - Morningstar, Inc. -  Parnassus Funds gained assets last year. Plus, new options make it easier to build SRI portfolios.

Consider Hedging Your Global Bond Currency Risk
Jan. 18, 2017 - Morningstar, Inc. -  Long-term investors haven't historically been rewarded for taking on currency risk.

Another Plow Horse Quarter
Jan. 17, 2017 - First Trust -  Animal spirits are back!
Confidence surveys have soared since the election. The Conference Board’s future expectations measure hit the highest level since 2003. The NFIB small business confidence index rose at its fastest pace ever. Other surveys are up, too.

A Snapshot Of The S&P 500 Index Earnings Beat Rate
Jan. 17, 2017 - First Trust -  View from the Observation Deck
1. As we head into corporate earnings season featuring Q4’16 results, we thought it would be a good time to review the percentage of S&P 500 Index companies that top their earnings estimates on a quarterly basis.The index currently has 505 constituents.
2. From Q4'12 through Q3'16 (16 quarters),the average quarterly earnings beat rate for the 500 companies that comprise the index was 69.2%, matching the results posted a year ago in Q4’15.

Some Insight Into The S&P 500 Index Dividend Payout
Jan. 12, 2017 - First Trust -  View from the Observation Deck
1. As of the close of 2016, 418, or 83%, of the constituents in the S&P 500 Index distributed a dividend to shareholders, up significantly from 351 at the end of 2002 (not shown in chart), according to S&P Dow Jones Indices.The bear market in stocks that proceeded the bursting of the bubble in the technology sector in March 2000 ended in October 2002.
2. For comparative purposes,since 1980,the highest number of dividend-paying stocks in the S&P 500 Index at year-end was 469 (1980), according to S&P Dow Jones Indices.

2016 Shows That Factors Are Fickle
Jan. 11, 2017 - MoneyShow -  Last year demonstrated that diversification and discipline are required to put factors to good use.

Big Government Causes Slow Growth
Jan. 09, 2017 - First Trust -  In 1930, Pluto was declared the ninth planet. In 2007, it was demoted to “dwarf planet” status by astronomers after considering new evidence. There are now only eight planets.

S&P 500 Index Top-Line Growth Estimates
Jan. 03, 2017 - First Trust -  View from the Observation Deck
1. Today's blog post provides investors with a three-year look into the expected revenue growth rates of the companies that comprise the S&P 500 Index.
2. On 12/30/16,the S&P 500 Index closed the year at 2,238.83, or 1.45% below its all-time high of 2,271.72,set on 12/13/16, according to Bloomberg

2017 Commodity Outlook
Dec. 31, 2016 - ETF Securities -  Summary
 Individual commodities trade on their own fundamentals.
 Near-term pressure on gold and silver to give way as inflation rises faster than interest rates.

The Best and Worst New ETFs of 2016
Dec. 28, 2016 - Morningstar, Inc. -  Among the many new launches, there were plenty of lumps of coal and a few diamonds to be found.

Creation/Redemption Mechanism of ETPs
Dec. 27, 2016 - Wells Fargo Advisors -  Summary
>> The creation/redemption mechanism — in particular the revolutionary “inkind” creation/redemption — is at the heart of some of the benefits of an exchange-traded product (ETP) over other similar investment vehicles.
>> Not enough investors fully understand how this process works and why it can provide benefits. Read on to appreciate the process and its principal players.

2017: Dow 23,750, S&P 2700 
Dec. 26, 2016 - First Trust -  We have used the metaphor of the “Plow Horse” to define the US economy since 2009 – an economy driven by new technology and entrepreneurship (fracking, the cloud, smartphones, big data…), but held back by the friction of a growing and burdensome government.

OPEC Production Cuts Solidify Case for Oil Recovery
Dec. 21, 2016 - Cohen & Steers -  As signaled in September, the Organization of the Petroleum Exporting Countries (OPEC) convened in November to establish a production target to help stabilize the global oil market. The agreed upon supply cuts should accelerate and solidify the rebalancing of oil markets already underway, supporting our base case for higher oil prices over the next two years.

3 Factors Driving ETF Capital Gains Tax Bills
Dec. 21, 2016 - Morningstar, Inc. -  The strengthening dollar in 2016 means that currency hedging is once again the tax villain for ETF investors.

Investors Continue To Favor Passive Funds Over Actively Managed Funds

Dec. 20, 2016 - First Trust -  View from the Observation Deck
1. Those investors directing capital into mutual funds and exchange traded funds (ETFs) favored passive investing over active management for the 12-month period ended November 2016.Here is a link to last year’s post measuring the same period with similar results (click here to view).
2. Passive mutual funds and ETFs reported net inflows totaling $479.8 billion, compared to net outflows totaling $358.8 billion for those actively managed (see chart).

Taxation of Commodity and Currency ETPs
Dec. 19, 2016 - Wells Fargo Advisors -  Summary
» Taxation of commodity and currency ETPs vary by structure and type of underlying instrument used.
» Tax considerations are important, but we think the specific exposure or strategy of a given ETP should be the primary driver in the selection process among similar vehicles.

Greedy Innkeeper or Generous Capitalist?

Dec. 19, 2016 - First Trust -  The Bible story of the virgin birth is at the center of much of the holiday cheer this time of year. The book of Luke tells us that Mary and Joseph traveled to Bethlehem because Caesar Augustus decreed a census should be taken. Mary gave birth after arriving in Bethlehem and placed baby Jesus in a manger because there was “no room for them in the inn.”

The Fed Turns Hawkish

Dec. 14, 2016 - First Trust -  The Federal Reserve unanimously decided to raise rates in 2016 – finally! – by a quarter of a percentage point earlier today, as the markets expected. The federal funds rate is now set to hover between 0.50% and 0.75%.

Sector Performance Via Market Capitalization Since The Presidential Election

Dec. 13, 2016 - First Trust -  View from the Observation Deck
1. From 11/8/16 through 12/12/16,small-capitalization (cap) stocks outperformed both mid- and large-cap stocks, as measured by the S&P 500 Index, S&P MidCap 400 Index and S&P SmallCap 600 Index (see top line of table).
2. As indicated in the table, there were two sectors in the S&P 500 Index that posted negative total returns in the period. All of the sectors in the S&P MidCap 400 Index and S&P SmallCap 600 Index posted positive total returns.

Rally is Real, Not “Hope & Faith”
Dec. 12, 2016 - First Trust -  Since the presidential election, the S&P 500 is up 8.4%, the Russell 2000, a small cap stock index, is up almost 20% and the Dow is closing in on 20,000. Financial stocks have surged.

Morningstar's Top Picks for Inflation Protection
Dec. 07, 2016 - Morningstar, Inc. -  Surveying the fund and ETF landscape, from direct hedges like TIPS to indirect inflation-fighting plays such as floating rate loans and commodities.

When It Comes to Diversification, Don't Be Naive
Dec. 07, 2016 - Morningstar, Inc. -  The straightforward nature of equal-weighting has some appeal, but diversification isn't that simple.

Interest Rates Spiked In November And Investment Grade Bond Prices Fell

Dec. 06, 2016 - First Trust -  View from the Observation Deck
1. Intermediate-term interest rates moved markedly higher following the presidential election.In general,asinterest ratesrise,fixedrate bond prices tend to fall, particularly those of the highest credit quality.
2. From 11/8/16 through 11/30/16,the yield on the benchmark 10-year Treasury note (T-note) surged 52 basis points,from 1.86% to 2.38%, according to Bloomberg. Its yield stood at 1.60% on 9/30/16.

Is Private Company Ownership a Risk for Mutual Funds?
Dec. 05, 2016 - Morningstar, Inc. -  A recent Morningstar study shows most funds tread lightly in private-firm investments.

Caution on Dollar-Meddling
Dec. 05, 2016 - First Trust -  If there’s one theme tying together many of the policies President-Elect Trump and Congress will try to enact, it’s making the US a better place to invest. This includes peeling back Obamacare, drastically cutting the top tax rate on corporate profits, moving from the depreciation of business investment to immediate and full expensing, and allowing more investment in energy infrastructure.

WisdomTree Working to Balance Its Growth
Dec. 01, 2016 - Morningstar, Inc. -  It's no secret that the popularity of the exchange-traded fund structure has risen tremendously. ETF assets measured $2.4 trillion at the end of October 2016 and have grown by nearly 20% annually from $400 billion in assets just 10 years prior. 

Populist Uprising or Conservative Revival? 
Dec. 01, 2016 - First Trust -  Steve Moore, economic advisor to President-Elect Donald Trump told a DC-newspaper, The Hill, and the Republican leadership; “Just as Reagan converted the GOP into a conservative party, Trump has converted the GOP into a populist working-class party.” (The Hill, Jonathan Swan, 11/23/2016)

Are Dividend Funds Overvalued?
Nov. 30, 2016 - Morningstar, Inc. -  Despite their popularity, the average dividend-focused fund isn’t trading at a premium relative to the broad market.

The real impact of rising rates on metals
Nov. 30, 2016 - ETF Securities -  Summary
•A continuation of the Federal Reserve’s (Fed) tightening cycle is not the death toll for metals that many anticipate since inflation may continue to outpace a data-dependent and reactive Federal Reserve Board.

Money Market Reform and the Opportunity for Enhanced Cash ETFs
Nov. 30, 2016 - First Trust -  Summary of Q3 2016 Estimated ETF Flows and Trends
» Overall US listed ETF net inflows totaled $93.1 billion in Q3, accelerating significantly from $34.2 billion in net inflows in the previous quarter.

U.S. Crude Oil & Natural Gas Rig Counts Are Trending Higher

Nov. 29, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post illustrates the dramatic reduction in the number of active U.S. crude oil and natural gas rigs since energy prices peaked in 2014, as well as a bit of a rebound in the counts in the second half of 2016.
2. Rig count cuts are generally done in an effort to curb production in response to declining energy prices. Rig counts tend to rise when energy producers sense that higher prices are not only coming, but are sustainable.

Higher Rates Won’t Crush Housing
Nov. 28, 2016 - First Trust -  In the past 7 ¾ years, we have consistently urged investors to separate their politics from their investing. It’s way too easy to say, “Their guy is in the White House; so everything must be awful – and if anything good happens, it must be fake, or a ‘sugar high’.”

The ETF Investor Reaction to the Election in 9 Charts
Nov. 25, 2016 - Morningstar, Inc. -  The ripples of investors reassessing U.S. government policy could be seen clearly among exchange-traded funds.

A Smoother (But Still Bumpy) Emerging Markets Ride
Nov. 23, 2016 - Morningstar, Inc. -  Low-volatility emerging-markets ETF can reduce risk and still provide diversification benefits investors seek.

The U.S.Dollar Is Once Again Testing The Upper Limits Of Its Recent Range

Nov. 22, 2016 - First Trust -  View from the Observation Deck
1. Today’s chart is an update of a previous post we did back in August showing the fluctuations in the U.S. Dollar Index (DXY) since mid-2014.
2. From 6/30/14 through 11/18/16, the U.S. Dollar Index rose from a reading of 79.78 to 101.21, or a gain of 26.86%, according to Bloomberg.

Big Boom for Stocks 
Nov. 21, 2016 - First Trust -  The S&P 500 hit a low of 666 on March 6, 2009 and was up 213%, excluding dividends, through November 4, 2016. Since then, the S&P 500 is up another 4.6%, and closed just 0.5% from a new all-time high last Friday.

Vanguard Inflation-Protected Securities Is a Top Pick
Nov. 20, 2016 - Morningstar, Inc. -  Vanguard Inflation-Protected Securities is an excellent choice for investors looking for a pure-play inflation hedge. Its fees are among the lowest for open-end mutual funds and exchange-traded funds; it has excellent long-term performance; and it benefits from Vanguard’s strong stewardship. For these reasons, it earns a Morningstar Analyst Rating of Gold. 

The Trouble with TIPS (and Some Workarounds)
Nov. 20, 2016 - Morningstar, Inc. -  After languishing at below-normal levels for the better part of a decade, worries over inflation have flared over the past week following the election results. As Morningstar director of economic analysis Bob Johnson noted in this video, an increase in infrastructure spending, accompanied by tax cuts and decreased regulation, all of which President-elect Donald Trump put forth as economic prescriptions in the run-up to the election, could stoke inflationary pressures. 

Bargain-Hunting: Finding Value With Index Funds
Nov. 16, 2016 - Morningstar, Inc. -  How aggressively a fund pursues value is an important consideration.

Investor Sentiment In Equities Shifted After Midyear
Nov. 15, 2016 - First Trust -  View from the Observation Deck
1. Today’s blog post features the total return performance of the S&P 500 Index and its 11 major sectors over three specific time periods.
2. The shift in investor sentiment that we eluded to pertains to the sell-off in those sectors that performed extremely well for the 12- month period ended 6/30/16 (see chart). We are referring to Utilities, Telecommunication Services, Real Estate and Consumer Staples, which posted total returns ranging from 18.66% to 31.47%.


Nov. 14, 2016 - First Trust -  Elections have consequences and the impact on U.S. economic policy of last week’s election will be enormous. We’re sure we’ll be writing about all of these issues in much greater depth over the next several months, but, for now, here’s a broad outline of what to expect.

Index Funds and ETFs: Tax-Efficient, But Not Always
Nov. 10, 2016 - Morningstar, Inc. -  JP Morgan Equity Index fund (OGEAX), an S&P 500 index tracker, is estimating a 9% capital gains distribution in 2016, following on the heels of an even larger distribution in 2015. That's no doubt an unwelcome development for investors who had been counseled to use broad-market index funds in their taxable accounts, but it shouldn't come as a complete surprise. 

Saving Private Sector
Nov. 09, 2016 - First Trust -  In the movie “Saving Private Ryan,” multiple brave soldiers give their lives to save one (the last-surviving of four brothers) in World War II. During a final, chaotic and riveting battle scene, Ryan is miraculously saved, but with tremendous loss of life. A bloody and dying, married, teacher from Pennsylvania – Captain Miller (played by Tom Hanks) – tells the farm boy from the Corn Belt – Private James Ryan (played by Matt Damon) – to “earn it.” “Earn” the sacrifice!

October ETF Flows: Despite the Red October, ETFs Flows See Green
Nov. 08, 2016 - State Street Global Advisors -  The hunt for Red October has ended. Last month’s market performance left nine out of the 11 US GICS sectors in the red.1 This led the S&P 500® Index to post its worst monthly performance since January and the Dow Jones Industrial Average to notch its third consecutive monthly decline—its longest losing streak since 2011.2 Bonds didn’t fare much better as inflationary pressures and the prospects of higher rates sent yields higher and prices lower.3

A Snapshot of Bond Valuations
Nov. 08, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is one we do on an ongoing basis so that investors can monitor fluctuations in bond prices relative to changes in interest rates and the global economy.
2. From 5/31/16 through 11/4/16 (chart period),the yield on the benchmark 10-year Treasury note (T-Note) declined by seven basis points, from 1.85% to 1.78%, according to Bloomberg. It was as low as 1.36% (7/8/16) in the period.

Precious Metals Monitor --- October 2016

Nov. 04, 2016 - ETF Securities -  Hawkish rhetoric and rate expectations drove sell off in precious metals
As year end approaches, market expectations for a December US Federal Reserve (Fed) interest rate hike are rising. As of October 31st, futures markets are implying a 71% probability for a December interest rate increase. Historically, the threat of rate hikes has pushed up the US dollar consequently weighting on commodities prices - particularly gold which has a strong negative correlation to the dollar.

Q3 Productivity (Preliminary) 
Nov. 03, 2016 - First Trust -   Nonfarm productivity (output per hour) increased at a 3.1% annual rate in the third quarter, much faster than consensus expected gain of 2.1%. Non-farm productivity is unchanged versus last year.  Real (inflation-adjusted) compensation per hour in the non-farm sector increased at a 1.7% annual rate in Q3 and is up 1.1% versus last year. Unit labor costs rose at a 0.3% rate in Q3 and are up 2.3% versus a year ago.

5 Tips For Trading ETFs
Nov. 02, 2016 - Morningstar, Inc. -  Some investors gloss over the "ET" in ETF, failing to understand or appreciate what these two letters stand for and the implications of investing in a fund that trades like a stock. The exchange-traded nature of these funds is increasingly taken for granted as many of the largest ETFs trade at tight spreads in very narrow bands around their net asset values through most market conditions. 

These 3 ETFs Are Top Options in Their Categories
Nov. 02, 2016 - Morningstar, Inc. -  We highlight three exchange-traded funds that are best-of-breed, and one that falls short relative to peers.

Finding the Signal Through the Noise: Does High Yield Have Room to Run?
Nov. 01, 2016 - State Street Global Advisors -  The high yield market is on pace for its fifth best annual performance in 20 years,1 and assets under management for the high yield corporate bond ETF market hit a record at the end of the third quarter as investors seek yield in a world where yield is hard to come by.2

Introducing the Morningstar Analyst Rating for ETFs
Nov. 01, 2016 - Morningstar, Inc. -  On Nov. 1, 2016, we unveiled Morningstar Analyst Ratings for more than 250 exchange-traded funds listed around the world, including 100-plus U.S.-listed funds. While this first batch of rated ETFs already accounts for a big portion of the global ETF market--more than $1.75 trillion in assets worldwide as of the end of September--we expect to assign Analyst Ratings to dozens more ETFs in the months ahead.

A Snapshot of Micro-Cap Stocks vs. Small-Cap Stocks
Nov. 01, 2016 - First Trust -  View from the Observation Deck
1. While there is no official set of parameters that define a micro-capitalization (micro-cap) stock,the U.S. Securities and Exchange Commission (SEC) defines them as companies with a market value of less than $250 or $300 million. Some money managers may stretch it to the $1 billion mark or so in order to expand the universe of stocks and/or increase liquidity, in our opinion.
2. As of 2015,there were over 20,000 publicly traded companies and more than 60% of them were micro-caps, according to The MicroCap Conference, which defines a micro-cap company as one that is valued at less than $500 million. Micro-caps account for less than 3% of total equity market capitalization.

Brexit Redux? 
Oct. 31, 2016 - First Trust -  It’s not like we all don’t know that certain media outlets favor certain candidates. Some outlets seem “more fair” than others, but some go to absurd lengths to spin the news

Third Quarter GDP (Advance)

Oct. 28, 2016 - First Trust -   The first estimate for Q3 real GDP growth is 2.9% at an annual rate, beating the 2.6% the consensus expected. Real GDP is up 1.5% from a year ago.
 The largest positive contributions to the Q3 real GDP growth rate were consumer spending, net exports, and inventories.

Rising Valuations Driving Down the Yield of This Utilities ETF
Oct. 28, 2016 - Morningstar, Inc. -  The utilities sector has historically been an income oasis, but demand from income-hungry investors is sending yields lower.

Fickle Investors Have Missed Out on This ETF's Momentum Strategy
Oct. 26, 2016 - Morningstar, Inc. -  Momentum is not a factor for the faint of heart.

A Snapshot Of Moving Averages
Oct. 25, 2016 - First Trust -  View from the Observation Deck
1. In today’s post, we are showing the percentage of stocks in a number of major U.S.stock indices that are trading above their respective 50-Day and 200-Day moving averages.
2. Moving averages tend to smooth out day-to-day price fluctuations and can be a useful tool for traders to identify both positive trends and reversals, in our opinion.

Growth Stepping Up
Oct. 24, 2016 - First Trust -  Real GDP has been soft in the past year, growing only 1.3% in the year ending in the second quarter. In the four quarters before that, however, real GDP grew 3%. That’s what it’s supposed to be like in a Plow Horse economy, with real GDP growth averaging around 2%, sometimes a little faster, sometimes slower

Modest Style Bets, Modest Price
Oct. 21, 2016 - Morningstar, Inc. -  This multifactor ETF won't shoot the lights out, but it has a good chance to slightly outperform the S&P 500 over the long term.

Economic Growth: Great for Everyone but Investors?
Oct. 19, 2016 - Morningstar, Inc. -  While it may be intuitive to presume strong economic growth translates into strong stock market performance, the evidence suggests otherwise.

Sector Performance Via Market Capitalization
Oct. 18, 2016 - First Trust -  View from the Observation Deck
1. From 12/31/15 through 10/17/16,small-capitalization (cap) stocks outperformed both mid- and large-cap stocks, as measured by the S&P 500 Index, S&P MidCap 400 Index and S&P SmallCap 600 Index (see table).
2. In that period, the only sector that posted a negative total return was Health Care. It was down in the S&P 500 and S&P SmallCap 600 Indices. Ironically, it performed well in the mid-cap space.

Alternatives Update - 3rd Quarter 2016
Oct. 18, 2016 - First Trust -  In the third quarter, Alternative Investments (“Alternatives”) were a mixed bag with regards to performance (Figure 1). Six of eleven categories had positive returns with the remaining five posting negative returns. The strongest performing categories were primarily focused in the credit markets and the higher equity beta related strategies (hedged equity, event driven). 

Does Growth Kill or Is There No Growth?
Oct. 17, 2016 - First Trust -  Two weekend articles, in major US newspapers, left us shaking our heads. The Washington Post wrote that "economic growth actually kills people," while The Wall Street Journal published a piece saying, ironically, we should get used to slow growth - it's normal.

Some Insight Into The S&P 500 Index Dividend Payout
Oct. 11, 2016 - First Trust -  View from the Observation Deck
1. Today's chart provides a comparison of the contributions to the S&P 500 Index's dividend payout, by sector, using current levels (9/30/16) versus the end of 2006.
2. We chose 12/31/06 levels in order to highlight where contribution levels stood prior to the 2008-2009 financial crisis.

Inflation Ready to Rise
Oct. 10, 2016 - First Trust -  One of the key excuses for the Federal Reserve to hold off raising rates again and again, and to raise them very slowly, is that inflation remains extremely low

S&P 500 Index Dividend-Payers Still Distributing Lots Of Cash To Shareholders

Oct. 04, 2016 - First Trust -  View from the Observation Deck
1. S&P 500 Index companies paid out $98.30 billion in stock dividends in Q2'16,up 4.1% from the $94.45 billion distributed in Q2'15.
2. It marked the seventh consecutive quarter in which cash dividend distributions exceeded $90 billion.Over the past 35 quarters through Q2’16,the average dividend payout was $70.8 billion.

Cut Spending to Grow Economy
Oct. 03, 2016 - First Trust -  Austan Goolsbee, former Chairman of President Obama’s Council of Economic Advisors, was interviewed by Paul Gigot on Fox News this past weekend and asked about slow economic growth. He argued that “a lack of ‘aggregate demand’ around the world and in the United States” is reducing business investment and slowing economic growth.

Precious Metals Monitor --- September 2016
Oct. 03, 2016 - ETF Securities -  Wake me up when September ends
Markets entered September with a renewed expectation that the Federal Reserve would continue its interest rate tightening cycle. This expectation was quickly shattered as a significantly weaker US jobs number for August came out in the first week of the month.

Indonesia by Numbers
Sep. 30, 2016 - Aberdeen Asset Management -  With a population of over 250 million, Indonesia’s growth potential is undeniable. President Joko Widodo, or Jokowi as he is more widely known, has been pushing for reforms in the Southeast Asian archipelago. The country is making steady progress. It has vowed to improve infrastructure and open opportunities to foreign investors, which should bode well for its long-term prospects.

Sprott Gold Report: September 2016

Sep. 30, 2016 - Sprott -  During the summer months, precious metals consolidated sharp gains of June and early July in a constructive sideways pattern. Between June 30 and September 13, spot gold was basically unchanged, declining 0.3% (from $1,322.20 to $1,319.01), while spot silver gained 0.8% (from $18.72 to $18.87). The U.S. dollar was similarly flat, with the U.S. Dollar Index (DXY) declining 0.5% (from 96.14 to 95.63). Given relative calm in precious-metal and U.S. dollar markets, it is interesting to note that 10-year Treasury yields jumped 18% over the same span (from 1.47% to 1.73%).

Another golden rule: gold miners ≠ gold
Sep. 30, 2016 - ETF Securities -  Summary
• Unlike gold, historically gold miners have served as ineffective hedges against tail event risk and large market drawdowns.

2nd Quarter GDP (Final)
Sep. 29, 2016 - First Trust -   Real GDP growth in Q2 was revised up to a 1.4% annual rate versus a prior estimate of 1.1%. The consensus expected 1.3%.
 The largest upward revisions were for business investment, inventories, and net exports.

The Growth In State Tax Collections May Be Better Than Some Think

Sep. 29, 2016 - First Trust -  View from the Observation Deck
1. The latest data on state tax collections in the U.S. is as of Q1’16.We have provided data going back 40 quarters (10 years) to Q2’06.
2. Totalstate tax collectionsregistered gainsin 34 of the 40 quarters,on a year-over-year basis,or 85% of the time.Five of the six quarters where growth rates turned negative occurred during the 2008-2009 financial crisis.

The Number of Strategic-Beta ETPs Continues to Mushroom
Sep. 28, 2016 - Morningstar, Inc. -  New funds are coming to market at a record pace, complexity is on the rise, and fees are under pressure.

The Recovery In Financials Could Include Rising Dividend Payouts

Sep. 27, 2016 - First Trust -  View from the Observation Deck
1. As indicated in the chart, from 2004-2007,the financial companies in the S&P 500 Index accounted for nearly 30% of the S&P 500 Index’s dividend payout. In that period, no other sector even reached 15%.
2. The chartshows a steep plunge in the contribution from financial companiesin 2009 and 2010.This was an unfortunate byproduct of the 2008-2009 financial crisis.

It’s Still the Fed, And It’s Not Magic
Sep. 26, 2016 - First Trust -  We hate to do this and we hope we don’t put you to sleep so early in the week, but it’s time to talk about monetary policy. Specifically, the “transmission mechanism” of monetary policy

Rate Hike Looks Set for December
Sep. 21, 2016 - First Trust -  The Federal Reserve kicked the rate hike can down the road once again, but looks very likely to raise rates in December.

Technology Stocks Have Delivered Strong Returns In The Current Bull Market

Sep. 20, 2016 - First Trust -  View from the Observation Deck
1. From 3/9/09-9/19/16 (current bull), all four of the technology-related indices featured in the chart outperformed the S&P 500 TR Index.
2. The average annualized total returns for the period were as follows: ISE Cloud Computing TR Index (+29.99%);Dow Jones Internet Composite TR Index (+28.05%);Philadelphia Semiconductor Index (+23.12%);S&P 500 InformationTechnology TR Index (+21.70%); and S&P 500 TR Index (+19.00%), according to Bloomberg.

The Glass Half Empty
Sep. 19, 2016 - First Trust -  We get called perma-bulls, wrongly we think, becausewe were late to call 2008 a Panic, and because we've pushedback against the doom and gloom of the past 7 1/2 years. Time and again over the past several years, we’ve argued the Plow Horse economy would continue to grow   

This Covered Call Index Tends To Beat The Broader Market In Low Return And Negative Return Climates

Sep. 15, 2016 - First Trust -  View from the Observation Deck
1. From 2001-2015,the CBOE S&P 500 BuyWrite Index (an index designed to measure a covered call strategy) outperformed the S&P 500 Index in six of the 15 calendar years. It is has lagged year-to-date thru 9/13/15 (see chart).
2. Over that 15 year period (2001-2015), the S&P 500 Index posted an average annual total return of 5.00%, compared to 3.93% for the CBOE S&P 500 BuyWrite Index, according to Bloomberg.

Avoid Leveraged and Inverse ETFs
Sep. 14, 2016 - Morningstar, Inc. -  They're only meant to be a one-day holding, and during that period you're just guessing.

Leveraged Loans (Senior Loans) Could Be One Of The Beneficiaries Of Higher Interest Rates

Sep. 13, 2016 - First Trust -  View from the Observation Deck
1. Conventional thought says that it is prudent to shorten the duration of one's bond holdings when interest rates are on the rise. With respect to pricing,fixed-rate bonds are particularly vulnerable to rising interest rates.
2. Today’s post seeks to illustrate that investors may shift capital in and out of floating-rate corporate securities based on the rise or fall of either short-term or longer-term interest rates.

Fundamentals, Not Headlines
Sep. 12, 2016 - First Trust -  The S&P 500 dropped 2.5% on Friday while the yield on the 10-year Treasury note rose to 1.67%, the highest since June. You’ll have to excuse us if we’re unimpressed.

Playing Favorites With Multifactor ETFs
Sep. 07, 2016 - Morningstar, Inc. -  Playing favorites here is difficult given that each of these strategies is designed to deliver somewhat different outcomes.

QE Is Not A Magic Elixir
Sep. 06, 2016 - First Trust -  In the Wild West, traveling salesmen sold Magic Elixirs that cured anything that ailed you. These days, the elixir is Quantitative Easing (QE) – it supposedly saved the world from Armageddon, lifted stock prices, drove down bond yields, and, according to at least one analyst, created the fracking boom.

The Bull Market In The S&P 500 Index May Be Picking Up Steam After A Sluggish 2015

Sep. 06, 2016 - First Trust -  View from the Observation Deck
1. From 1981 through 2015, the average number of stocks in the S&P 500 Index that finished the calendar year in positive territory was 312, according to data from S&P Dow Jones Indices.
2. As indicated in the chart,the number of stocks in the index that were up through the first eight months of 2016 totaled 355, outpacing each of the previous five-year averages.

AllianceBernstein, Karl Marx, and Index Investing
Sep. 02, 2016 - Morningstar, Inc. -  A colorful mix, but not very informative.

How ETFs Are Incorporating Sustainability
Sep. 01, 2016 - Morningstar, Inc. -  A spate of recent launches has given sustainable investors a greater range of diversified choices within the U.S. ETP universe.

ETFs That Take Some of the Volatility Out of Foreign Stocks
Aug. 31, 2016 - Morningstar, Inc. -  Currency-hedging and low-volatility approaches might make it easier to stick with international stocks over the long haul.

The U.S.Dollar Index Has Been Range Bound Since March 2015

Aug. 30, 2016 - First Trust -  View from the Observation Deck
1. The U.S.dollar hasstrengthened significantly relative to other major world currenciessince the middle of 2014.A strong dollar can make U.S.goods and services less competitive,with respect to price, in the global marketplace.
2. From 6/30/14 through 8/29/16 (period in the chart),the U.S.Dollar Index rose from a reading of 79.78 to 95.58,or a gain of 19.80%, according to Bloomberg.When measuring the index from 6/30/14 to its high (100.33) for the period on 3/13/15,the index rose by 25.76%. From 3/13/15 (high) through 8/29/16, however,the index was down 4.73%.

Bull Market Has Further to Run
Aug. 29, 2016 - First Trust -  Now, the pessimists can’t stop talking about profits. S&P 500 reported earnings are down 3.4% and the government’s economy-wide measure of corporate earnings are down 4.9% from a year ago.

2nd Quarter GDP (Preliminary) 

Aug. 26, 2016 - First Trust -   Real GDP was revised to a 1.1% annual growth rate in Q2 from a prior estimate of 1.2%, matching consensus expectations.
 The largest downward revisions were for net exports, government purchases, and inventories,

One-Stop Shopping for Exposure to International Stocks
Aug. 26, 2016 - Morningstar, Inc. -  This iShares’ ETF has appeal, but investors don't have to go much further afield to find more-compelling options.

Be Mindful of Rich Valuations in Low-Volatility Stocks
Aug. 24, 2016 - Morningstar, Inc. -  For the year to date, the top-ranked equity exchange-traded fund by net new inflows is  iShares Edge MSCI Minimum Volatility USA (USMV). The fund vacuumed up $6.7 billion in net new investor capital during the first seven months of the year. 

S&P 500 Index Stock Prices Relative To Their 52-Week Highs

Aug. 23, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post updates three previous posts done on 7/7/16 (click here to view), 5/17/16 (click here to view) and on 2/16/16 (click here to view).
2. The S&P 500 Index, which is capitalization-weighted, posted a total return of 13.22% for the 12-month period ended 8/22/16, according to Bloomberg.On a price-only basis,which excludes dividends,the index was up 10.74%

Broad Commodity ETFs Gain Traction in Q2: Will the Trend Continue?

Aug. 22, 2016 - First Trust -  » Overall US listed ETF net inflows totaled $34.2 billion in Q2, slightly accelerating from $32.8 billion in net inflows in the previous quarter.
» For the second quarter in a row, the strongest category for net asset flows was Taxable Bond ETFs, with $13.1 billion in net inflows in Q2.

Shut Out the Pessimists
Aug. 22, 2016 - First Trust -  You know the economy is getting better when the pessimists’ theories on economic doom have been so wrong for so long they have to start recycling the old ones.

Quality at a Low Cost
Aug. 19, 2016 - Morningstar, Inc. -  Good companies don't always make good investments, but they may offer attractive returns relative to the market over the long term when they are trading at reasonable valuations, as they are now. Investors can get low-cost exposure to quality stocks through  iShares Edge MSCI USA Quality Factor (QUAL) (0.15% expense ratio).

The U.S. Crude Oil Rig Count Is Rising But The Natural Gas Rig Count Is Not

Aug. 18, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post illustrates the dramatic reduction in the number of active U.S. crude oil and natural gas rigs since energy prices peaked in 2014.
2. Rig count cuts are generally done in an effort to curb production in response to declining energy prices. Rig counts tend to rise when energy producers sense that higher prices are not only coming, but are sustainable.

Most Investors Probably Won't Outperform This Simple Portfolio
Aug. 17, 2016 - Morningstar, Inc. -  Investing can seem like a daunting task. But low-cost index funds make it easy for investors to do better than they would with most professionally managed offerings, after fees. A broad-market index reflects the collective portfolio of all market participants and their view on the value of its holdings.

Beware of Popular Narratives

Aug. 15, 2016 - First Trust -  Narratives matter. They affect political outcomes and influence investment decisions. Narratives serve a purpose, but in serving that purpose they are often highly misleading, especially when they are invented to cover up a mistake, or to convince people to vote a certain way. These days, there are three main narratives impacting investors.

The Case for Multifactor ETFs
Aug. 10, 2016 - Morningstar, Inc. -  The case for multifactor exchange-traded funds is straightforward. It is in essence identical to the case for diversification, which Nobel Prize-winning economist Harry Markowitz has described as the only "free lunch" in investing. Implementation is simple: Don't put all your "eggs" in one factor.

Retail Investors Continue To Invest In Foreign Stocks
Aug. 09, 2016 - First Trust -  View from the Observation Deck
1. Over the past 6½ calendar years (2010-6/16), retail investors funneled a net $399.85 billion into open-end World Equity mutual funds, according to data from the Investment Company Institute (ICI).
2. As indicated in the chart, all periods registered net inflows despite multiple negative total returns for the MSCI Daily TR Net World (Ex-U.S.) Index and MSCI Daily TR Net Emerging Markets Index.

June International Trade
Aug. 05, 2016 - First Trust -   The trade deficit in goods and services came in at $44.5 billion in June, larger than the consensus expected $43.0 billion.
 Imports rose $4.2 billion, led by crude oil, pharmaceuticals, and cell phones & other household goods. Exports increased $0.6 billion in June, led by civilian aircraft and corn.

Better Bond ETFs?
Aug. 03, 2016 - Morningstar, Inc. -  A new crop of rules-based bond ETFs is attempting to improve on traditional market-cap-weighted alternatives.

Utilities Looking A Bit Rich After Staging Strong Rally In 2016

Aug. 02, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of one we did on 7/9/15 (click here to view).
2. The yield on the 10-year Treasury note fell from 2.32% on 7/9/15 to 1.45% on 7/29/16, or a decline of 87 basis points, according to Bloomberg.

GDP Distortions
Aug. 01, 2016 - First Trust -  As recently as two years ago, more than 70% of Americans thought the US economy was still in recession. We’re not sure what that figure is today – maybe pollsters are too busy with the election – but we’d bet it’s still very high.

High-Quality Dividends for a Slim Fee
Jul. 30, 2016 - Morningstar, Inc. -  Schwab US Dividend targets steady dividend-payers and is the least expensive dividend-oriented ETF available.

These 5 'Old-Fangled' Investment Options May Do Just As Well as Newer Alternatives
Jul. 28, 2016 - Morningstar, Inc. -  Don't dismiss traditional index funds, static-allocation funds, or traditional IRAs, among others, without careful consideration.

State Street Fee Revenue Drops on Weaker Market Conditions
Jul. 27, 2016 - WallStreetJournal -  State Street Corp.’s shares jumped nearly 7% after the trust bank reported a quarterly profit that beat Wall Street estimates on lower costs.

Navigating ETF Premiums and Discounts
Jul. 27, 2016 - Morningstar, Inc. -  What is net asset value? Why does it matter? And how can you ensure that you are buying and selling ETFs at a fair price?

10 Under-the-Radar and Up-and-Coming Funds
Jul. 26, 2016 - Morningstar, Inc. -  We added an exchange-traded fund for the first time to Morningstar Prospects earlier this year. ETFs have always been eligible for the list of up-and-coming or under-the-radar investment strategies that Morningstar Manager Research thinks might be worthy of full coverage someday.

Consumer Stocks Have Outperformed The Broader Market Over The Past 10 Years

Jul. 26, 2016 - First Trust -  View from the Observation Deck
1. Today’s blog post compares quarterly total returns for the S&P 500 Index versus a 50/50 split between the S&P 500 Consumer Discretionary Index and the S&P 500 Consumer Staples Index.
2. For the 10-year period ended 6/30/16,the 50/50 split outperformed the S&P 500 Index in 21 of the 40 quarters.

Fed Policy Not in Tune With Data
Jul. 25, 2016 - First Trust -  If the Fed were completely honest and transparent, its statement on monetary policy on Wednesday would be only two words: “We goofed.”

June Existing Home Sales 
Jul. 21, 2016 - First Trust -  Existing home sales increased 1.1% in June to a 5.57 million annual rate, beating the consensus expected 5.48 million. Sales are up 3.0% versus a year ago.

Making Contrarian Investing Work
Jul. 20, 2016 - Morningstar, Inc. -  Performance tends to persist in the short run, but betting on long-term losers can be a winning strategy.

The Search For Yield In the Bond Market
Jul. 19, 2016 - First Trust -  View from the Observation Deck
1. Today’s blog post shows where some major bond index yields stood at the close of 6/30/16, and also where they closed in June over the past three, five and seven years.
2. The U.S. economic recovery began in Q3’09, according to the National Bureau of Economic Research

Jul. 19, 2016 - Wells Fargo Advisors -  When reviewing MLP ETPs for a potential investment, in addition to identifying the strategy and/or specific segment of that market in which an investor is interested, the structure of the ETP should also be taken into consideration as one may be more appropriate than the others, depending on the investor’s objective.

Real GDP Accelerating
Jul. 18, 2016 - First Trust -  Forecasting economic growth from quarter to quarter is a humbling experience. Even when you get the trend right – and it’s hard to beat our forecast of Plow Horse growth – there’s always a quarter here and there that will throw you for a loop.

A Dividend ETF That’s Giving Our Longtime Favorites a Run for Their Money
Jul. 15, 2016 - Morningstar, Inc. -  There's a lot to like about this fund—save for its relatively steep price.

BlackRock CEO: Investors Are ‘Afraid’
Jul. 14, 2016 - WallStreetJournal -  BlackRock CEO Laurence Fink speaks after profit at asset manager slips and assets rise to record

June PPI
Jul. 14, 2016 - First Trust -  The Producer Price Index (PPI) increased 0.5% in June, coming in above the consensus expected rise of 0.3%. Producer prices are up 0.3% versus a year ago.
The rise in producer prices in June was broad-based, with final demand services, up 0.4% and final demand goods up 0.8%. Energy prices rose 4.1% in June while food prices increased 0.9%. Producer prices excluding food and energy rose 0.4%.

Index Construction Matters
Jul. 13, 2016 - Morningstar, Inc. -  Parsing the details of index methodologies is central to understanding the processes of index funds and ETFs and informs our overall assessment of these funds' investment merit.

3 Reasons U.K. REITs May Withstand the Brexit Fallout
Jul. 13, 2016 - Cohen & Steers -  With negative sentiment swirling around the U.K., is it time to be a buyer of Britain? We believe many U.K. REITs are well positioned to weather economic uncertainty, aided by stronger balance sheets, greater focus on core assets and an emphasis on cash flow growth over development.

Brexit: what next?
Jul. 12, 2016 - Deutsche Asset & Wealth Managment -  Following the results in the British referendum on membership in the European Union (EU), the market reaction has been as severe as we expected. Global equity markets declined sharply, with Europe especially hard hit, and the British pound (GBP) has depreciated significantly. Despite signs of stabilization in recent days, we believe that Brexit-related risks and uncertainties are here to stay.

A Snapshot Of S&P 500 Index Dividend Increases In The Current Bull Market

Jul. 12, 2016 - First Trust -  View from the Observation Deck
1.. Today’s blog post is just one perspective of the recovery that Corporate America has staged since the end of the financial crisis in 2009, as measured by dividend increases of S&P 500 Index component companies.The current bull market in stocks commenced on 3/9/09.
2. Stock dividend distributions are one measure of a company’s financial well-being.Dividend increases are an important barometer because companies are not likely to raise their dividend payouts unless they can sustain it for an extended period of time, in our opinion.

Ignore the Central Banks
Jul. 11, 2016 - First Trust -  How many times does Chicken Little have to wrongly squawk before investors get it? Yes, payrolls increased just 38,000 in May, and yes, British voters opted for political independence from the European Union. And, yes, Stock markets swooned. But, they will likely hit new highs this week. Just another head fake, brought to you by the bad news bears.

An ETF for Growing Appetites
Jul. 08, 2016 - Morningstar, Inc. -  Long-term growth in global food consumption should benefit this fund's holdings, but investors should be prepared for a bumpy ride.

An ETF for Growing Appetites
Jul. 08, 2016 - Morningstar, Inc. -  Long-term growth in global food consumption should benefit this fund's holdings, but investors should be prepared for a bumpy ride.

Volatility Exchange-Traded Tracking Products (ETPs)
Jul. 07, 2016 - Wells Fargo Advisors -  With the continued growth of the ETP universe, investors have gained access to an ever-increasing variety of asset classes and strategies, one of which is volatility. Investing in volatility is more complex than what the typical investor may assume at first, and this document describes the risks of “investing in volatility”.

Bill Gross: the Market’s Game of ‘Monopoly’ Is Coming to an End
Jul. 06, 2016 - WallStreetJournal -  The game is ending, and some people haven’t even figured out the rules yet.

Unintended Biases in ESG Index Funds
Jul. 06, 2016 - Morningstar, Inc. -  ESG index strategies can be effective tools for values-based investing, but they may introduce some additional bets that investors may not intend to make.

Watch Earnings, Not Fearful Forecasts
Jul. 05, 2016 - First Trust -  We wish we had a dime for every recession forecast we’ve heard in the past seven years. Like someone with hypochondria, fearful forecasters feel economic doom and gloom is right around the corner after every dip in economic data or shift in economic policy.

Commodity Prices Up Sharply In Q2’16
Jul. 05, 2016 - First Trust -  View from the Observation Deck
1. Commodity prices posted their third best quarterly showing in the past 40 quarters (10 Years) in Q2’16, as measured by the Bloomberg Commodity Total Return Index. It was the best quarter for gains since Q4’10.
2. The Bloomberg Commodity Total Return Index was up in 21 of the past 40 quarters, or 52.5% of the time.The index, however, has posted four quarters of double-digit losses since Q2’14 (see chart).

Tax Planning Tips and Fund Picks: A Q&A With Morningstar's Christine Benz
Jul. 04, 2016 - Morningstar, Inc. -  Morningstar's Christine Benz discusses reducing the drag of taxes on a portfolio and shares some of her favorite mutual funds.

Anatomy of a Dud ETF
Jul. 01, 2016 - Morningstar, Inc. -  A few simple checks can help investors avoid funds that are destined for the dustbin of history.

June ISM Manufacturing Index
Jul. 01, 2016 - First Trust -  The ISM manufacturing index rose to 53.2 in June, easily beating the consensus expected level of 51.3. (Levels higher than 50 signal expansion; levels below 50 signal contraction.)

Big Changes in Store for the Biggest Financial Sector ETF
Jun. 29, 2016 - Morningstar, Inc. -  Financial Select Sector SPDR ETF will be paying a special dividend as it adapts to reflect changes to its benchmark index.

Equity REITs Have Shined Relative To Financials Over The Past 15 Years

Jun. 28, 2016 - First Trust -  View from the Observation Deck
1. On September 16, S&P Dow Jones Indices will be adding an 11th sector to the S&P 500 Index:Real Estate Investment Trusts (REITs), according to its own release.
2. Currently,REITs are classified as an industry group within the financialsector.Today’s chartshowsthe relative performance of equity REITs and Financials for standard time periods.

Uncertainty Not All Bad 
Jun. 27, 2016 - First Trust -  If you listen to elite policymakers around the globe, they all seem to agree on one thing: the need to avoid “uncertainty.” In their thinking the battle against uncertainty is a never-ending struggle, and if only the world were more certain the economy would be doing much better

There's Value in This High-Dividend ETF
Jun. 24, 2016 - Morningstar, Inc. -  This low-cost exchange-traded fund offers an attractive yield while diversifying risk.

Finding Your Sweet Spot Along the Dividend Spectrum
Jun. 22, 2016 - Morningstar, Inc. -  Dividend strategies can look and behave differently from one another depending on how they manage the trade-off between income and dividend growth.

How Some Major Bond Indices Have Fared Over The Past Five Years

Jun. 21, 2016 - First Trust -  View from the Observation Deck
1. Today’s blog post is a simple exercise we can do to quickly assess how the various major bond categories are performing.
2. We are using a five-year time frame because it has historically been characterized as a long-term holding period for securities.

Policy Stagnation
Jun. 20, 2016 - First Trust -  Back in the 1970s, President Jimmy Carter told us that we were just going to have to learn to live with less. The mood among establishment economists in the late 1970s was gloomy. The world was running out of oil; inflation was an odd phenomenon that was beyond our control. Sure, we could get lower unemployment, but only by letting inflation get even higher. Somehow, the US had lost its post-war economic mojo and just wasn’t going to get it back.

Ready, Fire, Aim: The ETF Industry Blasts Its Spaghetti Cannon
Jun. 17, 2016 - Morningstar, Inc. -  Though there are now over 1,900 exchange-traded products to choose from, most of us could build a perfectly suitable, low-cost portfolio selecting a small handful of the 100 largest.

Municipal Quarterly Update – 1st Quarter 2016
Jun. 15, 2016 - First Trust -  1st Quarter 2016 Municipal Market Performance and Highlights
• While municipal bonds posted positive total returns during the first quarter of 2016,munislagged other asset classes including U.S. Treasuries. The Barclays Municipal Bond Index returned 1.67% for the three months ended March 31, 2016,while the Barclays Municipal 10 Year Revenue Index had a total return of 1.98%. In comparison, the Barclays U.S. Treasury Index returned 3.20% for the three months ended March 31, 2016.(Source: Barclays,

Fed Projects Very Slow Path for Rate Hikes 
Jun. 15, 2016 - First Trust -  At her post-meeting press conference Fed Chief Janet Yellen emphasized that it’s important not to “overreact” to one or two reports on the economy. But that’s exactly what the Fed did by refraining from raising rates at today’s meeting and notably altering its projections for future rate hikes.

Jun. 15, 2016 - Morningstar, Inc. -  Investor demographics are slowly turning in favor of the pairing of impact-oriented strategies and the exchange-traded fund chassis, and investors' need for relevant analytics is growing as a result.

The Outlook For 2016 Earnings Indicates Recovery Mode For Q2, Q3 & Q4

Jun. 14, 2016 - First Trust -  View from the Observation Deck
1. Today's chart is intended to give investors some visual perspective on where equity analysts think earnings are headed following a disappointing showing by the S&P 500 Index in Q1’16.
2. As indicated in the chart,the consensus estimates from equity analysts tracked by Bloomberg reflect an upward trajectory for earnings over the next three quarters. Earnings estimates are subject to change.

Why Does Japan Still Charge Taxes? 
Jun. 13, 2016 - First Trust -  Investors often wonder why governments don’t operate more like households, balancing their budgets year by year. Seems like good advice, right? If households can’t live beyond their means forever, governments shouldn’t either. But, what if your household could borrow for free? In other words, what if you were Japan!

Older Doesn't Mean Better
Jun. 10, 2016 - Morningstar, Inc. -  There are broader, cheaper options than this 2000-era world-stock ETF.

What Is an Emerging Market?
Jun. 08, 2016 - Morningstar, Inc. -  MSCI will answer this question with its June 14 announcement regarding changes to its indexes.

A Snapshot Of European Equities
Jun. 07, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of one we did on 2/2/16 (click here to view).
2. The 2016 earnings growth rate estimates (see chart) are in some cases much higher than they were back in February.This was due to 2015’s earnings being revised lower.

Brexit Is Freedom
Jun. 06, 2016 - First Trust -  Earlier this year, NHL hockey fans were asked to vote for the captains of the four teams to face off in this year’s new AllStar tourney. Three of the picks were players you’d expect: Jaromir Jagr from the Florida Panthers, Alex Ovechkin from the Washington Capitals, and Patrick Kane from the Chicago Blackhawks: True Gods of the Rink, who have scored hundreds of points.

A Dynamic Currency-Hedged Stock Strategy
Jun. 03, 2016 - Morningstar, Inc. -  This international-stock ETF places currency bets in an attempt to enhance performance.

A Snapshot Of Bond Valuations
Jun. 02, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is one we do on an ongoing basis so that investors can monitor fluctuations in bond prices relative to changes in interest rates and the global economy.
2. From 1/15/16 (1/18 was a holiday) through 5/31/16 (chart dates),the yield on the benchmark 10-Year Treasury Note (T-Note) declined 19 basis points, from 2.04% to 1.85%, according to Bloomberg. It was as low as 1.66% (2/11/16) in the period.

Mind the Gap: Active Versus Passive Edition
Jun. 01, 2016 - Morningstar, Inc. -  The biggest costs investors tend to incur don’t show up on a fact sheet but are a product of their own bad behavior.

Greece is Already Bankrupt 
May. 31, 2016 - First Trust -  One of the recurring pessimistic themes of the past several years is that Greece is about to default on its debt. Now that Greece is negotiating again, this fear is back. Some wonder if a major European financial firm, like Deutsche Bank, will also fail.

What if more investors adopt strategic beta?
May. 30, 2016 - John Hancock -  For more than three decades, Dimensional Fund Advisors has invested using a systematic approach designed to outperform conventional market-cap-weighted indexes. Our equity strategies seek to increase expected returns by pursuing size, relative price, and profitability premiums while sharing many of the benefits of conventional indexes, including low fees,
low turnover, and broad diversification. In efforts to outperform conventional indexes, we focus on all aspects of implementation, including research into the dimensions of expected returns, thoughtful portfolio structure, and efficient portfolio management and trading.

Defensive Exposure to Stocks Abroad
May. 27, 2016 - Morningstar, Inc. -  This low-volatility ETF should give international-stock investors a smoother ride and better downside protection.

April Durable Goods
May. 26, 2016 - First Trust -  New orders for durable goods rose 3.4% in April (+3.9% including revisions to prior months). The consensus expected a gain of 0.5%. Orders excluding transportation rose 0.4% in April, slightly above the consensus expected increase of 0.3%. Orders are up 1.9% from a year ago while orders excluding transportation are down 1.4%.

Risks and Opportunities in Senior Loan ETFs
May. 25, 2016 - Morningstar, Inc. -  These investments offer attractive yields and can hold up well when interest rates rise, but they come with considerable credit and liquidity risk.

U.S. Equities Still The Dominant Market On The Globe
May. 24, 2016 - First Trust -  View from the Observation Deck
1. Today’s post is an update of one we did on 8/25/15 showing the changes in total world equity market capitalization (market cap) over a 10-year period (8/21/05 thru 8/24/15).We have extended the chart through 5/23/16.
2. This snapshot is a reminder to all investors that, while stocks have the potential to build wealth over time,stock markets do not go up in a straight line.

Three-Year Anniversary for the Largest Actively Managed High Yield ETF

May. 23, 2016 - First Trust -  » US listed ETF net inflows totaled an estimated $32.7 billion in Q1, a significant drop from the $95.5 billion in net inflows in the previous quarter.
» Taxable Bond ETFs had the strongest net inflows, totaling $32.3 billion, more than double the net inflows for the category in the previous quarter.

Fed Teeing Up Rate Hike
May. 23, 2016 - First Trust -  Just a couple of weeks ago the odds of the Federal Reserve raising rates in June were slim to none. The federal funds futures market put the odds of a rate hike around 4%.

REIT Managers and the Active Advantage
May. 20, 2016 - Cohen & Steers -  Should you simply take what the market gives, or strive for more? It depends. Passive index funds may work well for certain investments, but REITs are one area where active managers have historically given investors an advantage. That advantage could add up to a sizeable difference over time, suggesting a place for both active and passive funds in a diversified portfolio.

China’s economic stimulus: finally working, but for how long?
May. 19, 2016 - Aberdeen Asset Management -  We believe China’s substantial monetary and fiscal stimulus is finally translating into stronger economic activity. Whether this boost is sustained, or fizzles out under the weight of the large structural imbalances in the Chinese economy, may be one of the defining features of this year’s global economic and investment landscape. 

Exchange-Traded Tracking Product Due Diligence
May. 18, 2016 - Wells Fargo Advisors -  Exchange-traded products (ETPs) have become increasingly popular among investors because they provide exposure to a variety of asset classes and strategies within a single vehicle with intraday liquidity, transparency, typically low costs, and tax efficiency. However, as the ETP market has expanded rapidly, as shown in the chart below, selecting the most appropriate ETP has become a much more challenging process. 

April Housing Starts
May. 17, 2016 - First Trust -  Housing starts increased 6.6% in April to a 1.172 million annual rate, easily beating the consensus expected 1.125 million. Starts are down 1.7% versus a year ago.

S&P 500 Index Stock Prices Relative To Their 52-Week Highs

May. 17, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of one we did on 2/16/16 (click here to view).Today’s chart reflects improvement across the board.
2. The S&P 500 Index, which is capitalization-weighted, posted a total return of -0.51% for the 12-month period ended 5/16/16, according to Bloomberg.On a price-only basis, which excludes dividends,the index was down 2.64%.

April PPI
May. 13, 2016 - First Trust -  The Producer Price Index (PPI) increased 0.2% in April, coming in below the consensus expected rise of 0.3%. Producer prices are up 0.1% versus a year ago.

Can Anything Stop Vanguard?
May. 13, 2016 - Morningstar, Inc. -  Short of an unlikely breach of investor trust, Morningstar’s Ben Johnson thinks the fund giant will continue its momentum.

Interest Rate Levels Do Not Portend A Bear Market In Stocks

May. 12, 2016 - First Trust -  View from the Observation Deck
1. Today’s blog post is intended to provide a little historical perspective as to where two key benchmark interest rates stood prior to U.S. equities, as measured by the S&P 500 Index,succumbing to bear markets.
2. A bear market in stocks is defined as a decline of 20% or more in the price level of a benchmark index,such as the S&P 500 Index

Keep Your Focus on Fees
May. 11, 2016 - Morningstar, Inc. -  Our semi-annual Active/Passive barometer shows that expenses are one of the only reliable predictors of success, writes Morningstar’s Ben Johnson.

Why Strategic Beta Makes Sense
May. 10, 2016 - Morningstar, Inc. -  This Time Is Different
Thanks for bearing with me this far.
As I have learned from bitter experience, the topic of strategic beta--or “smart beta,” as fund marketers would have it--is not exactly a crowd-pleaser. Today’s article would generate much more interest were the subject Vanguard, or 401(k) plans, or how to make one’s money last while in retirement. Compared with those evergreen themes, the latest investment innovation seems trivial.

April Employment Report
May. 06, 2016 - First Trust -  Nonfarm payrolls increased 160,000 in April, missing the consensus expected 200,000. Including revisions to February/March, payrolls rose 141,000.

A Defensive, Low-Cost Dividend Growth ETF
May. 06, 2016 - Morningstar, Inc. -  This dividend strategy has shone during market downturns by favoring companies with durable competitive advantages.

Defensive ETFs: Too Good to Be True?
May. 04, 2016 - Morningstar, Inc. -  Defensive strategies, like those followed by low-volatility ETFs, can produce better risk-adjusted returns while smoothing out the highs and lows of the market.

2016 & 2017 Earnings Snapshot
May. 03, 2016 - First Trust -  View from the Observation Deck
1. Today's blog features corporate earnings projections for 2016 and 2017. We provide updates on an ongoing basis.
2. The plunge in the price of crude oil since mid-2014 has resulted in a sharp decline in the projected earnings of energy-related companies in 2016 and a subsequent triple-digit projected surge in 2017.

Apple vs The Fed

May. 02, 2016 - First Trust -  Honest question: How much time does the Apple Inc. Board of Directors spend debating whether the Federal Reserve will hike rates once or twice more in 2016? We don’t really know the answer, but we would guess the best answer is zero.

The New Neutral: The long-term case for currency hedging
Apr. 30, 2016 - Deutsche Asset & Wealth Managment -  Currency risk can impact international equity return and risk, but full exposure is often assumed to be the neutral position with asset allocation decisions. Examining the role of currency risk from a long-term asset allocation standpoint finds that currencies can add risk to international equities without improving returns. Reducing currency risk exposure can potentially improve long-term portfolio outcomes, and may be considered the “new neutral” for portfolios.

Timeless Investment Lessons From Warren Buffett's Business Partner, Charlie Munger
Apr. 29, 2016 - Morningstar, Inc. -  A look at the worldview and investment philosophy of one of the great investors of our time. Plus, four ETFs that we believe have many of the characteristics that Munger (and Buffett) look for.

First Quarter GDP (Advance)

Apr. 28, 2016 - First Trust -   The first estimate for Q1 real GDP growth is 0.5% at an annual rate, slightly below the 0.7% the consensus expected. Real GDP is up 1.9% from a year ago.  Consumer spending and home building provided the largest positive contributions to Q1 real GDP growth. Business investment, inventories, trade, and commercial construction subtracted from growth.

A Snapshot Of Major Emerging Market Stock Indices
Apr. 28, 2016 - First Trust -  View from the Observation Deck
1. Emerging markets continue to be a mixed bag. As indicated in the chart, economies steeped in natural resources,such as Russia and Brazil, have performed quite well due in part to the rebound in the price of crude oil.
2. Year-to-date through the close on 4/27,the price of a barrel of crude rose by 22.38% to $45.33, according to Bloomberg.The price of crude oil was up 72.95% from this year’s closing low of $26.21 per barrel on 2/11.

Sprott Gold Report: April 2016
Apr. 28, 2016 - Sprott -  First quarter performance of precious metals and precious-metal equities caught many investors by surprise. After a four-year correction from September 2011 highs, spot gold posted its strongest quarterly performance in 30 years, rising 16.1% (from a year-end 2015 level of $1,061.42 to a 3/31/16 close of $1,232.71). 

A Distinctive Dividend-Growth ETF
Apr. 27, 2016 - Morningstar, Inc. -  This quality strategy looks beyond past dividend growth.

OPEC and the Ash Heap of History
Apr. 25, 2016 - First Trust -  Almost thirty-five years ago, President Reagan went to the British House of Commons and said “freedom and democracy will leave Marxism and Leninism on the ash heap of history.” Reagan chose his words carefully, using a phrase – the ash heap of history – very similar to the one used by the Russian Communist revolutionary Leon Trotsky against his political enemies. Within a decade, the Berlin Wall was no more and neither was the Soviet Union.

A Low-Volatility ETF for Emerging Markets
Apr. 22, 2016 - Morningstar, Inc. -  A more tempered ride, in both downturns and in upturns.

ETFs Get Even Cheaper
Apr. 20, 2016 - Morningstar, Inc. -  Average fees paid by ETF investors have fallen over the last decade as low-cost options gain popularity and large flows create economies of scale.

A Snapshot of Growth vs.Value Investing
Apr. 19, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of a previous one. Investors can compare today's snapshot to the one we did on 2/11/16 (click here to view).
2. Growth tends to outpace value investing when the earnings growth rates of said companies accelerate faster than the broader market,such as right after the economy exits a recession.Growth has slowed of late.

The Q1 Curse Strikes Again
Apr. 18, 2016 - First Trust -  Remember the recession of 2011, or 2014, or 2015?
Each of those years started out with either a contraction or anemic first quarter economic growth. But despite these slowdowns, the US economy didn’t fall into recession. Instead, it was just more Plow Horse growth.

A Portfolio of High-Quality Dividend-Paying Stocks at a Rock-Bottom Price
Apr. 15, 2016 - Morningstar, Inc. -  Schwab U.S. Dividend Equity ETF is a solid core holding with an income orientation.

March CPI
Apr. 14, 2016 - First Trust -   The Consumer Price Index (CPI) increased 0.1% in March, coming in below the consensus expected rise of 0.2%. The CPI is up 0.9% from a year ago.  “Cash” inflation (which excludes the government’s estimate of what homeowners would charge themselves for rent) rose 0.1% in March and is up 0.4% in the past year.

It’s Time To Get Real
Apr. 14, 2016 - First Trust -  View from the Observation Deck
1. As of the close of 4/13/16,the yield on the 10-Yr.T-Note was 1.77%.That is just one basis point above its 1.76% close on 12/31/12 (we will reference this again), according to Bloomberg.
2. This morning’s release of the Consumer Price Index (CPI) headline rate showed that U.S. inflation stood at 0.9% in March, according to the Bureau of Labor Statistics.

Currency Hedgers Behaving Badly
Apr. 13, 2016 - Morningstar, Inc. -  Some newly minted currency hedgers seem to lack the fortitude necessary to reap the long-term benefits of hedging currency risk.

The Bears Get Excited Again 
Apr. 11, 2016 - First Trust -  Since March 9, 2009, stock market bears have used every negative piece of economic data to argue their case. Last week they were hyperventilating over first quarter real GDP growth estimates. After recent inventory data, the Atlanta Fed GDPNow Model said annualized growth will be just 0.1% in Q1. It could be zero, or even negative

Everything You Need to Know About Strategic-Beta ETFs
Apr. 08, 2016 - Morningstar, Inc. -  Much of what investors need to know about strategic-beta funds has already been learned from decades of examining active strategies and how investors vet them and put them to use.

Not A Bad Bull Market After All
Apr. 07, 2016 - First Trust -  View from the Observation Deck
1. Today’s chart features performance figures for some major domestic and foreign stock and bond indices in the current bull market, which for equities commenced after 3/9/09.
2. Nearly all of the average annualized total returns depicted in the chart compare favorably to a couple of long-term historical averages

Don’t Short the Participation Rate!

Apr. 04, 2016 - First Trust -  Last Friday was an interesting day. For years now, the US has consistently added jobs and the unemployment rate has steadily fallen. But, the Pouting Pundits of Pessimism keep arguing that a falling unemployment rate is only because of weak growth in the labor force.

Low-Cost Exposure to U.S. Healthcare Firms
Apr. 01, 2016 - Morningstar, Inc. -  Investors seeking high-quality North American healthcare companies can consider  Health Care Select Sector SPDR (XLV). Given the sector's lack of economic sensitivity, investors seeking a defensive tilt for a broad portfolio may view this exchange-traded fund as a suitable satellite holding. XLV's holdings comprise all of the S&P 500's healthcare exposure, so owning this ETF and  SPDR S&P 500 (SPY)means investors effectively are doubling up on healthcare. In March 2016, the healthcare sector represented about 14.1% of the S&P 500.

Valuations Reflect Prospective Growth

Mar. 31, 2016 - Cohen & Steers -  U.S. REITs are trading near the midpoint of their five-year historical range relative to their underlying property assets (upper chart) and cash flows (lower chart). We believe this is appropriate considering the steady growth of the U.S. economy, modest new supply and still historically low financing costs. For investors looking to boost their income and broaden their diversification, we believe REITs represent an attractive opportunity.

Thought Leadership, Exchange-Traded Funds
Mar. 31, 2016 - Deutsche Asset & Wealth Managment -  Dodd: The municipal market is quite diverse. Can you give us an overview of the market?

Why blending active and passive strategies is right for investors

Mar. 30, 2016 - John Hancock Investments -  Key takeaways
ƒ Index investing has produced numerous benefits for investors—and for the asset management industry at large.
ƒ Many of the shortcomings in capitalization-weighted index strategies can be addressed with newer, strategic beta approaches.

Companies Are Repurchasing Stock At A Better Than Average Clip

Mar. 29, 2016 - First Trust -  View from the Observation Deck
1. Stock buybacks are one way that a company can return capital to shareholders, particularly those companies that reduce outstanding share count.
2. Companies with excess cash can also spend it on such things as capital expenditures,stock dividends, mergers and acquisitions (M&A) and R&D.

US Needs Sensible Debt Financing
Mar. 28, 2016 - First Trust -  Instead of imposing strict fiduciary rules on Wall Street, banks, investment houses, and financial advisors, the government should apply similar rules to the managers of the federal debt. This is particularly true because unlike the private sector – which faces tough market competition every day – the debt managers at the Treasury Department have a monopoly.

A Solid Choice for Broad Exposure to the U.S. Muni Market
Mar. 25, 2016 - Morningstar, Inc. -  This fund is the largest and most-liquid municipal-bond ETF.

The Growing Market Liquidity Trap
Mar. 23, 2016 - WBI Investments -  Flash crashes, excessively wild price movements over just a few days or even minutes, have been on the rise over the past few years. These dangerous market dislocations are causing increased downside volatility over short periods. The consequence for investors who seek liquidity during a flash crash is poor execution quality, driven by a cascade of sell orders that severely dislocate market price. 

Commodity Prices Get Some Relief From Decline In The U.S.Dollar

Mar. 22, 2016 - First Trust -  View from the Observation Deck
1. Commodity prices declined in each of the past five calendar years (see chart), as measured by the Thomson Reuters/CoreCommodity CRB Commodity Index.
2. The U.S.Dollar Index (DXY) posted gains in four of those five years.The only exception was a slight decline of -0.51% in 2012

Money Misperceptions 
Mar. 21, 2016 - First Trust -  1 – The Panic of 2008 was not caused by tight monetary policy. 2 – Zero percent interest rate policy (ZIRP) and Quantitative Easing (QE) did not save the US or global economies. 3 – Monetary policy in the US is getting looser as the Fed hikes rates, and, 4 – negative interest rates in Japan and Europe are not working.

A Distinct Approach to Investing in Dividend-Paying Mid-Caps
Mar. 18, 2016 - Morningstar, Inc. -  This ETF weights mid-caps by the dollar amount of dividends paid, instead of simply targeting the highest-yielding stocks.

2016 ETF & Investment Outlook
Mar. 17, 2016 - State Street Global Advisors -  Key Points
In 2016, we expect continued low growth, subdued inflation and generally accommodative monetary policy.
Risks are skewed to the downside as fragile markets could quickly turn volatile on a single bad data point or negative news event.

Are Expense Ratios a Dependable Predictor of Returns for Large Cap US Equity ETFs?

Mar. 16, 2016 - First Trust -  In 2010, Morningstar published a study which argued that expense ratios are “the most dependable predictor of performance” for mutual
funds.1 This study included roughly 5 years of mutual fund performance data, based upon which the authors recommended that investors
focus on the cheapest 40% of mutual funds as a starting point in the due diligence process. While some have sought to apply similar
heuristics to ETFs, the evidence presented below pertaining to US large cap equity ETFs calls into question the sensibility of this application.
Over the past 5 years (as of 2/29/16), the cheapest large cap US equity ETFs have tended to underperform ETFs with higher expense ratios,
with significantly fewer funds producing excess returns versus their respective S&P benchmarks.2

Value Investors Are Vexed
Mar. 16, 2016 - Morningstar, Inc. -  Value's decade-long slump is testing contrarians' patience.

Real Estate in a Class of Its Own

Mar. 15, 2016 - Cohen & Steers -  How the New Real Estate GICS Sector Classification Could Bring a $100 Billion Influx of Demand and Lower Volatility

Some Insight Into The S&P 500 Index Dividend Payout
Mar. 15, 2016 - First Trust -  View from the Observation Deck
1. Today’s chart provides a comparison of the contributions to the S&P 500 Index’s dividend payout, by sector, using current levels (3/11/16) versus the end of 2008.
2. We chose 12/31/08 levels in order to capture the fallout from the financial crisis.The U.S. was in a recession at that time.The recession lasted from December 2007 through June 2009, according to the National Bureau of Economic Research.

Don’t Fear Consumer Debt 
Mar. 14, 2016 - First Trust -  For decades, the issue of debt has often dominated discussions of economics. It’s especially true these days with a $19 trillion federal debt and the fact that home loans were at the heart of the Panic of 2008. Lately, some analysts have fretted about student loans and many think economic growth in this recovery has been driven by borrowing.

Durable and Defensive: A Look at Consumer Staples ETFs
Mar. 09, 2016 - Morningstar, Inc. -  If investors can get past valuations in the consumer staples sector, there are a raft of low-cost ETF options offering access to the space.

Retail Investors Partial To Foreign Equities Over The Past Two Years

Mar. 08, 2016 - First Trust -  View from the Observation Deck
1. From 1/14 through 1/16 (most recent monthly data), investors liquidated a net $46.68 billion from open-end mutual funds (does not include money market funds), according to the Investment Company Institute (ICI).
2. The major fund categories in the chart indicate that investors funneled the most capital into foreign equities, which is interesting considering all of the attention focused on the slowdown in global growth over the past two years.

Beware Trade-Recession Scare Story

Mar. 07, 2016 - First Trust -  Friday’s robust report on job growth ought to put the nail in the coffin on recent fears about a recession. Payrolls rose 242,000 and civilian employment, an alternative measure of jobs that includes small business start-ups, increased 530,000. In the past year, these two measures are both up approximately 2.7 million. Obviously, we’re not in a recession.

An Unconventional Play on Value
Mar. 04, 2016 - Morningstar, Inc. -  This fundamentally weighted ETF allows investors to profit from mean reversion in valuations.

iShares Gold Trust Suspends New Creations
Mar. 04, 2016 - Morningstar, Inc. -  A flood of safe-haven buyers causes a precarious situation in this gold exchange-traded product.

February Employment Report
Mar. 04, 2016 - First Trust -  Nonfarm payrolls increased 242,000 in February versus a consensus expected 195,000. Including revisions to December/January, payrolls rose 272,000.

A Snapshot Of The Top Performing S&P 500 Sector Indices Over Time

Mar. 03, 2016 - First Trust -  View from the Observation Deck
1. The first thing that pops out to us looking at the chart is the sheer number of defensive sectors that posted the highest total returns in the 16 respective periods.
2. Of the 16 periods featured in the chart, 13 of the sector indices that performed best, or 81.25%, are considered defensive in nature.They are Telecommunication Services, Consumer Staples, Health Care and Utilities.

Under the Hood of 5 Multifactor Funds
Mar. 02, 2016 - Morningstar, Inc. -  All these funds attempt to reduce the risk of underperformance by diversifying across multiple 'factors,' but there are important differences among them.

Currency Mayhem 
Feb. 29, 2016 - First Trust -  With both the European Central Bank (ECB) and the Bank of Japan moving to a Negative Interest Rate Policy (NIRP), conventional wisdom says the US dollar will continue to strengthen. After all, the Fed is tightening while everyone else seems to be working overtime to ease policy.

Check This Out Before Jumping Aboard International Dividend ETFs
Feb. 26, 2016 - MLP HINDSight -  These 'driver-less' funds may be going places you might not want to be.

Block Trading In The S&P 500 Index Has Turned For The Better

Feb. 23, 2016 - First Trust -  1. The S&P 500 Index set its all-time high on 5/21/15 at 2,130.82. From 5/21/15 through 2/22/16,the index declined by 8.70% to 1,945.50.
2. As indicated in the two charts, both block (10,000 shares or more) and non-block (< 10,000 shares) trading patterns in the S&P 500 Index have mostly signaled a selling bias since 5/21/15.

Staying the Course with FVD

Feb. 22, 2016 - First Trust -  Emotional decision-making ranks high on the list of obstacles that often prevent investors from achieving their financial goals and objectives. The fear of incurring losses evokes a desire to sell after prices have dropped, while the fear of missing out on gains evokes a desire to buy after prices have risen. Volatility acts as a catalyst to evoke emotional decision-making by creating a sense of urgency; investors may feel that decisions must be made in the heat of the moment, because prices are moving quickly!

January CPI
Feb. 19, 2016 - First Trust -  The Consumer Price Index (CPI) was unchanged in January, coming in above the consensus expected decline of 0.1%. The CPI is up 1.4% from a year ago.

Exposure to the Hard-Hit Energy Sector, at a Low Cost
Feb. 19, 2016 - Morningstar, Inc. -  For investors bold enough to venture into the bruised U.S. energy sector, this ETF is one of the best bargains around.

Preferreds May Present Buying Opportunity Amid Bank Profit Concerns

Feb. 18, 2016 - Cohen & Steers -  Growing worries over bank profitability have pressured bank stocks and credit, including preferred securities. We discuss why the pillars of the preferreds story remain intact—and why we believe market turbulence may present a compelling entry point.

No Sign of Recession in the Data

Feb. 16, 2016 - First Trust -  So far this year, the S&P 500 is down around 9% and has been down as much as 10.5%, a garden variety correction. But some pessimistic pundits, analysts, and investors are treating the correction as a harbinger of the recession they’ve predicted multiple times before, ever since the economy started to recover in mid-2009

The Average Stock In The S&P 500 Index May Be Down More Than You Think

Feb. 16, 2016 - First Trust -  View from the Observation Deck 1. Today's blog post is an update of a previous one. Investors can compare today's snapshot to the one we did on 1/7/16 (click here to view).

January Retail Sales
Feb. 12, 2016 - First Trust -   Retail sales increased 0.2% in January, beating the consensus expected 0.1% gain. Including revisions to prior months, sales rose 0.4%. Retail sales are up 3.4% versus a year ago.
 Sales excluding autos increased 0.1% in January (+0.2% including revisions to prior months), beating consensus expectations of no change. These sales are up 2.5% in the past year. Excluding both autos and gas, sales are up 3.8% versus a year ago.

Cheap Exposure to U.S. Consumer Discretionary Stocks
Feb. 12, 2016 - Morningstar, Inc. -  This exchange-traded fund is one of the best bargains in the consumer cyclical Morningstar Category.

China, US Dollar and Oil Create Volatile Brew for 2016 Markets

Feb. 10, 2016 - State Street Global Advisors -  Concerns about growth in China, the impact of a strong dollar and ongoing pressure on the prices of oil and other commodities continued to weigh heavily on global markets as we enter 2016. Furthermore, all eyes continue to be on the Fed as market participants look for signs of the next rate move – whether, when, and how many.

The Cost Matters Hypothesis
Feb. 10, 2016 - Morningstar, Inc. -  While markets’ efficiency will be forever questioned, there is no question that the costs we incur in investing deduct directly from our returns--it’s simple subtraction

Sector Performance Via Market Capitalization
Feb. 09, 2016 - First Trust -  View from the Observation Deck
1. From 2/5/15 through 2/5/16, large-capitalization (cap) stocks outperformed both mid- and small-cap stocks, as measured by the S&P 500 Index, S&P MidCap 400 Index and S&P SmallCap 600 Index (see chart).

Riding a rebound?
Feb. 05, 2016 - Wells Fargo Advisors -  Equity markets had the worst start to the year in a long time. There's probably little solace in the knowledge that a bad start to the year doesn't tell us anything about how the rest of the year might go. Investors are nervous, and the economic data has been weak. But the data—in our view—hasn't been bad enough to merit the abysmal start to the year. 

January Employment Report
Feb. 05, 2016 - First Trust -   Nonfarm payrolls increased 151,000 in January versus a consensus expected 190,000.
 Private sector payrolls increased 158,000 in January. The largest gains in December were for retail (+58,000), restaurants/bars (+47,000), and manufacturing (+29,000). Government payrolls fell 7,000.

Cheap Exposure to Large-Value Stocks
Feb. 05, 2016 - Morningstar, Inc. -  This ETF is one of the best bargains in the U.S. large-value Morningstar Category.

What to Make of the Buyback Bonanza
Feb. 03, 2016 - Morningstar, Inc. -  Buybacks are in vogue, but many investors still prefer good old-fashioned dividends.

A Snapshot Of European Equities
Feb. 02, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of one we did on 11/5/15 (click here to view). Investors committed a lot of capital to European equities last year.

Municipal Quarterly Update – 4th Quarter 2015
Feb. 02, 2016 - First Trust -  The Barclays Municipal Bond Index returned 1.51% for the three months ended December 31, 2015, bringing the calendar year 2015 total return for the
index to 3.30% (6.60% on a taxable-equivalent basis) (see footnote 1*). Tax-exempt municipal bonds had the highest risk-adjusted returns of any asset class.
Municipal bond yields diverged from U.S. Treasuries. Even in the face of the current global economic malaise of slow growth, falling commodity
prices, and volatile equity markets,the Federal Reserve (“Fed”) finally raised its benchmark rate during the December meeting,the first rate hike since
2006. While the 10- and 30-year U.S.Treasury rates rose 21 basis points (bps) and 15 bps, respectively, to 2.27% and 3.02% from September 30, 2015
to December 31, 2015, 10- and 30-year AAA MMD yields decreased 11 bps and 22 bps, respectively,to 1.92% and 2.82% for the same period.

Fed Not Going Away 
Feb. 01, 2016 - First Trust -  Close your eyes (well, not literally). Imagine a huge manufacturing economy, in Asia, growing very rapidly. It became the second largest economy in the world, from ruin, in just a few short decades and produced 14% of global output. Now imagine it collapses.

As markets swing, momentum can be deceiving
Feb. 01, 2016 - BlackRock -  Weekly commentary overview
Stocks experienced several violent reversals last week before finishing strong. Stocks continue to find support in an old friend: central bank accommodation, most recently from the Bank of Japan.

Robust Growth for Municipal Bond ETFs in 2015
Jan. 30, 2016 - First Trust -  Summary of 2015 ETF Flows and Trends1
» US-listed ETF Assets stood at over $2.1 trillion on 12/31/15, a 6.7% increase from the end of 2014. Total estimated net inflows for the year were $245 billion, narrowly exceeding the record inflows of $242 billion from 2014.
» ETF categories with the largest percentage increase in total assets in 2015 were Municipal Bond ETFs (+30%), Taxable Bond ETFs (+16.5%), and International Equity ETFs (+16.4%).

December Durable Goods 
Jan. 28, 2016 - First Trust -  New orders for durable goods declined 5.1% in December (-5.5% including revisions to prior months), well below the consensus expected decline of 0.7%. Orders excluding transportation fell 1.2% in December (-1.7% including revisions to prior months), below the consensus expected decline of 0.1%. Orders are down 0.6% from a year ago while orders excluding transportation are down 3.2%.

Reminder: Notes Are Not Funds
Jan. 27, 2016 - Morningstar, Inc. -  Recent events have served up a not-so-gentle reminder of the perils of investing in exchange-traded notes.

How Large Company Stocks Have Performed In The New Millennium

Jan. 26, 2016 - First Trust -  View from the Observation Deck
1. Today’s blog post is intended to show how large-cap equities have performed over specific periods since the start of 2000. Keep in mind that this period includes two severe bear markets, multiple wars, recessions and a global financial crisis.
2. The first column captures the entire period.The second column represents the current bull market, which began the day after the close of trading on 3/9/09.The third column shows performance since the S&P 500 Index registered its all-time high on 5/21/15.

Q4: Sluggish Growth, No Recession
Jan. 25, 2016 - First Trust -  The recent turmoil in the equity markets would make more sense if the US economy were headed for recession. But the economic data aren’t cooperating.

Own the Whole U.S. Stock Market on the Cheap
Jan. 22, 2016 - Morningstar, Inc. -  A lower fee and a new benchmark have upped this total stock market ETF's appeal.

The Energy Sector’s Influence On S&P 500 Index Earnings Is Waning

Jan. 21, 2016 - First Trust -  View from the Observation Deck
1. Even the strongest of themesrun their course in due time.Like the exceptionalshowing posted by technology stocks during the Internet Revolution, energy stocks have succumbed to gravity after rewarding shareholders for over a decade.
2. The price of crude oil closed trading at $26.55 per barrel on 1/20/16,significantly below its 2014-high of $107.26 per barrel (6/20/14) and its all-time closing high of $145.29 per barrel (7/3/08), according to Bloomberg. It was even below its closing price of $31.20 per barrel on 12/31/02, just a little over two-and-a-half months before the U.S. invaded Iraq on March 19, 2003.

The Whole Market for Free?
Jan. 20, 2016 - Morningstar, Inc. -  A race to lower expense ratios on broad-market ETFs, along with other factors, has pushed the estimated holding costs of many funds to nearly zero, writes Morningstar's Ben Johnson.

Snapshot Of Bond Valuations
Jan. 19, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is one we do ongoing so that investors can monitor fluctuations in bond prices relative to changes in interest rates and the global economy.
2. Perhaps the most notable change since our last post on 11/12/15 was the increase in the federal funds rate on 12/16/15. It represented the first hike in interest rates by the Federal Reserve since June 2006.

Fear is Overbought
Jan. 19, 2016 - First Trust -  The stock market is not the economy, and the economy is not the stock market. Nonetheless, many are convinced that the market correction of the past few weeks is a certain sign of impending recession. Never mind that China just reported 6.9% real GDP growth. Never mind that a barrel of oil costs less than $30, which means consumers are saving hundreds of billions of dollars per year on top of what the drop in natural gas prices has saved them.

When Interest Rates Rise
Jan. 15, 2016 - Cohen & Steers -  With the interest-rate environment becoming less accommodative, what will happen to preferred securities? We believe the answer is that some securities will perform much better than others. This was certainly the case in 2013, which we use as a case study to examine different aspects of the preferred securities market. As active managers, we seek structures, income rates and credit spreads that can help protect investors when rates rise.

It’s Time to Reevaluate Risk in Your Portfolio

Jan. 15, 2016 - WBI Investments -  In response to the 2008 Financial Crisis, governments around the world led by the U.S. Federal Reserve adopted zero interest rate policy (ZIRP) and quantitative easing (QE) monetary policy tools to try to stabilize the financial system. We believe that these policies have created a high-risk paradigm for investors around the globe who have come to believe that easy monetary policy can drive asset prices higher forever.

Feeling Gravity's Pull
Jan. 15, 2016 - Morningstar, Inc. -  Amid significant underperformance in 2015 and likely more interest-rate hikes, can risky mortgage REITs turn things around? Here's a look at the largest mortgage REIT exchange-traded fund.

Unmasking improvements in corporate Latin America
Jan. 14, 2016 - Aberdeen Asset Management -  With high-profile corporate scandals garnering media attention in Latin America, investors may be hesitant to invest in the region. However, with the adoption of best practices over the past several years, we believe that these incidents are relatively isolated, and mask the improvements throughout the region over the past decade. 

Will Rising Rates Power Down Utilities Stocks?
Jan. 13, 2016 - Morningstar, Inc. -  U.S. utilities stocks underperformed the S&P 500 in 2015. In aggregate, this defensive, high-yielding sector slid about 4.9%, which was about 615 basis points worse than the performance of the broad benchmark. And while the bondlike utilities sector's underlying fundamentals generally remain strong, the sector's underperformance stems from the long-standing relationship between the price performance of utilities firms and interest rates. 

S&P 500 Index Top-Line Growth Estimates
Jan. 12, 2016 - First Trust -  View from the Observation Deck
1. Today's blog post is one we do ongoing so that investors can monitor changes in the expected revenue growth of the companies that comprise the S&P 500 Index. It includes estimates for 2017.
2. The S&P 500 closed the trading session on 1/11/16 at 1923.67. It stood 9.72% below its all-time high of 2130.82 (5/21/15), according to Bloomberg.

Defensive Exposure to Small-Cap Stocks
Jan. 11, 2016 - Morningstar, Inc. -  This ETF should give small-cap investors a smoother ride, though it has some distinct risks.

December Employment Report
Jan. 08, 2016 - First Trust -   Nonfarm payrolls increased 292,000 in December, easily beating the consensus expected 200,000. Including revisions to prior months, nonfarm payrolls increased 342,000.
 Private sector payrolls increased 275,000 in December, while September and October were revised up a combined 51,000. The largest gains in December were for administrative & support services (+58,000, including temps), health care & social assistance (+53,000), construction (+45,000), and restaurants/bars (+37,000). Manufacturing payrolls rose 8,000 while government rose 17,000.

2016 & 2017 Earnings Snapshot
Jan. 05, 2016 - First Trust -  View from the Observation Deck
1. Today's blog is an update of a previous post.We refresh the data every 3-4 months or so. Investors can compare today's snapshot to the last one we did on 9/1/15 (click here to view).
2. With respect to the 2016 earnings growth rate estimates,the 7 indices in the chart with positive double-digit projections are as follows (Highest-Lowest): MSCI Emerging Markets; S&P SmallCap 600; S&P 500 Consumer Discretionary; S&P 500 Materials; Nikkei 225; S&P 500 Information Technology; and S&P MidCap 400.

December ISM Manufacturing Index
Jan. 04, 2016 - First Trust -   The ISM manufacturing index declined to 48.2 in December, below the consensus expected level of 49.0. (Levels higher than 50 signal expansion; levels below 50 signal contraction.)
 The major measures of activity were mixed in December. The employment index fell to 48.1 from 51.3, while the supplier deliveries index dropped to 50.3 from 50.6. The production index increased to 49.8 from 49.2, and the new orders index rose to 49.2 from 48.9.

November Durable Goods
Dec. 23, 2015 - First Trust -  New orders for durable goods were unchanged in November, coming in better than the consensus expected decline of 0.6%. Orders excluding transportation declined 0.1% in November, coming in almost exactly at the consensus expected no change. Orders are up 1.2% from a year ago while orders excluding transportation are down 1.9%.

ETFs: Tax-Efficient, Not Tax-Exempt
Dec. 23, 2015 - Morningstar, Inc. -  Thanks mostly to their under­lying strategies and their unique structure, ETFs are relatively more tax-efficient, but they're not immune from taxation.

S&P 500 Index Companies Rewarding Shareholders Despite Modest Recovery

Dec. 22, 2015 - First Trust -  View from the Observation Deck
1. The period depicted in the chart captures the majority of the U.S. economic recovery following the 2008-2009 financial crisis. The previous recession ended in June 2009.
2. From 9/09-9/15, real GDP growth in the U.S. averaged just 2.2%, according to data from the Bureau of Economic Analysis.

Currency-Hedged ETFs Can Serve as Core Holdings
Dec. 16, 2015 - Morningstar, Inc. -  Currency-hedged exchange-traded funds continue to enjoy strong inflows in 2015. Through the first 11 months of the year, a net $45 billion flowed into these products, accounting for a significant slice of the net $209 billion of flows into international-equity funds and ETFs.

November Industrial Production / Capacity Utilization
Dec. 16, 2015 - First Trust -  Industrial production declined 0.6% in November, coming in well below the consensus expected decline of 0.2%. Including revisions to prior months, production declined 0.7% and is down 1.2% in the past year. Utility output declined 4.3% in November, while mining declined 1.1%.

Covered Calls May Be Conducive For This Market Climate
Dec. 15, 2015 - First Trust -  View from the Observation Deck
1. From 2000-2014,the CBOE S&P 500 BuyWrite Index (an index designed to measure a covered call strategy) outperformed the S&P 500 in six of the 15 calendar years. It is outperforming year-to-date thru 12/14/15 (see chart).
2. Over that 15 year period (2000-2014), the S&P 500 Index posted an average annual total return of 4.24%, compared to 4.07% for the CBOE S&P 500 BuyWrite Index, according to Bloomberg.

A Targeted Way to Home in on Housing
Dec. 11, 2015 - Morningstar, Inc. -  This ETF holds mostly homebuilders but includes some housing-related subsectors as well.

November Retail Sales
Dec. 11, 2015 - First Trust -  • Retail sales increased 0.2% in November. The consensus expected a gain of 0.3%. Retail sales are up 1.4% versus a year ago.
• Sales excluding autos increased 0.4% in November (+0.3% including revisions to prior months). The consensus expected a gain of 0.3%. These sales are up 0.7% in the past year. Excluding both autos and gas, sales are up 3.4% versus a year ago.

U.S.Dollar Strength & China Slowdown Help Push Commodity Prices Lower

Dec. 10, 2015 - First Trust -  View from the Observation Deck
1. While today’s blog post focuses on the negative influences that a strengthening U.S. dollar and the tempering of economic growth in China have had on commodity prices since mid-2014, we acknowledge that other influences,such as production levels, can also influence prices.
2. From 6/30/14 (rally in the U.S. dollar commenced) through 12/8/15,the U.S.Dollar Index (DXY) posted a gain of 23.43%, compared to a decline of 42.45% for the Thomson Reuters/CoreCommodity CRB Commodity Index (see chart), according to Bloomberg.

Dividend Investing: Man vs. Machine
Dec. 09, 2015 - Morningstar, Inc. -  At our sixth annual Morningstar ETF Conference, I moderated a panel on dividend investing. We had a diverse group, featuring Fidelity’s Ramona Persaud (the active manager), WisdomTree’s Jeremy Schwartz (the indexer), and CLS Investments’ Scott Kubie (the ETF strategist).

Gundlach says time is not right for Federal Reserve to raise rates
Dec. 09, 2015 - Investment News -  Jeffrey Gundlach, whose $51.3 billion DoubleLine Total Return Bond Fund has outperformed 99% of peers over the past five years, said the Federal Reserve may come to regret raising U.S. interest rates amid signs of a fragile economy and a crumbling credit market.

Respect the Auto Sales Surge
Dec. 07, 2015 - First Trust -  Cars and light trucks – SUVs, minivans, and pick-ups – have been a key bright spot in the economy the past few years, particularly with tepid growth in overall manufacturing caused by weak foreign economies and a stronger dollar. The pace seen in September, October, and November marks the first time in history that auto sales have exceeded an 18 million annual rate in three consecutive months.

A Low-Cost ETF Offering Exposure to U.S. Banks
Dec. 04, 2015 - Morningstar, Inc. -  Banks have outperformed broader stocks in 2015, as investors are bullish on higher interest rates and credit quality has stayed strong.

November ISM Non-Manufacturing Index
Dec. 03, 2015 - First Trust -  The ISM non-manufacturing index declined to 55.9 in November from 59.1 in October, coming in below the consensus expected 58.0. (Levels above 50 signal expansion; levels below 50 signal contraction.)

Which ETFs Are Making Capital Gains Distributions This Year?
Dec. 02, 2015 - Morningstar, Inc. -  For investors, one of the most appealing aspects of exchange-traded funds is their clear tax efficiency.

Many Investors Could Be Underweight Mid- & Small-Cap Stocks

Dec. 01, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post focuses on equity asset allocation via market capitalization (market cap). In other words, how much capital do investors commit to U.S. large-, mid- and small-cap stocks.We use mutual fund and exchange-traded fund (ETF) asset levels as a barometer.
2. As indicated in the chart, as of 10/31/15, investors had committed a combined $4.7 trillion to the three large-cap categories, while committing just $831.0 billion and $605.0 billion, respectively,to the mid- and small-cap categories

Expect Strong Christmas Spending 
Nov. 30, 2015 - First Trust -  We are watching Christmas season sales data very carefully, but we also warn investors that the early data are not very useful. No matter what initial readings show, the underlying fundamentals look relatively strong.

U.S. REIT Valuations Are Attractive

Nov. 30, 2015 - Cohen & Steers -  U.S. REIT valuations are at attractive levels relative to their four-year range, as seen in the first chart. In the second chart, we show that REIT prices are near the middle of the four-year range relative to cash flows, while the broader stock market’s prices relative to earnings are at their highest levels during this period. We believe this represents a compelling opportunity for REIT investors.

What's Behind Your Bond Fund's Returns?
Nov. 25, 2015 - Morningstar, Inc. -  Bond investors require compensation for bearing greater credit and interest-rate risk through higher expected returns, or yields. Fixed-income managers can--and often do--boost returns by taking more credit or interest-rate risk than their benchmarks, but that does not necessarily require skill. 

A Snapshot of Growth vs.Value Investing
Nov. 24, 2015 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of a previous one. Investors can compare today's snapshot to the one we did on 9/10/15 (click here to view).
2. Growth tends to outpace value investing when the earnings growth rates of said companies accelerate faster than the broader market,such as right after the economy exits a recession.

Giving Thanks! 
Nov. 23, 2015 - First Trust -  If the US were in the middle of an economic boom, like in the mid-1980s or late-1990s, it would be very easy to be thankful in the week ahead. Instead, a cornucopia of complaints seems to accompany what has been a plodding economic recovery, what we call the Plow Horse Economy.

October Flash Flows: Rally Puts ETFs on Record-Setting Course

Nov. 20, 2015 - State Street Global Advisors -  

Global stock and bond markets bounced back from a summer slump to rally in October, putting the ETF industry on a record-setting course with over $173.9 billion of inflows through the end of the month.

Only the Highest Quality Junk (Bonds)
Nov. 20, 2015 - Morningstar, Inc. -  Unlike traditional bond indexes, which typically give higher weightings to issuers with the greatest amount of debt,  PowerShares Fundamental High Yield Corporate Bond Index's (PHB) index-weights its holdings according to fundamental measures of issuers' size, including sales, cash flow, dividends, and the book value of their assets.

The Return of Volatility and the Case for Earnings Quality

Nov. 18, 2015 - First Trust -  Despite healthy net inflows totaling $44.8 billion in Q3, in line with $45 billion of net inflows in Q2, US-listed exchange-traded fund (ETF) assets declined by $132 billion for the quarter, to $1.99 trillion.1 This quarter-over-quarter decline—the first since Q2 of 2013—was caused
primarily by a correction in global equities. Nonetheless, domestic equity was the strongest category for the quarter, bringing in $22.8 billion in net inflows, marking the first quarter of positive net flows for the category in 2015

Stop “QE” Insanity

Nov. 18, 2015 - WBI Investments -  Stop the Insanity!
In response to the 2008 Financial Crisis, governments around the world led by the U.S. Federal Reserve developed a series of monetary policy tools to try to stabilize the financial system.

Micro-Caps Have Been The Sweet Spot In The Small-Cap Space

Nov. 17, 2015 - First Trust -  View from the Observation Deck
1. While there is no official set of parameters that define a micro-capitalization (micro-cap) stock,the U.S. Securities and Exchange Commission (SEC) defines them as companies with a market value of less than $250 million.
2. The SEC refers to companies with market capitalizations below $50 million as“nano-cap”stocks.Due to their low valuations levels, micro-cap companies tend to receive little attention from equity analysts, according to U.S.News & World Report.

The Worst Recovery Ever…For Part-Time Jobs

Nov. 17, 2015 - First Trust -  Mark Twain has been attributed with saying “If you don't read the newspaper, you're uninformed. If you read the newspaper, you're misinformed.” And given the media’s portrayal of the job market recovery over the past six-and-a-half years, we can see where he was coming from.

The Enormous Long-Term Cost of Holding Cash

Nov. 14, 2015 - BlackRock Blog -  By definition, trauma leaves a scar. Fifteen years after the bursting of the tech bubble and more than eight years after the advent of the last financial crisis, many investors are still being impacted by the memory of those traumatic events.

Understanding High Yield Fund Performance

Nov. 13, 2015 - BlackRock Blog -  If you follow bond markets—and maybe even if you don’t—you’ve probably been hearing a lot about high-yield. Some say this so-called “junk” spells doom. Others say there’s still value there, but you must be selective. We would agree that selectivity is crucial in this space—after all, these are the bonds of companies with widely diverging performance. For exchange traded fund investors, that means knowing what you own: Not all high-yield ETFs are the same. I’d like to take a look at one high yield investment in particular to set the stage for you.

It’s the Domestic Spending; Stupid
Nov. 13, 2015 - First Trust -  Washington DC is out of control. In Orwellian Newspeak, we hear liberals say tax cuts, “cost too much,” but deficit spending is an “investment.” If GOP politicians reduce spending growth from already inflated forecasts, they call it a “‘conservative’ spending cut.” And, politicians from both sides of the aisle pat themselves on the back for “working so hard” to reduce the deficit when it’s really the US taxpayer that provided the muscle. Surging tax receipts have lowered deficits in recent years, not fiscal discipline.

A Guide to Selecting Strategic-Beta ETPs
Nov. 11, 2015 - Morningstar, Inc. -  A brief guide outlining how we set out to separate the wheat from the chaff in this field.

S&P 500 Index Top-Line Growth Estimates
Nov. 10, 2015 - First Trust -  View from the Observation Deck
1. Today's blog post is one we do ongoing so that investors can monitor changes in the expected revenue growth of the companies that comprise the S&P 500 Index.
2. The S&P 500 closed the trading session on 11/9/15 at 2078.58. It stood 2.45% below its all-time high of 2130.82 (5/21/15), according to Bloomberg.

Higher Rates, Higher Stocks 
Nov. 09, 2015 - First Trust -  What’s happened over the past few weeks is not supposed to happen, at least if you use traditional academic-style discount models to assess the stock market. Whether you prefer a dividend discount model or an earnings discount model, both say higher interest rates should reduce the value of equities.

A Great Complement to an S&P 500 Fund
Nov. 06, 2015 - Morningstar, Inc. -  Vanguard Extended Market can be used to round out a large-cap portfolio, but mind its quirks.

How Well Have Large-Blend Funds Performed? It Depends.
Nov. 04, 2015 - Morningstar, Inc. -  How well have large-blend mutual funds performed during the past 10 years? That question is not as easy to answer as it might seem. At face value, the average trailing 10-year return for all mutual funds currently in the large-blend Morningstar Category was 5.97% at the end of September 2015. Not too shabby--considering the tremendous volatility the markets have experienced during the past decade. This number is displayed as the category average return in the Performance tab for individual funds on

A Snapshot Of Moving Averages
Nov. 03, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post is a follow-up to one we did last week showing the performance of the S&P 500 Index after it had registered its first correction in four years (click here to view).
2. The basic premise of that post was to show investors that the S&P 500 Index had recovered at least some of the losses it had sustained during the correction.

Light This Candle
Nov. 02, 2015 - First Trust -  The US stock market reminds us of Alan Shepard in 1961. Exasperated by the long wait in his Mercury Spacecraft “Freedom 7” while NASA engineers fiddled, he said, “Why don’t you fix your little problem and light this candle?” They finally did and he became the first American to go into space

New ETFs Look for Quality in Japan
Oct. 30, 2015 - Morningstar, Inc. -  These ETFs screen for companies with higher returns on equity and independent directors.

Frontier Markets Haven't Been Immune
Oct. 28, 2015 - Morningstar, Inc. -  The risks of frontier markets become more visible in a persistent slow global growth environment.

A Low-Cost, High-Yielding Equity Sector ETF
Oct. 23, 2015 - Morningstar, Inc. -  In a low-rate environment, this large, liquid ETF, which holds the biggest U.S. utilities firms, could offer some appeal.

A Wooden Horse Full of Acorns?
Oct. 22, 2015 - WBI Investments -  Today’s investor doesn’t have to look far to find someone predicting dire consequences just around the bend. Forecasts of impending doom have been around a long time.

September Existing Home Sales 
Oct. 22, 2015 - First Trust -   Existing home sales increased 4.7% in September to a 5.55 million annual rate, beating the consensus expected 5.35 million. Sales are up 8.8% versus a year ago.
 Sales rose in all major regions. The increase was entirely due to single-family homes, while sales of condos/coops remained unchanged.

Are MLPs Going Down the Tubes?
Oct. 21, 2015 - MLP HINDSight -  A look at the largest ETPs available for investors in this battered corner of the market.

The Performance Of Health Care Stocks In The Recent Correction & Subsequent Rebound

Oct. 20, 2015 - First Trust -  View from the Observation Deck
1. Health Care is the only sector that has outperformed the S&P 500 Index in each of the past five years, including this one, according to S&P Capital IQ. It is a top theme in the market, in our opinion.
2. From 12/31/10-10/19/15, the S&P 500 indices in the chart posted the following cumulative total returns (Bloomberg): 301.7% (Biotech.); 252.3% (Managed Health Care); 143.5% (Health Care); 127.0% (Pharmaceuticals); and 90.6% (Health Care Equipment). The S&P 500 Index was up 79.01% over the same period.

GDP: Soft Headline, Solid Fundamentals

Oct. 19, 2015 - First Trust -  The most important part of the quarterly GDP reports is not the headline number. Instead, we like to focus on the underlying trend and what the details of the report mean for future growth.

The Sector-Neutral Value ETF
Oct. 16, 2015 - Morningstar, Inc. -  This is a compelling large-value offering, but there are some drawbacks to its sector-neutral approach.

September Flash Flows: ETF Inflows Surge Despite Market Volatility
Oct. 15, 2015 - State Street SPDR -  If there’s one thing we all know about markets, it’s that they move quickly and all it takes is one headline to change momentum. This has never been more true than in the third quarter, and it’s one of the reasons I take time every month to review what happened in the markets and how investors used ETFs to respond to shifting conditions.

Just When You Thought It Was Over…
Oct. 15, 2015 - First Trust -  View from the Observation Deck
1. Today's blog is the third version of a post we originally did on 6/12/12, which depicted the rolling 12-month total returns of an of index comprised of intermediate-maturity Treasuries

A Closer Look at the New John Hancock ETFs
Oct. 14, 2015 - Morningstar, Inc. -  These funds effectively mimic Dimensional’s distinctive investment approach in an index format.

The Fed DID NOT Save the Economy
Oct. 12, 2015 - First Trust -  Last week the Wall Street Journal (WSJ) opinion page published a piece by former Federal Reserve Chairman Ben Bernanke. The title was “How the Fed Saved the Economy.”

A Rough Year for Natural Gas Attracts the Bottom-Pickers
Oct. 09, 2015 - Morningstar, Inc. -  It may be tempting to try to catch a rebound, but know what you're getting into first.

Rethinking Commodities
Oct. 07, 2015 - Morningstar, Inc. -  The biggest return-driver for commodity futures is market structure, not fundamentals or spot prices.

The Bull Market Still Lives 
Oct. 05, 2015 - First Trust -  Stock market corrections (usually defined as 10% pullbacks) are hard to understand. Often they happen in the midst of long-term bull markets. But why? Is it like getting the flu? Is it just emotion? Or, are corrections a necessary cleansing out of excess optimism? Our answer: we don't really know.

We’re in the First Inning with Active ETFs
Oct. 02, 2015 - State Street SPDR -  I’m often asked about the future of active ETFs.

For perspective, I see the entire ETF industry itself as being in the third inning of a nine inning game. But active ETFs are just settling into the first inning. Like with most “new” things, some figured active ETFs would have an immediate and significant impact on the industry; however, active ETF growth trends have been more in line with the growth trends of traditional passive ETFs when they were first introduced.

The Outlook For Corporate Earnings Remains Positive
Oct. 01, 2015 - First Trust -  View from the Observation Deck
1. As of 9/30/15,the S&P 500 Index, S&P MidCap 400 Index and S&P SmallCap 600 Index stood 9.89%, 11.65% and 12.39%, respectively, below their all-time highs, according to Bloomberg.
2. Today's chart is intended to give investors some visual perspective on where equity analysts think earnings are headed following the recent correction in the S&P 500 Index, registered in August, and a tough September.

What You Need to Know About 'Strategic Beta'
Sep. 30, 2015 - Morningstar, Inc. -  As these sometimes complex new funds continue to grow, investors need to be selective, writes Morningstar’s Ben Johnson.

A Shutdown Would Be Positive
Sep. 28, 2015 - First Trust -  Sometimes, news really is important. The Pope’s visit to the U.S. was big, but the resignation of House Speaker John Boehner, effective October 30, was huge.

How to Deal With Continued Volatility
Sep. 28, 2015 - BlackRock Blog -  Investors should expect the current high volatility regime to persist. Russ explains how to contend with the rocky road ahead.

Currency-Hedged ETFs Still Popular
Sep. 25, 2015 - Morningstar, Inc. -  Generally speaking, most international-equity funds do not hedge their foreign-currency exposure. During the last few years, major foreign currencies such as the yen and euro have been falling against the U.S. dollar, and this has negatively impacted the performance of funds that invest abroad. 

China Opens 'A' Door for Foreign Investors
Sep. 23, 2015 - Morningstar, Inc. -  Index funds are likely to add China A-Shares in the coming years.

The Prospects For Owning Natural Gas Stocks Over A Particular 5-Month Stretch

Sep. 22, 2015 - First Trust -  View from the Observation Deck
1. The October through February time frame tends to capture the most critical months of the winter weather season in the U.S. with respect to both the anticipated and actual demand for natural gas, in our opinion.
2. In the past 10 October through February time periods,the price of natural gas increased in just 5 of the 10 periods (see chart). The ISE-Revere Natural Gas Index posted a positive total return in 6 of the 10 periods (see chart).

Is Another Bear Market Ahead?
Sep. 22, 2015 - BlackRock Blog -  Russ updates his outlook for U.S. stocks in 2015 and beyond.

The Uber-Dove vs Black Swans
Sep. 21, 2015 - First Trust -  You couldn’t have missed it. Only stages full of GOP presidential candidates or the Super Bowl have ever had more media attention. Yes, we are talking about the Federal Reserve’s thundering announcement on Thursday – of nothing. The Fed decided to keep interest rates at zero, for at least the next few months, after holding them near zero for over six years.

A Deep-Value ETF for Income Seekers
Sep. 18, 2015 - Morningstar, Inc. -  This exchange-traded fund could serve as a supporting player to boost dividend yields.

Ideas for Your Bond Portfolio When Rates Rise
Sep. 17, 2015 - BlackRock Blog -  Though the Fed didn't raise rates this month, Heidi Richardson explains how to potentially prepare your bond portfolio for the rate regime change.

Funds That Channel Ben Graham
Sep. 16, 2015 - Morningstar, Inc. -  Popular dividend-oriented ETFs that tilt toward yield or dividend growth have their roots in the teachings of Ben Graham.

How U.S. stocks performed in the 14 years since 9/11
Sep. 15, 2015 - First Trust -  View from the Observation Deck
1. In response to the terrorist attacks on the morning of 9/11/01 (Tuesday), U.S.stock exchanges shutdown early that day and were closed for the remainder of the week.They reopened on 9/17/01 (Monday).
2. The cumulative total return posted by the S&P 500 Index for the 14-year period featured in the chart was 137%.

First-Mover Advantage? Ark Invest ETF Buys Bitcoin Trust
Sep. 15, 2015 - Barron's -  The first exchange-traded fund to own bitcoin doesn’t have anything to do with Cameron and Tyler Winklevoss.

Want More From Your ETFs? Trade Smarter
Sep. 12, 2015 - Barron's -  Exchange-traded funds trade throughout the day, usually without incident. But in today’s volatile market, some smarter trading can make for much safer investing.

A Cheap Way to Bulk Up on Consumer Exposure
Sep. 11, 2015 - Morningstar, Inc. -  This low-cost ETF offers a basket of consumer-discretionary firms whose success hinges on consumer sentiment.

2 Sectors to Explore When Rates Rise
Sep. 10, 2015 - BlackRock Blog -  Though the recent market selloff and declining inflation expectations have lowered the probability of the Federal Reserve (Fed) raising rates right away, the exact timing of the hike isn't as important as the market implications of moderately higher interest rates, which are expected to eventually arrive.

OPEC’s Waning Influence
Sep. 10, 2015 - First Trust -  Since the 1970s nothing has struck fear into the heart of the average American driver like the name OPEC. With every rise in prices at the pump came theories that once again this shadowy cartel might be using its influence to reach deeper into the pockets of the US public. However, the domestic shale revolution seems to have changed all that. The US produced 8.7 million barrels of oil per day in 2014 and that number is expected to grow to 9.2 million for this year, according to the EIA. With this surge of domestically produced oil, OPEC continues to lose leverage as a trading partner. 

A Snapshot of Growth vs.Value Investing
Sep. 10, 2015 - First Trust -  View from the Observation Deck
1. Today's blog post is an update of a previous one. Investors can compare today's snapshot to the one we did on 4/16/15 (click here to view).
2. Growth tends to outpace value investing when the earnings growth rates of said companies accelerate faster than the broader market,such as right after the economy exits a recession.

Diversify Your Short Duration Income Portfolio

Sep. 10, 2015 - First Trust -  As financial advisors prepare for the Federal Reserve (the “Fed”) to begin raising interest rates for the first time since 2006, it may be a prudent time to consider shortening the duration of their clients’ fixed-income portfolios. 1 Considering the relatively low yields offered by long-term bonds, an interest rate increase of 1 or 2 percentage points could result in a price decline equivalent to multiple years of income. For example, as of 8/31/15,the yield-to-maturity for the Barclays US Aggregate Bond Index was 2.4%, with a modified duration of 5.6 years. 2 This implies that for every 1% increase in interest rates, the price of the index could decline by roughly 5.6%.

ETFGI September 2015: Europe
Sep. 09, 2015 - etfgi -  Although August was a roller coaster for investors, ETFs/ETPs listed in Europe gathered US$11.5 billion in net new assets ranking as their third best month and marking their 11th consecutive month of positive net inflows, according to ETFGI’s preliminary ETF and ETP global insights report for August 2015.  

ETFGI September 2015: United States
Sep. 09, 2015 - etfgi -  After a roller coaster August for investors, ETFs/ETPs listed in the United States gathered just US$2.4 billion in net new assets, according to ETFGI’s preliminary ETF and ETP global insights report for August 2015.

Just a Bump in the Road for the Global Infrastructure Sector?
Sep. 09, 2015 - Morningstar, Inc. -  This ETF has been battered by the decline in energy prices and weakness in emerging markets.

ETFGI September 2015: Global
Sep. 08, 2015 - etfgi -  Although August was a roller coaster ride for investors, ETFs/ETPs listed globally gathered US$20.8 billion in net new assets, marking their 19th consecutive month of positive net inflows, according to ETFGI’s preliminary ETF and ETP global insights report for August 2015.

Diversified Exposure to Quality Stocks
Sep. 04, 2015 - Morningstar, Inc. -  This ETF offers a low-cost way to invest in profitable companies with durable competitive advantages.

Chinese Auto Stimulus

Sep. 01, 2015 - First Trust -  A tax cut? In China? We couldn't believe our ears! In the wake of a myriad of other measures to shore up its slowing economy, China announced Tuesday that the auto industry would be the focus of its latest stimulus measures. Starting Oct 1st, and continuing through the end of 2016, China will cut the sales tax on cars with engines of 1.6 liters or less from 10% to 5%. 

2015 & 2016 Earnings Snapshot
Sep. 01, 2015 - First Trust -  View from the Observation Deck
1. Today's blog is an update of a previous post.We refresh the data every couple of months or so. Investors can compare today's snapshot to the one we did at the start of the year on 1/6/15 (click here to view).

Markets Volatile, Economy Fine

Aug. 31, 2015 - First Trust -  As you woke up this morning, US stock market futures were down again. They say it’s because the Chinese stock market fell, and in spite of this every summary of Fed intentions that we read suggests a rate hike this year (possibly in September) is still very much on the table

Preferred Securities
Aug. 31, 2015 - Cohen & Steers -  Investment Review
Fixed income markets were generally negative in August, although they fared better than equities in a risk-averse environment. Concerns about slowing growth in China sparked broader market volatility and sent commodities and emerging market stocks sharply lower.

Active Commodities
Aug. 31, 2015 - Cohen & Steers -  Investment Review
Commodities prices declined in August but outperformed broad equity markets. The S&P 500 Index fell sharply in reaction to disappointing economic data and currency devaluation from China.

Corporate Credit Spreads on the Rise
Aug. 28, 2015 - Morningstar, Inc. -  In light of the increased compensation being offered by the asset class, we spotlight a corporate-bond ETF with limited interest-rate risk.

Be Cautious With Commodity Exchange-Traded Products
Aug. 26, 2015 - Morningstar, Inc. -  Academic research suggests that commodities can play a role in a balanced asset allocation. A track record of providing uncorrelated returns has won the commodities Morningstar Category a place in many portfolios as an attractive diversifier in a mix of stocks, bonds, and cash.

The Big Picture With Respect To Global Equities
Aug. 25, 2015 - First Trust -  View from the Observation Deck
1. The current correction in stocks is very much a global event.Today’s chart reflects the changes in total world equity market capitalization (market cap) over the past 10 years (thru 8/24/15).

This Correction is Technical, Not Fundamental

Aug. 24, 2015 - First Trust -  Well…what’s up? The Chicago Cubbies, that’s what. They’ve won 19 out of their last 23 games and have the fourth best record in Major League Baseball. Maybe hell really is about to freeze over. Cub’s fans have been waiting for a very long time.

What’s the Difference Between a Bond ETF and an Equity ETF?

Aug. 19, 2015 - BlackRock Blog -  Stock ETFs and bond ETFs have some similarities, but it's their differences that tend to trip investors up. Matt Tucker explores the ins and outs of both categories.

What The Recovery In REITs Looks Like
Aug. 18, 2015 - First Trust -  View from the Observation Deck
1. The FTSE NAREIT All Equity REITs (Real Estate Investment Trusts) Total Return Index closed 7.48% below its all-time high on
8/14/15, according to Bloomberg.
2. The index’s all-time high was set on 1/26/15, an indication that equity REITs had fully recovered from the previous bear market,
which ended in March 2009.

Financial System Healing 
Aug. 17, 2015 - First Trust -  Every month, the National Association of Realtors reports on existing home sales, which are closings on previouslyowned homes. These sales have been doing very well lately, up in four of the past five months and up almost 10% from a year ago. We expect further gains when the next report comes out Thursday morning

The Cheapest Fund for All-Cap, Developed-, and Emerging-Markets Exposure
Aug. 14, 2015 - Morningstar, Inc. -  Vanguard made a bold move in June when it announced that it will be adding onshore-listed China A-shares to the  Vanguard FTSE Emerging Markets ETF (VWO) portfolio later this year. However, this emerging-markets fund will be the only one of Vanguard’s international-equity funds to make this addition (although Vanguard may decide to add China A-shares to other funds at a later date).

What You Need to Know about Bond ETF Yields
Aug. 14, 2015 - BlackRock Blog -  With multiple bond ETF yield measures to choose from, it can be difficult for investors to quickly assess what their fund is yielding. Matt Tucker reviews the most common yield measures and explains when to use each one, and why.

The Cheapest Fund for All-Cap, Developed-, and Emerging-Markets Exposure
Aug. 14, 2015 - Morningstar, Inc. -  Vanguard uses this fund in its target-date and LifeStrategy funds.

Flows Into Foreign Equity Funds Remain Strong
Aug. 12, 2015 - Morningstar, Inc. -  Investor rebalancing is a contributor.

ETFGI August 2015: Japan
Aug. 11, 2015 - etfgi -  ETFs and ETPs listed in Japan are gathering net new assets 59% percent faster than in prior years according to ETFGI. A record level of US$23.8 billion in net new assets (NNA) was gathered by ETFs and ETPs listed in Japan in the first seven months of 2015, surpassing the prior record of US$15.0 billion gathered in the same period in 2014. At the end of July 2015, the Japanese ETF/ETP industry had 154 ETFs/ETPs, with 209 listings, assets of US$125 Bn, from 21 providers listed on 2 exchanges, according to ETFGI’s preliminary ETF and ETP global insights report for the July 2015.

A Good Climate For Equity Covered Call Writing
Aug. 11, 2015 - First Trust -  View from the Observation Deck
1. From 1926-2014,the average annual total return on the S&P 500 Index was 10.12%, according to data from Ibbotson
2. Since 1990,there were seven calendar years in which the S&P 500 Index posted a total return that was greater than zero, but less
than 11%.

ETFGI August 2015: Europe
Aug. 10, 2015 - etfgi -  ETFs and ETPs listed in Europe are gathering net new assets 13% percent faster than in prior years according to ETFGI. A record level of US$48.4 billion in net new assets (NNA) was gathered by ETFs and ETPs listed in Europe in the first seven months of 2015, surpassing the prior record of US$42.9 billion gathered in the same period in 2014. At the end of July 2015, the European ETF/ETP industry had 2,135 ETFs/ETPs, with 6,534 listings, assets of US$504 Bn, from 50 providers listed on 25 exchanges in 21 countries, according to ETFGI’s preliminary ETF and ETP global insights report for July 2015.

ETFGI August 2015: Canada
Aug. 10, 2015 - etfgi -  ETFs and ETPs listed in Canada gathered 7 billion US dollars in net new assets year to date (YTD) through end of July 2015 according to ETFGI. At the end of July 2015, the Canadian ETF industry had 368 ETFs, with 524 listings, assets of US$66 Bn, from 11 providers listed on 1 exchange, according to ETFGI’s preliminary ETF and ETP global insights report for the July 2015.

ETFGI August 2015: United States
Aug. 10, 2015 - etfgi -  ETFs and ETPs listed in the United States are gathering net new assets 8% percent faster than in prior years according to ETFGI. A record level of US$125.1 billion in net new assets (NNA) was gathered by ETFs and ETPs listed in the United States in the first seven months of 2015, surpassing the prior record of US$115.9 billion gathered in the same period in 2013. At the end of July 2015, the US ETF/ETP industry had 1,764 ETFs/ETPs, assets of US$2.14 trillion, from 84 providers listed on 3 exchanges, according to ETFGI’s preliminary ETF and ETP global insights report for July 2015.

IMF Can’t End Dollar’s Reign
Aug. 10, 2015 - First Trust -  Ever since Quantitative Easing began, a group of so-called Monetarist/Austrian thinkers have predicted “hyper-inflation” and the demise of the dollar as the world’s “reserve currency.”

ETFGI August 2015: Global
Aug. 07, 2015 - etfgi -  ETFs and ETPs listed globally are gathering net new assets 21% percent faster than in prior years according to ETFGI.  Assets invested in ETFs and ETPs are again above the US$3 trillion milestone which they first passed at the end of May 2015 before dropping below US$3 trillion at the end of June 2015.

The Emerging Markets Best Positioned to Withstand a Fed Hike
Aug. 07, 2015 - BlackRock Blog -  Russ explains why not all emerging markets are created equal when it comes to weathering capital outflows associated with higher U.S. interest rates.

When Only the Biggest Stocks Will Do
Aug. 07, 2015 - Morningstar, Inc. -  Mega-cap stocks may be slow-growing, but their low volatility has appeal.

The Three Key Elements of a Bond ETF
Aug. 06, 2015 - BlackRock Blog -  Matt Tucker explores common misconceptions about bond exchange traded funds and provides three things every investor should know about this investment vehicle.

What's Behind Your Fund Returns?
Aug. 05, 2015 - Morningstar, Inc. -  Beta may be boring, but it provides the majority of funds' returns.

Snapshot of U.S. Equity Styles/Market Caps
Aug. 04, 2015 - First Trust -  View from the Observation Deck
1. Today's blog post is intended to expose potential opportunities within the growth and value styles of investing, as well as by
market capitalization (market cap).
2. At any given time,the equities markets are likely being led up or down by one of the three market cap classifications (large-cap,
mid-cap or small-cap).Often this leadership role can be held for a multi-year period.

Lipper U.S. Fund Flows: Investors Are Net Redeemers of Fund Assets for the Week

Aug. 03, 2015 - Lipper -  During the fund-flows week ended July 29 weak earnings reports from bellwether stocks such as American Express, Caterpillar, and 3M, accompanied by a hangover from China’s market meltdown, outweighed a plunge in weekly applications for unemployment benefits to the lowest level since 1973.

Even Garth Can’t Argue About Liftoff
Aug. 03, 2015 - First Trust -  Plow On, Garth! Time for Liftoff, Wayne! The first report on Q2 real GDP showed Plow Horse annualized growth of 2.3%, exactly the same as the average growth rate in the past year. Now that’s the definition of a Plow Horse report.

An Exchange-Traded Note for Low-Cost Exposure to MLPs
Jul. 29, 2015 - Morningstar, Inc. -  MLPs have fallen out of favor this year amid lower commodity prices, currency concerns, and interest-rate fears. This ETN offers broad exposure to the asset class.

Five reasons to invest

Jul. 29, 2015 - Aberdeen Asset Management -  Asia’s rising economic importance is nearly impossible to ignore. The region’s vast potential is underpinned by a huge domestic market, young workforce and growing middle class population. Asia Pacific's middle classes will soon be larger than Europe and North America combined. At the corporate level, the wide choice of quality companies makes it a stock-picker's haven.

Rising Interest Rates And Stock Performance
Jul. 28, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post provides some historical perspective on how the S&P 500 Index has performed in calendar years when the yield on the benchmark 10-Year Treasury Note (T-Note) finished the year higher than where it began.
2. From 1975-2014,there were 18 such years (see chart).The S&P 500 Index posted a positive total return in 15 of those 18 years.

GDP Rebounds in Q2 
Jul. 27, 2015 - First Trust -  The US economy rebounded in the second quarter from the supposed decline in real GDP in Q1. We say “supposed decline” in Q1 because the government has had persistent problems seasonally adjusting GDP, tending to underestimate growth in the first quarter each year while overestimating growth in the middle two quarters

Questions to Ask Your "Smart Beta" ETF

Jul. 27, 2015 - First Trust -  One of the most common complaints we hear from investment advisors attempting to evaluate "smart beta" ETFs is that the category itself lacks cohesion.  ETFs employing a variety of different strategies, with a wide range of risks and objectives, have been given the "smart beta" label simply because they do not track traditional market-cap weighted benchmark indices.  Alternatively, we believe advisors are better off judging ETFs on the basis of their own underlying strategies, rather than attempting to treat "smart beta" ETFs as a category.

Is There Still Opportunity in Japanese Stocks?
Jul. 27, 2015 - BlackRock Blog -  After Japan's strong performance this year, some believe the market will soon run out of steam. Heidi Richardson disagrees.

Sizing Up a Distinctive Approach to Tilting Toward Smaller-Cap Stocks
Jul. 24, 2015 - Morningstar, Inc. -  This exchange-traded fund tilts toward smaller and more-defensive names in the large-cap universe.

What Upcoming Index Changes Mean for Two Factor ETFs
Jul. 22, 2015 - Morningstar, Inc. -  BlackRock is switching benchmarks for two of its factor ETFs, but this change may help one ETF more than the other.

ETFGI July 2015: Hedge fund vs ETF
Jul. 21, 2015 - etfgi -  Assets invested in the global ETF/ETP industry have surpassed the assets invested in the hedge fund industry at the end of Q2 as we had forecasted.

The Biotechnology Sector Is Clearly Outperforming “Big Pharma”

Jul. 21, 2015 - First Trust -  View from the Observation Deck
1. From 1995-2014, biotechnology stocks outperformed their pharmaceutical counterparts in 13 of the 20 calendar years (see chart).
2. Over that 20-year period,the NYSE Arca Biotechnology Index posted an average annual return of 20.55%, compared to 12.00% for the S&P 500 Pharmaceuticals Index, according to Bloomberg.

Tax Cuts on the Horizon 
Jul. 20, 2015 - First Trust -  The one key reason for being bullish on equities the past several years has been valuation. Stocks are cheap based on profits and interest rates.

Agricultural Commodities in the Spotlight
Jul. 15, 2015 - Morningstar, Inc. -  Globally, calorie consumption is growing and could spur demand as well as a need for greater agricultural productivity.

There's More to ETF Liquidity Than Meets the Eye
Jul. 15, 2015 - Morningstar, Inc. -  Exchange-traded funds' unique structure provides two sources of liquidity.

Bond ETFs: Benefits, Challenges, Opportunities

Jul. 14, 2015 - BlackRock -  EXECUTIVE SUMMARY
The rapid growth of assets in bond ETFs juxtaposed with the perception of growing liquidity challenges in fixed income markets has raised some questions about the liquidity of ETFs.

Growth-Oriented Stocks in the S&P 500 Outperforming Dividend-Payers (2012-Present)

Jul. 14, 2015 - First Trust -  1. One of the ways in which S&P Dow Jones Indices tracks the performance of the constituents in the S&P 500 is by separating those that pay a dividend from those that do not.

Should I Take the Plunge into Currency-Hedged ETFs?
Jul. 14, 2015 - Morningstar, Inc. -  Trying to time your portfolio’s currency exposure could cost you money.

Politicians Should Stop Giving Investment Advice

Jul. 13, 2015 - First Trust -  For the past six years, the conventional wisdom has predicted the end of the world. On the left, they say “Tea Party austerity” is a catastrophe and an “income divide” spells doom. On the right, the election of President Obama made collapse inevitable. Anything and everything that could be spun negatively, has been.

ETFGI July 2015: Canada
Jul. 10, 2015 - etfgi -  Assets invested in ETFs/ETPs listed in Canada increased 2.6% in the first half of 2015, according to ETFGI’s preliminary ETF and ETP global insights report for the first half of 2015.  At the end of June 2015, the Canadian ETF industry had 367 ETFs, with 521 listings, assets of US$68 Bn, from 11 providers listed on 1 exchange. 

ETFGI July 2015: Asia Pacific (Ex-Japan)
Jul. 10, 2015 - etfgi -  Assets invested in ETFs/ETPs listed in Asia Pacific ex-Japan increased 4.3% in the first half of 2015, according to ETFGI’s preliminary ETF and ETP global insights report for the first half of 2015.  At the end of June 2015, the Asia Pacific (ex-Japan) ETF/ETP industry had 682 ETFs/ETPs, with 821 listings, assets of US$123 Bn, from 113 providers listed on 17 exchanges in 13 countries. 

ETFGI July 2015: Japan
Jul. 10, 2015 - etfgi -  Assets invested in ETFs and ETPs listed in Japan reached a new record of US$120 billion at the end of the first half of 2015 as well as a record level of US$18 billion in net new assets (NNA). Net inflows in the first half of 2015 have surpassed the prior record of US$13.5 billion set in the first half of 2014, according to ETFGI’s preliminary ETF and ETP global insights report. At the end of June 2015, the Japanese ETF/ETP industry had 157 ETFs/ETPs, with 212 listings, assets of US$120 Bn, from 20 providers on 2 exchanges.

Dramatic Moves in Chinese Equities Having Minimal Impact on the Average Investor
Jul. 10, 2015 - Morningstar, Inc. -  China typically accounts for about a 1% allocation in a 60/40 stock/bond portfolio.

ETFGI July 2015: United States
Jul. 09, 2015 - etfgi -  A record level of US$103 billion in net new assets (NNA) was gathered by ETFs and ETPs listed in the United States in the first half of 2015, surpassing the prior record of US$76 billion gathered in the first half of 2012, according to ETFGI’s preliminary ETF and ETP global insights report for the first half of 2015.  At the end of June 2015, the US ETF/ETP industry had 1,742 ETFs/ETPs, assets of US$2.1 trillion, from 82 providers listed on 3 exchanges.

ETFGI July 2015: Europe
Jul. 09, 2015 - etfgi -  A record level of US$40 billion in net new assets (NNA) was gathered by ETFs and ETPs listed in Europe in the first half of 2015, surpassing the prior record of US$32 billion gathered in the first half of 2014, according to ETFGI’s preliminary ETF and ETP global insights report for the first half of 2015. At the end of June 2015, the European ETF/ETP industry had 2,118 ETFs/ETPs, with 6,502 listings, assets of US$499 Bn, from 50 providers listed on 25 exchanges in 21 countries.

ETFGI July 2015: Global
Jul. 08, 2015 - etfgi -  A record level of US$152 billion in net new assets (NNA) was gathered by ETFs and ETPs listed globally in the first half of 2015, surpassing the prior record of US$130 billion gathered in the first half of 2014, according to ETFGI’s preliminary ETF and ETP global insights report for the first half of 2015. At the end of June 2015, the global ETF/ETP industry had 5,823 ETFs/ETPs, with 11,295 listings, assets of US$2.971 trillion, from 259 providers listed on 62 exchanges in 51 countries.

One of the Most Useful ETF Data Points You May Never Have Heard Of
Jul. 08, 2015 - Morningstar, Inc. -  Morningstar's fair value metric is a useful touch point for ETF investors doing their homework on equity valuations.

Xpert Insights: Market outlook from Dodd Kittsley

Jul. 08, 2015 - Deutsche Asset & Wealth Managment -  Greek contagion: This time it’s different
After a period of relative calm, Greece is back in the headlines. The recent failure to negotiate an extension to its aid program and the ensuing referendum result has highlighted the dangers of political brinkmanship and once again has driven the prospect of “Grexit” to new heights.

2015 & 2016 Earnings Snapshot
Jul. 07, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post is a midyear update. Investors can compare today’s snapshot to the one we did at the start of the year on 1/6/15 (click here to view).

End of an Era 
Jul. 06, 2015 - First Trust -  Over this past Fourth of July weekend, in Chicago, the Grateful Dead, or at least what’s left of it, played its last concert. It’s the end of an era, one that epitomized the liberal political earthquake of the 1960s and 70s – VW vans, flower power, tie-dyed tee shirts, drugs, protests, and social justice.

End of an Era
Jul. 06, 2015 - First Trust -  Over this past Fourth of July weekend, in Chicago, the Grateful Dead, or at least what’s left of it, played its last concert. It’s the end of an era, one that epitomized the liberal political earthquake of the 1960s and 70s – VW vans, flower power, tie-dyed tee shirts, drugs, protests, and social justice.

Valuations Across the Sectors of the S&P 500
Jul. 01, 2015 - Morningstar, Inc. -  It can be helpful to evaluate both fundamental and relative equity valuations, with a few caveats.

S&P 500 Companies Still Cash Rich Despite Returning More Capital To Shareholders

Jun. 30, 2015 - First Trust -  View from the Observation Deck
1. S&P 500 companies have been rewarding shareholders by increasing stock dividend payouts as well as repurchasing company stock in an effort to boost earnings-per-share growth via the reduction of share count.

Ignore Greece
Jun. 29, 2015 - First Trust -  Don’t let anyone tell you Greece is sticking up for its "dignity" by fighting “austerity.” The current Greek government is sticking up for socialism by fighting reality.

Mid-Year Outlook - Investment Directions

Jun. 29, 2015 - BlackRock -  The year so far has played out largely within our expectations. The divergence in economic growth and central bank policy had some predictable effects, with the most obvious being a stronger U.S. dollar. But there were some surprises. Interest rates unexpectedly plunged early in the year before abruptly rebounding in May. The U.S. economy got off to a rough start, just as Europe notched a surprisingly good first quarter. With six months down, where are the potential opportunities for the rest of 2015?

A Low-Cost, Core Equity Portfolio From iShares
Jun. 26, 2015 - Morningstar, Inc. -  IShares Core S&P Total US Stock Market (ITOT) provides convenient and low-cost exposure to U.S. stocks and can serve as a core equity holding. The S&P 1500 Index that this fund tracks does not include as many small- or micro-cap stocks as other U.S. broad or total stocks market indexes from Russell or CRSP. 

The Ability Of REITs To Raise Capital Is A Good Sign For Investors

Jun. 23, 2015 - First Trust -  View from the Observation Deck
1. From 12/31/13-3/31/15 (15 months),the FTSE NAREIT All Equity REITs Index posted a cumulative total return of 33.12%, according to Bloomberg.The index, however, was down 5.35% from 3/31/15 through 6/19/15.

Stocks Are Still Cheap
Jun. 22, 2015 - First Trust -  You know those TV shows – the ones about ice trucking, fishing in Alaska, or digging for gold. They’re made to bring out these interesting jobs, but also the danger. They leave you hanging, and break for commercial, just when the truck starts to slide on a bridge, or just when a huge wave is approaching.

Can the Hard-Hit Transportation Sector Get Back on Track
Jun. 21, 2015 - Morningstar, Inc. -  Interested investors may consider this ETF, the largest that holds U.S. transportation companies, which have been battered by sagging commodity prices.

A Look at Merger-Arbitrage ETPs
Jun. 17, 2015 - Morningstar, Inc. -  Fueled by continued deal activity, merger-arbitrage ETPs offer an alternative for investors seeking a cash substitute.

Greece is Detroit, Not Lehman

Jun. 16, 2015 - First Trust -  Greece is the land of misinformation. We constantly hear that a Greek default will cause a market panic and be as damaging to financial markets as the default of Lehman Brothers back in 2008. While there is no possible way to know for sure, we believe that a Greek default will look and feel more like the Detroit default. In other words, it may make a great deal of noise, but the European economy will not collapse. In fact, we believe any sell-off in the equity markets is a buying opportunity.

The U.S.Dollar Has A Significant Influence On Commodity Prices

Jun. 16, 2015 - First Trust -  View from the Observation Deck 1. For the 12-month period ended 6/12/15,the U.S.Dollar Index (DXY) posted a 17.86% gain, compared to a 27.57% decline for the TR/CC CRB Commodity Index (see chart), according to Bloomberg.

Global Diversification With a Smoother Ride
Jun. 12, 2015 - Morningstar, Inc. -  Although this low-volatility global equity ETF holds U.S. stocks, it has offered more diversification from the S&P 500 than the average world-stock fund.

These Three Equity Income Asset Classes Have Sold-Off Following Strong Gains

Jun. 11, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post seeks to briefly address some inquiries we have been getting lately regarding three sectors of the market often pursued by investors seeking relatively high levels of equity income.

Adding China A-Shares to the Index: What It Means for Fundholders
Jun. 10, 2015 - Morningstar, Inc. -  Vanguard Emerging Markets is adding China A-shares, and MSCI says it soon will, too.

Don’t Deny The Jobs Recovery
Jun. 08, 2015 - First Trust -  You would think that after 63 straight months of growth in private sector payrolls, the longest streak since the 1930s, everyone would agree that the job-market recovery is for real. But, that ain’t the case. A quick Google search still uncovers a whole bunch of pessimistic appraisals of jobs and the economy.

ETFGI June 2015: Global
Jun. 05, 2015 - etfgi -  Assets invested in ETFs/ETPs listed globally broke through the US$3 trillion milestone at the end of May to reach a new record of US$3.015 trillion in assets under management (AUM), according to ETFGI’s preliminary monthly ETF and ETP global insight report for May 2015. At the end of May 2015, the global ETF/ETP industry had 5,757 ETFs/ETPs, with 11,117 listings, from 256 providers listed on 62 exchanges in 51 countries. 

A Unique Way to Invest in Emerging-Markets Sovereign Bonds
Jun. 05, 2015 - Morningstar, Inc. -  This fixed-income ETF screens for the most-undervalued emerging-markets sovereign bonds and weights each country equally.

Treasury Yields Are Inching Higher…Again
Jun. 04, 2015 - First Trust -  Treasury Yields Are Inching Higher…Again

View from the Observation Deck
1. The yield on the benchmark 10-Year Treasury Note increased from 1.91% on 4/2/15 to 2.26% on 6/2/15 – an increase of 35 basis
points.While higher of late, it remains well below where it stood (3.03%) at the close of 2013.
2. Bond investors appear to be more-and-more sensitive to any economic data that could tip the balance in favor of a Federal
Reserve interest rate hike, in our opinion.Having said that, net inflows to bond funds remain strong.

Discipline at the Core
Jun. 03, 2015 - Morningstar, Inc. -  Investing has always been part art and part science, but leaning more heavily on a scientific approach may help improve consistency. Through fundamental research, a manager may decide to purchase stocks with varying degrees of value, momentum, and market exposure--the elements that appear to drive stock returns. But without directly targeting these dimensions of return, a portfolio's risk and expected return relative to the market can change over time.

Canadian Fixed Income

May. 30, 2015 - BlackRock -  April Review
The iShares fixed income suite returned between -2.65% and -0.05% in April
The negative performance of the fixed income funds can be attributed to the significant increase in interest rates across the curve. The Government of Canada 10 year yield closed the month of 1.58%, up 23 basis points from the end of March

A Tactical Tool For Dialing Down Fixed-Income Risk
May. 29, 2015 - Morningstar, Inc. -  This ETF is light on interest-rate risk and light on credit risk.

Trouble With the (Yield) Curve
May. 27, 2015 - Morningstar, Inc. -  Because interest rates do not always move in tandem, investors need to pay close attention to the yield curve and spreads to gauge risk.

Inflation: Dormant, Not Dead 
May. 26, 2015 - First Trust -  Last month we explained why the dreaded threat of hyperinflation hasn’t materialized, and likely wouldn’t materialize, in spite of the huge expansion of the Federal Reserve’s balance sheet the past several years, including QE1, 2, and 3.

Sizing Up The Bull
May. 26, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post is intended to provide investors with a snapshot of how five major stock indices have fared in the current bull market.Three are U.S. based and two track foreign equities.

Scouring S&P 500 Sectors For Bargains
May. 22, 2015 - Morningstar, Inc. -  The energy sector looks to be the last pocket of value in a fairly priced market.

This 50/50 Sector Combo Has Captured Upside While Mitigating Much Of The Downside

May. 19, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post is an equity investment approach targeting those investors who are concerned about the risks associated with owning common stocks over time.

Taxes Culprit Behind Slow Sales
May. 18, 2015 - First Trust -  Last week’s report on retail sales in April came in weaker than most economists expected, with no change from the pace of sales in March. As a result, the chorus calling for the Federal Reserve to postpone the start of rate hikes beyond June, already loud, grew even louder

The Big Chill: What’s Wrong with the U.S. Consumer?
May. 14, 2015 - BlackRock Blog -  Most market watchers expect the US economy to bounce back in the second quarter. However, the consumer isn't playing to script. Russ explains.

A Long-Term View on Latin America: Infrastructure Investment and Institutional Reform
May. 08, 2015 - BlackRock Blog -  Armando Senra, BlackRock Head of the Latin America & Iberia Region, discusses the fundamental changes taking place in Latin America and the opportunities for economic growth and investment in the region.

The S&P 500 Beat Rate Hasn’t Skipped A Beat
May. 07, 2015 - First Trust -  View from the Observation Deck
1. From Q1’12 through Q4’14,the average quarterly earnings beat rate for S&P 500 companies was 67.8%.The 67.9% beat rate so far in Q1’15 is on the mark.

Too Late to Invest in EM?
May. 05, 2015 - BlackRock Blog -  While emerging market stocks have had a good 2015 so far, this may still be an attractive time to invest for investors who have been sitting on the EM sidelines.

What Rising Yields Mean for U.S. Stocks
May. 05, 2015 - BlackRock Blog -  Last week’s bond selloff provided a foreshadowing of the U.S. stock segments likely to suffer as the eventual Federal Reserve (Fed) rate liftoff nears.

Puerto Rico bonds a good bet? Jeffrey Gundlach says yes
May. 05, 2015 - CNBC -  Jeffrey Gundlach, founder of investment firm DoubleLine Capital, has made a bold recommendation to investors: Buy Puerto Rican general obligation bonds.

A Snapshot of Q1 Flows and Trends
May. 05, 2015 - First Trust -  US-listed exchange-traded fund (ETF) net inflows totaled $59.1 billion during the first quarter of 2015, according to Morningstar.1 International Equity ETFs and Taxable Bond ETFs received the strongest net inflows, totaling $37.7 billion and $20.2 billion, respectively, while US Equity ETFs had the largest net outflows, totaling $12.6 billion. (See Table 1 below) Within the International Equity category, currencyhedged ETFs received $26.5 billion in net inflows, as US investors sought to avoid foreign currency risk. Within the Taxable Bond ETFs category, net inflows were strongest among High Yield Bond ETFs (+$4.8 billion), Corporate Bond ETFs (+$4.8 billion), Intermediate-Term Bond ETFs (+$3.5 billion), and Preferred Stock ETFs (+$1.9 billion). Interestingly, net outflows for the US Equity category may not be as bad as they seem, as outflows from a single ETF totaled nearly $31.3 billion. Apart from this ETF, the US Equity ETFs category received $18.8 billion in net inflows.

@WSJopinion vs. @BenBernanke
May. 04, 2015 - First Trust -  The Wall Street Journal’s editorial page and former Fed Chair Ben Bernanke are in a tiff. In a nutshell, the WSJ says growth is slow (which is true) and the Fed has overestimated economic growth (true, too); therefore, monetary policy is not working. Interestingly, after saying this, the WSJ says it does think quantitative easing (QE) has boosted the stock market

An ETF for Low-Cost Exposure to Large-Cap Financials
May. 01, 2015 - Morningstar, Inc. -  With an interest-rate hike at the forefront, here's a closer look at an inexpensive financial-services exchange-traded fund.

Would More Government Debt Help the U.S. Economy?
Apr. 30, 2015 - BlackRock Blog -  Russ explains why he's skeptical that massive, debt-fueled government stimulus is what's needed to accelerate the U.S. recovery.

The Price Of Natural Gas Rarely Stays Below $2.50 For Long

Apr. 30, 2015 - First Trust -  View from the Observation Deck 1. The price of natural gas closed yesterday’s trading session (4/29) at $2.61 per million British thermal units (BTUs), up from $2.49 on 4/27.

8 Popular ETPs That Have Launched in Recent Months
Apr. 29, 2015 - Morningstar, Inc. -  A look at new exchange-traded products--most of which are narrowly constructed--that have attracted the most assets in the past six months.

Where’s the Hyper-Inflation?
Apr. 27, 2015 - First Trust -  If we had a dollar for every time we’ve heard about the threat of hyperinflation, we’d probably have enough money to never worry about it.

Cheap Access to the Investment-Grade Bond Market
Apr. 24, 2015 - Morningstar, Inc. -  This fund's high-quality tilt can help diversify and protect an investor's portfolio.

A Potential Remedy For A Nagging Problem That Could Get Worse

Apr. 23, 2015 - First Trust -  View from the Observation Deck
1. A study released yesterday (4/22) from TransUnion revealed that out-of-pocket medical costs for U.S. patients rose by 11% in 2014, according to

Rear-View Mirror Shows Ugly Q1
Apr. 20, 2015 - First Trust -  We know Plow Horses don’t have rearview mirrors, but economists do. So, let’s not beat around the bush: the economy barely grew last quarter. Right now, we’re forecasting that real GDP expanded at a 0.7% annual rate in Q1. That’s a little below the consensus expected 1.0% growth rate, although above the 0.1% estimate by the Atlanta Fed’s GDPNow Model

Setting Expectations for Stock Returns
Apr. 17, 2015 - Morningstar, Inc. -  The past may not be a good guide for the future, but a forward-looking framework can help investors set realistic return expectations.

Xpert Insights - Market outlook from Dodd Kittsley

Apr. 17, 2015 - Deutsche Asset & Wealth Managment -  Plenty of gas left in the U.S. dollar strength engine
One of the more pronounced trends in global markets over the past year has been the strengthening U.S. dollar. The U.S. Dollar Index appreciated 9% year to date and 23% over the past 12 months, which has had a material impact on U.S. investors’ international equity returns.

Cheap Exposure to Small-Value Stocks
Apr. 15, 2015 - Morningstar, Inc. -  This may not be the deepest small-value fund available, but its low expense ratio makes it one of the best bargains in the category.

Some Government Bonds Yield Less Than Half Of What They Did In 2010

Apr. 14, 2015 - First Trust -  View from the Observation Deck
1. With the exception of the three BRIC-member countries (Brazil, China and India) featured in the chart, yields on 10-Year government bonds issued by many of the world’s largest nations have declined substantially in the last five years.
2. One of the things that has contributed to the decline in government bond yields is the drop in inflation rates throughout much of the globe, in our opinion

June Rate Hike Still on Tap

Apr. 13, 2015 - First Trust -  According to a recent survey by the Wall Street Journal, most economists think a June rate hike is unlikely. In fact, four times as many think the Federal Reserve won’t start raising rates until September or later as currently think the Fed will start in June.

Avoid a Potential Minefield in the Oil Patch
Apr. 10, 2015 - Morningstar, Inc. -  This ETF offers a cheap and broadly diversified way to invest in the volatile energy sector.

Will 2015 Be The Year The Fed Tightens?
Apr. 09, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post is an update of one we did on 12/11/14 (click here to view).The yield on the benchmark 10-Year Treasury note fell 80 basis points from 3/31/14-3/31/15. It stood at 1.92% on 3/31/15.
2. While the drop in interest rates helped bolster the 1-year total returns for investment grade bonds,speculative-grade and foreign bond returns came in below their respective yields as of 3/31/14 (see gray shaded columns in chart).

Should You Invest in a Currency-Hedged International-Equity ETF?
Apr. 08, 2015 - Morningstar, Inc. -  Currency-hedged ETFs have recently delivered category-topping performance, but moving in and out of these products may not be a sustainable strategy for long-term investors.

Don’t “Dread” The Plow Horse
Apr. 06, 2015 - First Trust -  “Dread” is the perfect word for what many investors have felt in recent years. Some have experienced it daily since the bottom in March 2009. Some experience it whenever the stock market falls

A Closer Look at One of Our Favorite Dividend ETFs
Apr. 03, 2015 - Morningstar, Inc. -  Schwab U.S. Dividend Equity ETF offers a high-quality portfolio at a very low price.

Not All Dividend ETFs Are Created Equal
Apr. 01, 2015 - Morningstar, Inc. -  The common dividend label belies what is a diverse array of equity-income strategies.

U.S. Retail Investors Continue To Invest In Foreign Stocks
Mar. 31, 2015 - First Trust -  View from the Observation Deck
1. Over the past five calendar years (2010-2014), retail investors funneled a net $294.39 billion into open-end World Equity mutual funds, according to data from the Investment Company Institute (ICI).
2. As indicated in the chart, all five calendar years registered net inflows, despite a couple of negative total return years for the MSCI World (Ex-U.S.) Index and three down years for the MSCI Emerging Markets Index.

Rate Hikes Won’t Kill Housing
Mar. 30, 2015 - First Trust -  Home building plummeted in February, which made perfect sense; this February was the coldest for the most Americans since 1979. What no one expected was that new home sales would soar. Bad winter weather usually doesn’t hurt new home sales as much as it hurts housing starts, but it typically has an impact. This time, though, new homes sales spiked 7.8%, hitting the highest level in seven years.

International Small-Cap Funds Offer Better Diversification
Mar. 27, 2015 - Morningstar, Inc. -  And they do so without more risk, relative to international large-cap funds.

A Deeper Look at Smart Beta in Fixed Income
Mar. 26, 2015 - BlackRock Blog -  While most tend to think of smart beta as a tool for stock portfolios, there are ways to apply it to bonds. Sara Shores shares a smart beta approach to balancing interest rate and credit risk.

India Continues to Be a Bright Spot Among Emerging-Markets Countries
Mar. 25, 2015 - Morningstar, Inc. -  As most equity markets around the world remain sluggish, India-focused funds continue to perform in 2015, up an average of 6% year to date, and that's on the heels of an average 40% return in 2014. 

S&P 500 Dividend-Paying Stocks Distributing Record Levels Of Cash To Investors

Mar. 24, 2015 - First Trust -  View from the Observation Deck 1. S&P 500 companies paid out a record-high $92.80 billion in stock dividends in Q4’14, up 9.2% from the $84.98 billion distributed in Q4’13.This is an indication of how healthy Corporate America was heading into 2015, in our opinion. 2. The $92.80 billion distributed in Q4’14 was 96.6% higher than the $47.21 billion in Q3’09 (see chart). Stock dividend distributions are now well above pre-financial crisis levels.

Don’t Fret Student Debt
Mar. 23, 2015 - First Trust -  For the past six years, investors have faced one fear after another. One of those fears has been the more than $1 trillion of student loan debt outstanding. This debt is up 160% since the start of 2006 (and growing) while the share of student loans with payments 90 days late, or longer, has risen from 6.4% to 11.3%.

Small-Cap Indexing: Popularity Can Be a Pain
Mar. 20, 2015 - Morningstar, Inc. -  The Russell 2000 Index is the most popular benchmark for active small-cap managers to measure themselves against. But here is an industry secret: Active managers pick that index because it is easy to beat. If you're going with a passive strategy, you don't have to limit yourself to that index. 

Two Of The Sectors At The Epicenter Of The Financial Crisis Are Still Recovering

Mar. 17, 2015 - First Trust -  View from the Observation Deck
1. The U.S. bull market in stocks turned six years old on 3/9/15.Today’s post is intended to provide an update on two of the main sectors that were at the center of the financial crisis back in 2008-2009.
2. While the broader stock market indices have been setting multiple record highs over the past 12 months, financial and homebuilding-related stocks still stand well below their respective all-time highs.

Resist the Rate-Hike Huff
Mar. 16, 2015 - First Trust -  In June 2013, then-Federal Reserve Chair Ben Bernanke hinted the time to “moderate” quantitative easing was approaching. The press called this “tapering”. The Fed would end QE gradually, by slowly shrinking its asset purchases rather than going cold turkey.

Play Defense With This ETF
Mar. 13, 2015 - Morningstar, Inc. -  A low-cost way to access 39 consumer defensive firms found in the S&P 500.

Health-Care Funds: Hale and Hearty
Mar. 11, 2015 - Morningstar, Inc. -  Health-care stocks' performance has amazed. Here's an outlook for the sector, along with some active and passive options for investors.

Worries about the Looming Fed Hike Spill Over
Mar. 10, 2015 - BlackRock Blog -  Many investors are anxious about a possible bubble in stock markets, but those fears seem overblown to us. The greater near-term danger may be a more aggressive Federal Reserve.

Good News is Still Good News
Mar. 09, 2015 - First Trust -  The stock market sold off hard last Friday and the reason looks clear: job creation was stronger than the consensus expected in February, the fourth straight month of upside surprises in payrolls.

Xpert Insights: Market outlook from Dodd Kittsley
Mar. 09, 2015 - Deutsche Asset & Wealth Managment -  Rise of currency-hedged ETFs has only just begun
Many international equity exchange-traded funds (ETFs) posted negative return in 2014 despite the positive performance of the equities they held. How could this be? The answer: currency exposure. In 2014 the MSCI EAFE Index returned 5.9% in local currency terms but –4.9% in U.S. dollar terms, a difference of 10.8 percentage points. Investors may have chosen the right equities, but saw their return negatively swamped out by the ongoing broad-based strength of the U.S. dollar. Investors are now taking action to protect their equity return from the impact of currency by increasingly allocating to currency-hedged ETFs.

Will a New Type of Fund Give Active Managers a Fighting Chance?
Mar. 06, 2015 - Morningstar, Inc. -  During the past 15 years, actively managed U.S. equity funds have suffered cumulative net redemptions of $367.8 billion, while passive domestic and international-stock funds have attracted a combined $1.89 trillion. Might the former group of funds be able to learn something from the latter?

Cheap Exposure to the Universal Bond Index
Mar. 06, 2015 - Morningstar, Inc. -  With yields at all-time lows, many income-seeking investors have been chasing yield, investing in everything from high-yield corporate bonds to high-quality dividend-paying stocks. However, chasing yield can often lead to increased volatility, increased probability of permanent capital loss, and returns that are more correlated to stocks. Said another way, when chasing yield, fixed-income investors often face disappointing and costly consequences.

Don’t Audit It: Rein It In
Mar. 05, 2015 - First Trust -  Some in Congress want to “Audit the Fed.” But an audit, unless the word is used in a very broad sense, would be redundant and basically irrelevant. The Fed is already audited, by Deloitte & Touche LLP and it releases an annual report that includes the auditor’s opinion, each year.

Searching for Yield Down Under
Mar. 03, 2015 - BlackRock Blog -  The persistence of low yields has had investors searching for income high and low for a while now. Recently, investors are expanding their hunt to some less than obvious places.

A Snapshot Of European Equities in 2015
Mar. 03, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post provides some consensus 2015 earnings estimates and price-to-earnings (P/E) estimates from analysts tracked by Bloomberg.
2. Investors funneled a net $6.46 billion into European stock funds and ETFs for the 12-month period ended 1/31/15, according to Morningstar.Nearly $3.5 billion of it came in January 2015.

Fed Has Less Patience For ZIRP
Mar. 02, 2015 - First Trust -  Economic data will have something for everyone this week. The ISM reports (manufacturing and nonmanufacturing) will likely be held down by unusually harsh weather and the Port closures. But, autos sales should remain strong and January jobs data are set for a gain close to 250,000

Cost-Efficient Exposure to Momentum
Feb. 27, 2015 - Morningstar, Inc. -  In many cases, extrapolating past performance into the future is a bad idea. In fact, securities that have outperformed for several years tend to become more expensive and priced to offer lower returns going forward. But in the short run, recent performance trends tend to persist. Winners over the past six to 12 months tend to continue to outperform for the next several months, while those that have underperformed often continue to lag. This phenomenon is known as momentum. It has been observed in nearly every market studied and across different asset classes over long periods. Investors can get efficient exposure to stocks with positive momentum through  iShares MSCI USA Momentum Factor (MTUM) for a low 0.15% expense ratio. 

The Russell 2000 Index's Achilles' Heel
Feb. 25, 2015 - Morningstar, Inc. -  While low expense ratios make index funds appealing, indexes can incur meaningful transaction costs that are often overlooked. Changes in an index's constituents force the funds that track it to buy and sell the affected securities around the same time. These concentrated trades can move prices away from the index fund managers, creating a drag on their performance. Such market-impact costs tend to be larger among smaller-cap stocks. Here, differences in portfolio construction and the popularity of the index in question can have a noticeable impact on performance. Market-impact costs have especially plagued the Russell 2000 Index and will likely continue to put it at a disadvantage to its peers. 

Technology & Financial Stocks Contribute Most To S&P 500 Dividend Payout

Feb. 24, 2015 - First Trust -  View from the Observation Deck 1. Today’s chart provides a snapshot depicting the level of contribution each of the 10 major sectors currently make to the dividend payout of the S&P 500, relative to the close of 2005. 2. What investors may find interesting is that the dividend yield on the S&P 500 changed very little from 1.80% on 12/31/2005 to 1.99% to 2/17/15.There were a couple of major changes, however, on a sector level.

Strong Dollar: Good, Not Bad
Feb. 23, 2015 - First Trust -  In fifteen short days, the bull market will be six years old. And, we’ve never seen such a steep wall of worry. Nouriel Roubini called it a “dead cat bounce.” Many said the recession wouldn’t end until 2010, maybe 2011. Supply-siders said the “Fiscal Cliff” would do us in. Keynesians said “The Spending Sequester” would end the boom.

The Surge In The U.S.Dollar Is Noteworthy…But Not Rare
Feb. 19, 2015 - First Trust -  View from the Observation Deck 1. From 6/30/14 through 12/31/14,the U.S.Dollar Index rose by 13.15% to an index reading of 90.27, according to Bloomberg. 2. That surge essentially brought the index back in line with its 20-year average (year-end values).

Betting on Oil
Feb. 18, 2015 - Morningstar, Inc. -  The collapse in oil prices in the back half of 2014 has prompted some bargain-hunters to take their chances bottom-fishing the volatile commodity. In just the past four months, exchange-traded products offering exposure to energy markets via futures contracts have attracted about $3.5 billion in asset flows. That figure represents a remarkable 80% of the $4.3 billion in total assets invested in the category as of the end of January.

Two Trillion Dollars and Counting…
Feb. 17, 2015 - First Trust -  2014 was a record-setting year for US-listed ETFs, with assets exceeding $2 trillion by year end, according to Morningstar. This increase of
approximately 18% versus the end of 2013 was fueled by record net inflows, which totaled an estimated $241.9 billion.1 As usual, ETF net
flows were not equally distributed among major asset categories. Results for the fourth quarter were generally in line with the full year, as 3
of the top 4 categories for inflows were equity-related (US Equity, Sector Equity, International Equity), while the Taxable Bond category
received the second most inflows during the fourth quarter and the full year. Also following the trend established during most of 2014, the
Commodities ETF category had the largest net outflows. (See Table 1 below)

Technology Dividends — A Missing Ingredient in Your Equity Income ETF

Feb. 17, 2015 - First Trust -  Over the past 5 years, few themes have more consistently resonated with ETF investors than equity income.1 Since 9/30/2009, equity income
ETFs have collectively gathered over $50 billion in net inflows, with positive net inflows in 19 out of the last 20 quarters.2 This recent
popularity can largely be attributed to investors’ growing appetite for income in a yield-starved interest rate environment, combined with the
perception that dividend-paying stocks may be less risky than non-dividend payers.

QE and Currency Wars A Theory With No Evidence 

Feb. 17, 2015 - First Trust -  Some analysts think that central bank policy (specifically, quantitative easing) is the only thing that matters.

Treasury Yields Are Up Sharply In The First Half Of February

Feb. 17, 2015 - First Trust -  View from the Observation Deck
1. The yield on the benchmark 10-Year Treasury Note rose from 1.64% on 1/30/15 to 2.13% on 2/17/15 (midday) – an increase of 49 basis points. Its yield stood at 3.03% on 12/31/13.
2. A strong U.S. nonfarm payroll number in January (257,000/accompanied by substantial upward revisions to December’s and November’s totals), combined with decent corporate earnings (Bloomberg reported that 69.4% of the 395 S&P 500 companies that have reported Q4’14 earnings have topped their estimates) and some hope that Greece’s debt situation can be contained, helped push interest rates higher, in our opinion.

Gold Slides as the Greenback Climbs
Feb. 13, 2015 - Morningstar, Inc. -  Earlier this week, I wrote about the mechanics and merits of hedging the foreign-currency exposure in an international-equity portfolio, a feat made increasingly straightforward in the wake of the recent proliferation of currency-hedged exchange-traded funds. These funds might take the sting out of a sliding yen or stumbling euro, which have been losing ground to the U.S. dollar of late. As the dollar has risen, one of the world's oldest currencies has also been suffering. The price of gold has slipped some 3% over the past year, while the ICE U.S. Dollar Spot Index has risen by more than 17%. (See chart below.)

Technology Stocks Have Delivered Strong Returns In The Current Bull Market

Feb. 12, 2015 - First Trust -  View from the Observation Deck
1. From 3/9/09-2/10/15 (current bull), all four of the technology-related indices featured in the chart outperformed the S&P 500.
2. The average annualized total returns for the period were as follows: ISE Cloud Computing (+35.44%); Dow Jones Internet Composite (+31.36%); Philadelphia Semiconductor (+26.23%); S&P 500 Information Technology (+24.95%); and S&P 500 (+23.32%), according to Bloomberg.

Change Your Style by Driving an ETF
Feb. 12, 2015 - BlackRock Blog -  Guest contributor Matt Raynor explains how style box ETFs can help you reach your financial destination.

Outcome Investing: Blending Index and Active Strategies
Feb. 09, 2015 - BlackRock Blog -  Here are some of the ways that an investor can combine active and indexed solutions in a portfolio to potentially create better outcomes and help reach their investment goals.

Dual Mandate Achieved: Rate Hikes Coming

Feb. 09, 2015 - First Trust -  From 45,000 feet, it certainly looks like the Federal Reserve has achieved, or is very close to achieving, its Dual Mandate of price stability and full employment.

A More Tempered Global Equity Fund
Feb. 06, 2015 - Morningstar, Inc. -  Low-volatility strategies, such as the iShares minimum volatility family of exchange-traded funds, can be attractive options for long-term investors. This is because these ETFs' underlying MSCI indexes generally exhibit less-dramatic declines in bear markets. Over the long term, these muted drawdowns explain much of the strategy’s outperformance versus its cap-weighted benchmark. 

Sell Underperforming Funds With Large Personal Unrealized Capital Gains?
Feb. 04, 2015 - Morningstar, Inc. -  The Scenario
Over the past two years, U.S. equities have delivered very strong returns. The one downside is that in both years, you received large capital gains distributions from your U.S. equity fund investment. If you had no personal loss carryforwards, you had to cut a check to Uncle Sam when you filed your 2013 tax returns and will have to do so again for your 2014 taxes. Another significant concern is that this fund has been underperforming a comparable index fund over the past three and five years, annualized. However, you have held this fund in a taxable account for a long time, and your cost basis is significantly lower than the current net asset value. In other words, selling this fund to move into an index fund or exchange-traded fund will result in a large capital gains tax liability.

2015 & 2016 Earnings Snapshot
Feb. 03, 2015 - First Trust -  View from the Observation Deck
1. Today’s blog post is an update of one we did on 1/6/15 (click here to view).There was a significant downward adjustment in the energy sector for 2015, as well as other notable changes.

Fooled By Extrapolation 
Feb. 02, 2015 - First Trust -  Pundits have a bottomless reservoir of pessimism and also a magnified ability to extrapolate the most recent trends. So, when Q1-2014 real GDP fell at an annual rate of 2.1%, fear turned rampant.

Xpert Spotlight: Currency Hedged ETFs: Offering a world of opportunity for U.S. investors in today’s market
Jan. 30, 2015 - Deutsche Asset & Wealth Managment -  Perhaps one of 2014’s most important lessons was the significant impact that currency fluctuations can have on both the risk and return of international equity investments. Although most international equity indices posted positive returns for the year, U.S. investors at large had a very different experience. Because many access foreign markets through unhedged investments in mutual funds, ETFs and ADRs, they found their return last year more than completely wiped out by currency losses.

What’s So Cool About ETFs?
Jan. 30, 2015 - BlackRock Blog -  Amy Belew explains, after a record-breaking year, why she believes ETFs will remain popular with investors in 2015.

The 6 Best Passive Large-Cap ETFs
Jan. 30, 2015 - Morningstar, Inc. -  Passive large-cap funds won the performance battle in 2014.

Finding a Tax Cut at the Pump
Jan. 28, 2015 - BlackRock Blog -  BlackRock Chairman and CEO Larry Fink reacts to the drop in oil prices and explains the concept of “good deflation”.

Two Trillion Dollars and Counting…
Jan. 28, 2015 - First Trust -  2014 was a record-setting year for US-listed ETFs, with assets exceeding $2 trillion by year end, according to Morningstar. This increase of approximately 18% versus the end of 2013 was fueled by record net inflows, which totaled an estimated $241.9 billion.1 As usual, ETF net flows were not equally distributed among major asset categories. Results for the fourth quarter were generally in line with the full year, as 3 of the top 4 categories for inflows were equity-related (US Equity, Sector Equity, International Equity), while the Taxable Bond category received the second most inflows during the fourth quarter and the full year. Also following the trend established during most of 2014, the Commodities ETF category had the largest net outflows.

For Passive Funds, a Stronger Link Between Fees and Performance
Jan. 28, 2015 - Morningstar, Inc. -  When it comes to fund performance, you don't always get what you pay for.

DoubleLine’s Gundlach is Bullish on Gold
Jan. 27, 2015 - Barron's -  The King of Bonds is buying gold.

Jeffrey Gundlach told attendees at the Inside ETFs conference on Tuesday that he added to his position in the yellow metal in recent weeks amid a “cyclone of major events” unfurling across the globe. Gundlach also said that Treasury bond yields could fall farther in 2015 and that oil prices are likely to remain stubbornly low for the rest of this year.

GDP, Strong Again 
Jan. 26, 2015 - First Trust -  With all the focus on Europe in general and Greece in particular, it’s important to keep in mind that the US economy continues to move forward. After real GDP dropped in the first quarter of last year, some analysts were predicting another recession. By contrast, we said the drop was due to unusually harsh winter weather and the economy would rebound quickly.

A Low-Tech Index Offering Exposure to the High-Tech Sector
Jan. 23, 2015 - Morningstar, Inc. -  The case for the tech-heavy, large and liquid PowerShares QQQ ETF remains a strong one.

Higher Inflation Not Only Welcome But Sought In Current Climate

Jan. 22, 2015 - First Trust -  View from the Observation Deck
1. Today,the European Central Bank (ECB) announced that it will soon implement its own version of quantitative easing (QE) in an effort to stimulate growth in the European economy.

Is Retail in Retreat?
Jan. 21, 2015 - Morningstar, Inc. -  As retailers have fallen under pressure to start the year, we look at retail ETFs for investors who see a buying opportunity.

How Do Fidelity's New Bond Exchange-Traded Funds Stack Up?
Jan. 20, 2015 - Morningstar, Inc. -  Fidelity follows PIMCO's footsteps in launching actively managed bond ETFs.

Fair Value Of Oil Lies In The $60 To $80 Range

Jan. 20, 2015 - Forbes -  Jay Hatfield: In our approach to investing, we’re focused on master limited partnerships, and our ETF, InfraCap MLP ETF (NYSE: AMZA), focuses on the largest, most liquid, midstream MLPs in the United States. We focus on midstream MLPs which typically own and operate pipelines and storage facilities rather than upstream MLPs which own and operate commodity producing wells.

Davos – And the Euro 
Jan. 20, 2015 - First Trust -  Perfect! Last week, the Swiss National Bank in reaction to market pressure, ended its crawling peg against the euro. The Swiss Franc surged 40% versus the euro, before settling around 20% higher, and roughly 17% against the already strong dollar. So, guess what? Attendees at The World Economic Forum – an annual gaggle of the global financial elite held in Davos, Switzerland, which starts today – just saw their trip get a lot more expensive.

Preserve Purchasing Power With This ETF
Jan. 16, 2015 - Morningstar, Inc. -  This fund provides low-cost exposure to Treasury Inflation-Protected Securities, which can protect investors from long-term unexpected inflation.

Fixed Income ETF Portoflio Management
Jan. 14, 2015 - PIMCO -  Investors now have a tremendous range of choices in fixed income ETFs.  Some may be wrestling with the balance of passive and active management they should employ - specifically, whether their approach should be fully passive with an aggregate index ETF, an actively allocated mix of passive ETFs, or an actively managed ETF. 

Watch Your Step When Using Bond Ladder ETFs
Jan. 14, 2015 - Morningstar, Inc. -  Bond ladder ETFs can reduce cost and risk and can increase liquidity. However, investors should be aware of some potential drawbacks.

Bullish, For the Right Reasons

Jan. 12, 2015 - First Trust -  Last week, we forecast the S&P 500 will hit 2,375 at the end of this year (link), so we’re obviously bullish on stocks. Our case is based on fundamentals, specifically, the long-term link between stocks, earnings, interest rates, and the economy as a whole. However, just because we’re bullish, doesn’t mean we agree with every bullish argument that’s out there.

ETF Flows Set a Fresh Record in 2014
Jan. 09, 2015 - Morningstar, Inc. -  The $241 billion of inflows into U.S. exchange-traded funds in 2014 were the strongest ever and topped the $190 billion inflow in 2012. Strong flows and market appreciation helped push assets to $2 trillion, and that milestone comes just four years after hitting $1 trillion.

Corporate Cash Holdings Remain High
Jan. 08, 2015 - First Trust -  View from the Observation Deck
1. The S&P 500 Old Industrials companies have more than doubled their cash and equivalent holdings from $606.6 billion in
March 2007 to $1.25 trillion in September 2014.The all-time high is $1.30 trillion (Q4’13).

The Benefits and Costs of Socially Responsible Investing
Jan. 07, 2015 - Morningstar, Inc. -  Corporate social responsibility can make good business sense, but the investment options can be a little pricey.

The Risks of Not Using a Liquidity Provider – A Case Study
Jan. 06, 2015 - WisdomTree Blog -  What if I told you that a large $500 million order and a smaller $1.2 million order traded in the same ETF, but one executed around the bid/ask spread and the other drove up the ETF price 84 cents, or almost 5%. Could you guess which trade was responsible for each outcome? The answer may surprise you. The $500 million notional block traded in-line, and a small order of $1.2 million notional block pushed the WisdomTree Brazilian Real Fund (BZF) price 5% away from its underlying value. The trades were done on different days and times, but the price of the ETF and its trading characteristics were similar. So what was the difference between the two trades?

2015: More Investment and Profits, Higher Rates, Dollar and Stocks

Jan. 05, 2015 - First Trust -  Contrary to popular opinion, business investment is a key factor behind the current recovery. Productive investments have boosted profits to record highs and, in turn, those profits have driven stock prices to record highs. They should continue to do so.

Chicken Little Economics 
Dec. 29, 2014 - First Trust -  It’s now been more than six years since the failure of Lehman Brothers – when the sky fell in and economic panic seized the land. Since then, Chicken Little Economics has inflicted fear and loathing on many investors.

Under the Hood of SPDR Barclays High Yield Bond ETF
Dec. 26, 2014 - Morningstar, Inc. -  It offers an attractive yield but is heavily concentrated in the industrials sector.

The Best U.S. Equity Factor ETFs
Dec. 24, 2014 - Morningstar, Inc. -  The exchange-traded fund universe is as vast and absurd as a Las Vegas buffet. Here's how to pick the best factor funds.

Do You Hear What I Hear? Why Opportunity Rings in FM & EM
Dec. 24, 2014 - BlackRock Blog -  Heidi Richardson takes a closer look at recent volatility in emerging and frontier markets and explains why we’re still optimistic on these segments.

Greedy Innkeeper or Generous Capitalist?

Dec. 22, 2014 - First Trust -  The Bible story of the virgin birth is at the center of much of the holiday cheer at this time of year. The book of Luke tells us that Mary and Joseph traveled to Bethlehem because Caesar Augustus decreed a census should be taken. Mary gave birth after arriving in Bethlehem and placed baby Jesus in a manger because there was “no room for them in the inn.”

A Popular Emerging-Markets Consumer ETF Rocked by Currency Volatility
Dec. 19, 2014 - Morningstar, Inc. -  Large exposures in South Africa, Brazil, and Chile have weighed on the performance of this fund.

Frontier Markets Begin to Emerge
Dec. 17, 2014 - Morningstar, Inc. -  But for investors, frontier-markets funds have short track records and carry unique risks.

A Snapshot Of Major Emerging Market Stock Indices
Dec. 16, 2014 - First Trust -  View from the Observation Deck
1. Emerging markets have been a mixed bag in 2014. As indicated in the chart, economies steeped in natural resources (Russia and
Brazil) have performed quite poorly, particularly in the second half of the year.

Oil Price: Looks Reasonable 
Dec. 15, 2014 - First Trust -  A former economic colleague, and mentor, used to say: “In the Bible, it says an ounce of gold will buy a fine suit of clothing.” We have read the Bible, and we haven’t found this, although there could be some high-powered math, using talents, cubits, frankincense and myrrh that make it true.

Xpert Insights: Market outlook from Dodd Kittsley
Dec. 12, 2014 - Deutsche Asset & Wealth Managment -  The consequences of currency exposure
One of the biggest investment stories of 2014 has been the broad-based strength of the U.S. dollar. Over the past year, the U.S. dollar has risen significantly relative to the euro and yen due to divergence: divergence in economic growth rates, and resultant divergence in monetary policy. Investors should be aware of the magnitude of currency’s negative return on international equities over the past 12 months, as well as the longer three- and five-year periods.

Efficient Exposure to Mid-Cap Stocks
Dec. 12, 2014 - Morningstar, Inc. -  While this isn’t the only ETF that tracks the S&P MidCap 400 Index, a structural advantage gives this fund an edge.

November Retail Sales
Dec. 11, 2014 - First Trust -  Retail sales increased 0.7% in November, and including revisions to prior months were up 1.1%, coming in above the consensus expected gain of 0.4%. Sales are up 5.1% versus a year ago.

Fixed-Rate Bond Total Returns Are Trending Lower
Dec. 11, 2014 - First Trust -  View from the Observation Deck
1. The purpose of today’s blog post is simply to show investors how traditional fixed-rate bonds have performed over the past 1-, 3-
and 5-years.
2. We believe that the information in the chart can help investors establish realistic expectations with respect to fixed-rate bond
yields and performance potential moving forward.

ETFs Are Not Always Cheaper
Dec. 10, 2014 - Morningstar, Inc. -  On an asset-weighted basis, institutional mutual fund share classes are lower than ETFs' in all but one Morningstar Category.

Three Key Drivers Push ETFs to a Record Year
Dec. 09, 2014 - BlackRock Blog -  In her first contribution to The Blog, Amy Belew takes a look at the year’s three key ETF investing trends and sheds some light on what this means for 2015.

Why the World’s Second-Largest Economy has Room to Run
Dec. 08, 2014 - BlackRock Blog -  What do China’s softer economic numbers mean for investors? Heidi Richardson takes a closer look and finds some bright spots.

The Myth of QE: Why Rates Are Headed Higher 

Dec. 08, 2014 - First Trust -  It’s a myth; an abused narrative. Those who disagree are called economic heretics. What are we talking about? The idea that Quantitative Easing (QE) drives interest rates down. This myth has a fervent following even though virtually no evidence supports it.

A Broad, Low-Cost REIT ETF for a Low-Rate Environment
Dec. 05, 2014 - Morningstar, Inc. -  Throughout 2014, interest rates have defied many expectations to the contrary by declining. That's been good news for the United States REIT space, which has performed well this year.

Snapshot of U.S. Equity Styles/Market Caps
Dec. 04, 2014 - First Trust -  View from the Observation Deck
1. Today’s blog post is intended to expose potential opportunities within the growth and value styles of investing, as well as by
market capitalization (market cap). It updates the one we did on 8/7/14.
2. At any given time,the equities markets are likely being led up or down by one of the three market cap classifications.Often this
leadership role can be held for a multi-year period.

What Kinds of ETFs Are Making Capital Gains Distributions This Year?
Dec. 03, 2014 - Morningstar, Inc. -  A look at the exchange-traded funds and providers that have announced projected capital gains distributions thus far.

Oil – Just Another Price 
Dec. 01, 2014 - First Trust -  Don’t take this the wrong way: energy is important. Oil prices are important. But, we believeth those involved in economic punditry often bloweth them out of proportioneth.

S&P 500 Top-Line Growth Estimates (Updated)
Nov. 25, 2014 - First Trust -  View from the Observation Deck
1. When the stock market is setting new all-time highs, as it did yesterday (S&P 500 at 2069.41), investors are naturally going to
wonder what catalysts are potentially capable of pushing equity prices higher.
2. We believe that corporate earnings determine the direction of the stock market over time.

Let’s Finally Fix The CBO
Nov. 24, 2014 - First Trust -  If they came back today, the Founders of the United States wouldn’t recognize the government they created 225 years ago. They put safeguards in place – separation of powers, a bicameral legislature and reserved powers for the states – to prevent it from growing so large.

A Deep-Value Quantitative Hedge Fund Strategy
Nov. 21, 2014 - Morningstar, Inc. -  ValueShares US Quantitative Value (QVAL) has an unusual history. Its creator, Drexel University finance professor Wesley Gray, began his career as a money manager while studying for his Ph.D. at the University of Chicago under Eugene Fama. Friends and family gave Gray around $3 million to run in a systematic value strategy.

Deflation Fears Are A Distraction
Nov. 17, 2014 - First Trust -  No matter what happens these days, deep fears, driven by breathless newscasters, take things to the extreme. As a result, slight gains in inflation create forecasts of “hyper-inflation,” while slowing or low inflation leads to fears of “deflation.”

Xpert Spotlight: The UK: A Country not to be ignored

Nov. 16, 2014 - Deutsche Asset & Wealth Managment -  Europe’s largest country by market cap, the United Kingdom (UK), has continued its robust economic recovery even as uncertainty and opportunity in the Eurozone grab headlines. We believe the UK equity market offers attractive growth prospects and valuation relative to broader Europe and the U.S.

Still Excellent Without Bill Gross
Nov. 14, 2014 - Morningstar, Inc. -  An analysis of PIMCO Total Return ETF.

Bond Investors Still Facing The Prospects For Higher Interest Rates

Nov. 13, 2014 - First Trust -  View from the Observation Deck
1. From 5/27/14-11/12/14 (see chart dates),the yield on the benchmark 10-Year Treasury Note dipped from 2.52% to 2.37%.The yield
rose from 1.76% to 3.03% in 2013.

When Oil Prices Dip, Unexpected Winners Emerge
Nov. 10, 2014 - BlackRock Blog -  A stronger dollar is one of the reasons that oil prices are low, which serves many energy-importing economies in Asia while weighing on large oil-producing nations.

Change Is In The Air
Nov. 10, 2014 - First Trust -  While many flail away, trying to figure out the meaning of last week’s GOP wave election, it seems simple. The government has tried for more than five years to turn a Plow Horse economy into a Race Horse, and failed. Yes, the economy is growing and creating jobs, but living standards are growing slowly, or not at all, for many.

A Dynamic Approach to Value Investing Abroad
Nov. 07, 2014 - Morningstar, Inc. -  This fundamentally weighted exchange-traded fund offers a good way to overweight value stocks in foreign developed markets.

Diversification Benefits of REITs
Nov. 05, 2014 - Morningstar, Inc. -  REITs look richly valued right now, but they have potential as a long-term diversifier and source of income.

Emerging-Markets Bonds in a Rising U.S. Dollar Environment
Oct. 31, 2014 - Morningstar, Inc. -  The U.S. dollar has been rising and likely will remain strong in the medium term, thanks to a relatively healthier U.S. economy and the expectation that the U.S. will normalize its monetary policy before the eurozone and Japan. In a strong U.S. dollar environment, investors considering emerging-markets bonds to diversify their portfolios may want to focus on funds that invest in U.S. dollar-denominated sovereign debt, such as  iShares J.P. Morgan USD Emerging Markets Bond (EMB) or  PowerShares Emerging Markets Sovereign Debt ETF (PCY), both of which are currently yielding above 4%.

Fed Ends QE, Rate Hikes Now on Radar
Oct. 29, 2014 - First Trust -  We count five key takeaways from today’s policy statement from the Federal Reserve.

First, the Fed clearly raised its assessment of the economy. Most notably, it deleted its long-standing reference to “significant underutilization” in the labor market, changing it to say that the underutilization in the labor market is “gradually diminishing.”

Where Are the Opportunities in Emerging Markets Today?
Oct. 29, 2014 - Morningstar, Inc. -  It is difficult to find attractively valued assets today. Interest rates in the developed world remain near record lows, and investors continue to pour into riskier assets, driving up valuations. U.S. stocks have enjoyed a five-year rally, with the S&P 500 currently trading at a trailing 12-month price/earnings multiple of 18 times, above their historical average of 15 times. Certain pockets of the emerging markets are also trading at lofty valuations, thanks to new market-friendly reforms (Mexico) or a relatively strong near-term growth outlook (the Philippines).

Equity Investors Still Have The Fundamentals On Their Side

Oct. 28, 2014 - First Trust -  View from the Observation Deck
1. Equity investors endured another pullback in the stock market recently and it was accompanied by the usual dose of scary headlines and dire predictions.

Finding the Best Fund for a Passive Allocation to U.S. Equities
Oct. 24, 2014 - Morningstar, Inc. -  How many funds is enough?  Vanguard Target Retirement 2055 (VFFVX) is a fund of funds that consists of just four funds: one for U.S stocks, U.S. bonds, international stocks, and international bonds. In contrast,  MassMutual RetireSMART 2055 (MMWAX) has 35 funds, of which 17 are focused on U.S. stocks. There is a separate fund for small-cap exposure, small-cap value, and small-cap growth. Which approach is better--a single fund to cover an entire asset class or separate funds that carve up and target specific segments of an asset class? A truly passive approach would seem to favor the former.

A Value Strategy That Doubles Down When Stocks Get Cheaper
Oct. 22, 2014 - Morningstar, Inc. -  Value investors get compensated for taking contrarian bets, particularly when it is agonizing to do so. Sam Zell, known as "the grave dancer" for his penchant for buying companies as they emerged from bankruptcy, sold his Equity Office Properties Trust near the peak of the real estate market in 2007. In the depths of the financial crisis, Warren Buffett took a large stake in Goldman Sachs, which was desperate for capital at the time.

U.S. Equities’ Share Of Total Global Market Capitalization Is Growing

Oct. 21, 2014 - First Trust -  View from the Observation Deck
1. Today’s blog post is an update of one we did on 2/28/13.The chart provides investors with a snapshot of where capital is invested in equities around the globe.

Q3 Real GDP Still Looks Solid 
Oct. 20, 2014 - First Trust -  The current recovery started in mid-2009. Since then, real GDP has grown at a 2.2% annual rate (what we have called a Plow Horse Economy). Now, despite a negative first quarter (caused by weather and inventories), the economy is picking up some speed. It’s not a race horse, yet, but we expect 2.5% to 3% real GDP growth, on average, in the year ahead.

Opportunity in the World’s Roads, Railways, and Water Systems
Oct. 17, 2014 - Morningstar, Inc. -  Thus far this year, earnings releases and economic reports have shown a mixed bag for some global infrastructure firms, with both positive and not-so-positive news. Traffic volumes on toll-road operators in Europe have unexpectedly rebounded nicely, while Chinese toll-road operators have struggled amid government regulation and general complaints from citizens about excessive tolls.

What the 10-Year Treasury’s Dip Means for Bond Portfolios
Oct. 16, 2014 - BlackRock Blog -  It was hard to miss the headlines earlier this week about the 10-year Treasury yield dipping below 2% Wednesday, hitting its lowest level in over a year. Rick Rieder explains what was behind the drop and what it means for bond portfolios going forward.

Three Things You Need to Know about ETFs
Oct. 16, 2014 - BlackRock Blog -  As an investor, what are you avoiding simply because you fear the unknown? Heather Pelant explains how this general human tendency can be eased with a little knowledge, and delivers some ETF basics.

The Most Popular ETF Debuts of 2014
Oct. 15, 2014 - Morningstar, Inc. -  Despite recent global unrest and questions about global growth, United States equity markets remain near record highs, and the U.S. economy continues to strengthen, with still-declining unemployment, solid growth, and modest inflation.

Much-ballyhooed predictions of higher interest rates haven't yet come to pass, and with U.S. equity market valuations at such elevated levels, investors with extra cash to put to work may be asking themselves where to find compelling investment opportunities.

Senior Loan & High Yield Review – 3rd Quarter 2014

Oct. 13, 2014 - First Trust -  Market Review
For the first time in quite a while, a healthy dose of volatility was introduced into various markets of risk assets, including equities, senior loans and high-yield bonds. The volatility was driven largely by geopolitical headlines, including Russia/Ukraine, Gaza, Banco Espirito Santo bailout, Argentine default, etc. As a result, risk sentiment reversed course, and investors became more defensive in the quarter.

Timing The Market Doesn’t Work
Oct. 13, 2014 - First Trust -  The stock market doesn’t owe anything to anyone. If you missed the bottom in 2009, no one owes you another chance to get in when stocks are that cheap. We may never see such historic lows again.

5% Corrections Have Been Normal in this Bull Market
Oct. 10, 2014 - Calamos Investments -  Yesterday’s S&P 500 close of 1928 marked a 4% correction since the index peaked at 2011 on September 18, 2014.

A Unique Way to Invest in the Eurozone
Oct. 10, 2014 - Morningstar, Inc. -  Despite the risks they face, eurozone stocks may offer good diversification benefits to U.S. investors. However, currency risk is a very real threat. Low to negative interest rates across the eurozone, coupled with lackluster growth, could cause the euro to weaken relative to the U.S. dollar. WisdomTree Europe Hedged Equity ETF (HEDJ) offers investors a way to gain exposure to European stocks, while hedging this currency risk.

Fidelity Launches 3 Actively Managed Bond ETFs
Oct. 09, 2014 - Morningstar, Inc. -  Today, Fidelity debuted its first actively managed exchange-traded funds: a trio of bond ETFs whose strategies mirror those of three of Fidelity's actively managed mutual funds.

Fidelity first filed paperwork with the SEC seeking permission to create actively managed ETFs in December 2012. Fidelity has been in the passively managed ETF space since 2003 with its Fidelity Nasdaq Composite Index Tracking Stock (ONEQ), although it wasn't until October 2013 that the firm rolled out a broad suite of passively managed U.S. equity sector ETFs.

Trouble With the (Yield) Curve
Oct. 08, 2014 - Morningstar, Inc. -  For more than a year, the term "interest rate" has struck fear among bond investors. These fears intensified recently after Federal Reserve comments sparked speculation that the Fed will begin to increase the federal-funds rate early next year. After all, as interest rates rise, most bond prices decline.

A Snapshot of Growth vs.Value Investing
Oct. 07, 2014 - First Trust -  View from the Observation Deck
1. Today’s blog post is an update of one we did on 12/19/13. In that post,the S&P 500 Pure Value Index outperformed its growth counterpart over the 1-, 3-, 5-, 10- and 15-year periods.

Inflation: What Inflation?
Oct. 06, 2014 - First Trust -  Who hasn’t heard forecasts of “Hyperinflation?” They’ve been all over the web and TV ever since the Federal Reserve started a huge expansion in its balance sheet, called Quantitative Easing, back in 2008. Among other things, these forecasts called for a dollar collapse, dire problems for the banking system and 1970s, or Weimar Republic-like, inflation.

Strong Material for a Volatile Sector
Oct. 03, 2014 - Morningstar, Inc. -  The materials sector represents a very thin sliver of the U.S. stock market--just over 3% of the S&P 500. In contrast, this sector soaks up a meatier 9% of the FTSE All World ex-US Index. That’s partially because many of the leaders in the metals and mining industry are based outside the United States. Investors looking for greater exposure to this sector without delving into foreign stocks might consider  Vanguard Materials ETF (VAW). But this is appropriate only for investors with a high risk-tolerance.

Why We Believe the Market Will Go to New Highs
Oct. 03, 2014 - Calamos Investments -  Today’s +248K jobs growth number and the August revision to +181K suggest recent worries that the U.S. economy was falling backward were misplaced. Over the past two weeks, the 10-year Treasury yield had fallen from 2.6% to 2.4% and the S&P 500 Index lost roughly 3% on fears about slowing global growth. But the combination of today’s strong U.S. employment data, indications of dissipating Hong Kong unrest, and no new Ebola cases put many of those no-growth fears to rest.

September ISM Manufacturing Index
Oct. 01, 2014 - First Trust -  The ISM manufacturing index declined to 56.6 in September from 59.0 in August, coming in below the consensus expected level of 58.5. (Levels higher than 50 signal expansion; levels below 50 signal contraction.)

Performance Evaluation Tool Kit
Oct. 01, 2014 - Morningstar, Inc. -  Most investors pay lip service to the idea that past performance is not indicative of future results. But it's tempting to use past performance to gauge manager skill and form expectations for the future. Unfortunately, raw performance doesn't say much about skill. An unskilled manager can outperform if he is lucky (or vice versa) or takes more risk to boost returns, which may not continue to pay off in the future. While raw performance does not tell the whole story, it is possible to uncover useful information from past performance with the appropriate tools.

Making a Move with Bond ETFs
Oct. 01, 2014 - BlackRock Blog -  What do you do when you want to sell one of your investments, and aren’t quite sure what to do next? Matt Tucker explains why ETFs may provide a good interim solution.

2014 & 2015 Earnings Snapshot
Sep. 30, 2014 - First Trust -  View from the Observation Deck
1. Today’s blog post is an update of one we did on 7/31/14 (click here to view).We intend to update earnings forecasts every couple of months.

Is Your EM Allocation Vulnerable to Index Vagaries?
Sep. 29, 2014 - First Trust -  Recently, global index provider FTSE announced it has reclassified Morocco from “emerging market” to “frontier market” and Argentina from “frontier market” to “unclassified.”* These changes will impact the composition of FTSE’s emerging market and frontier market indexes in mid-2015.

Four Ways to Increase Your Corporate Bond Exposure
Sep. 28, 2014 - BlackRock Blog -  Record low U.S. Treasury rates continue to push investors to find yield elsewhere, and it seems that corporations are rushing to meet the demand. Matt Tucker explains.

A Tale of Two Dividend Growth Funds
Sep. 26, 2014 - Morningstar, Inc. -  Expense ratios are one of the best predictors of relative fund performance. This lends support to low-cost index investing. But sometimes it can be beneficial to pay a little more for active management.  Vanguard Dividend Appreciation ETF (VIG) and  Vanguard Dividend Growth (VDIGX) offer an excellent case in point. Both funds target stocks with strong records of dividend growth, but where the exchange-traded fund tracks an index, Vanguard Dividend Growth applies active management to achieve the same goal. Yet despite its higher expense ratio, Vanguard Dividend Growth has outpaced its ETF counterpart by 1.3% annualized since April 2006, when Vanguard launched the ETF (and its associated mutual fund share classes).

Investors With Exposure To Dividend-Paying Stocks Should Check This Out

Sep. 25, 2014 - First Trust -  View from the Observation Deck
1. Today’s blog post is an update of one we did on 3/27/14.We intend to continue monitoring the direction of S&P 500 stock dividend distributions over the coming quarters.

Two Sides to Every Coin
Sep. 22, 2014 - First Trust -  Every coin, like every historical (or even not so historical) event, has two sides. You can choose which side to focus on – the positive or the negative. For example, some choose to view the Initial Public Offering (IPO) of Alibaba – a Chinese company described as eBay, Amazon and PayPal, combined, which serves more than a quarter billion customers – as a negative.

S&P 500 Top-Line Growth Estimates
Sep. 18, 2014 - First Trust -  View from the Observation Deck
1. When the stock market is setting new all-time highs, as it did on 9/5/14 (S&P 500 at 2007.71), investors are naturally going to
wonder what catalysts are potentially capable of pushing equity prices higher.

August Housing Starts
Sep. 18, 2014 - First Trust -  Housing starts declined 14.4% in August to a 0.956 million annual rate, coming in below the consensus expected 1.037 million annual rate. Starts are up 8.0% versus a year ago.

What You Need to Know About 'Strategic Beta'
Sep. 18, 2014 - Morningstar, Inc. -  "Smart beta," "alternative beta," "enhanced indexes," "quantamental indexes"--at this point, the list of monikers describing the fast-growing middle of the active-to-passive spectrum extends long enough to put it just a few syllables shy of making a lunar landing. It's an arena that has further blurred the lines between active and passive management (see Exhibit 1), and one which is at the leading edge of the most recent wave of product proliferation within the global exchange-traded products landscape.

An Aggressive Quality and Value Dividend Fund
Sep. 17, 2014 - Morningstar, Inc. -  It’s been a little over three years since  iShares Core High Dividend (HDV) launched. Now that iShares has slashed its fee to 0.12% from a rich 0.40%, this fund is worth another look. As a rough rule, I don’t like to buy U.S. stock exchange-traded funds with expense ratios higher than 0.25%. Thanks to bone-crunching competition among the titans of the ETF industry, there are plenty of good products that charge less than that.

South Korean Government Moves to Boost Economy--and Stock Market
Sep. 12, 2014 - Morningstar, Inc. -  The South Korean stock market has been a relative underperformer this year, partly because of weak economic growth and sluggish domestic spending. To address these issues, finance minister Choi Kyung-hwan earlier this summer announced a USD 40 billion stimulus package, and in August, the Bank of Korea cut the country's key interest rate for the first time in 15 months. Of greater interest to investors is a proposal that would push corporate South Korea to boost dividends.

How to Play the Emerging Markets Equity Renaissance
Sep. 12, 2014 - BlackRock Blog -  In her first contribution to The Blog, Investment Strategist Heidi Richardson explores the resurgence of emerging markets equity and explains why ETFs can be a smart vehicle to gain exposure to this market segment.

Seeking Alpha with Biotechnology ETFs
Sep. 11, 2014 - First Trust -  2014 is shaping up to be another strong year for the biotechnology industry and associated exchange-traded funds (ETFs).  After declining nearly 20% from February to April the NYSE Arca Biotechnology Index rebounded to new highs during the month of August, boosting year-to-date returns to 34.6% (through 8/31/14).  As in years past, the industry's news flow contained a number of important announcements that significantly impacted near-term returns for biotechnology stocks.

What Is Your Emerging-Markets Allocation?
Sep. 11, 2014 - Morningstar, Inc. -  Investors' average 3% to 4% allocation is low given the rising importance of emerging markets.

A Global Growth Slowdown?
Sep. 10, 2014 - BlackRock Blog -  As 2014 is shaping up to be another year of below-trend economic growth, many investors are wondering: Is economic growth once again slowing? Russ explains why his answer is no.

Does the August Jobs Report Mean U.S. Growth is Softening?
Sep. 09, 2014 - BlackRock Blog -  After last week’s weaker-than-expected August jobs report, many investors are wondering whether the U.S. economy is softening. Russ explains why he still expects a strong U.S. economy in 2014, noting three takeaways for investors.

Why Growth Stocks Now?
Sep. 09, 2014 - Calamos Investments -  After five years of a strong bull market, I believe there’s still room for stocks to advance. Growth stocks look especially attractive. At 1.23, the premium for growth over value remains lower than the historical average of 1.44. Even when we omit the tech bubble from the long-term average, the 1.23 premium for growth is lower than that 1.37 average.

A Dividend-Themed Strategic-Beta ETF From WisdomTree
Sep. 05, 2014 - Morningstar, Inc. -  WisdomTree LargeCap Dividend ETF (DLN) provides a handy alternative U.S. equity core holding for investors who want a value tilt and extra income. This fund targets high-dividend-paying companies and forgoes the standard market-capitalization weighting scheme traditional market indexes, such as the S&P 500, use. Instead, WisdomTree has an annual rebalancing in December when it assesses how much each company plans to pay in dividends over the next year and then weights each company's common stock by its percentage of the total planned dividend payout of all companies in the portfolio.

Strategic-Beta ETFs Seeing Stars
Sep. 03, 2014 - Morningstar, Inc. -  We are all familiar with the saying that past performance is no guarantee of future results. But that doesn't stop investors from picking funds this way. Before fund data became widely available and in order to facilitate meaningful comparisons, Morningstar developed a performance measure called the Morningstar Rating for funds. Unfortunately, some investors heavily rely on it when picking new funds, and investment flows consistently accrue to 4- and 5-star funds.

September Swoon Ahead?
Sep. 02, 2014 - BlackRock Blog -  Despite stocks’ strong recent performance, investors may want to exercise a bit of caution going into the fall. Russ gives two reasons why.

Where Are the Opportunities in U.S. Health Care?
Aug. 27, 2014 - Morningstar, Inc. -  As the sector has continued to best the broader market, a look both at the dynamics that would drive further outperformance by the sector and at funds that investors can use to tap those themes.

Low-Cost Exposure to Taxable Municipal Bonds
Aug. 27, 2014 - Morningstar, Inc. -  The recent credit troubles in Detroit and Puerto Rico should not scare investors away from the municipal bond market. Many of these securities offer similar--or better--yields than corporate bonds, with comparable credit risk. However, they do tend to carry greater interest-rate risk.  PowerShares Build America Bond ETF (BAB) may be an ideal offering for investors who can accept this risk.

How to Position Your Portfolio as Rates Start to Rise

Aug. 26, 2014 - BlackRock Blog -  With the Fed likely to begin raising rates in the first half of 2015, you may be wondering how to position your portfolio for the coming period of rate normalization. Russ shares his take.

The Consumer Price Index Increased 0.1% in July
Aug. 20, 2014 - First Trust -  The Consumer Price Index (CPI) increased 0.1% in July, matching consensus expectations. The CPI is up 2.0% versus a year ago.

“Cash” inflation (which excludes the government’s estimate of what homeowners would charge themselves for rent) was unchanged in July and is up 1.8% in the past year.

Europe…A Distinction With A Bit Of A Difference

Aug. 20, 2014 - First Trust -  View from the Observation Deck

European equities have experienced a pullback of late. The sell-off has been more pronounced in the European Union (EU or Eurozone), which is comprised of 18 countries. Broader Europe spans 28 countries.

Four Ways to Increase Your Corporate Bond Exposure

Aug. 20, 2014 - BlackRock Blog -  Record low U.S. Treasury rates continue to push investors to find yield elsewhere, and it seems that corporations are rushing to meet the demand. Matt Tucker explains.

Is the Aggregate Index Too Heavy in Treasuries?
Aug. 20, 2014 - Morningstar, Inc. -  In many markets, index investing is appealing because it takes a free ride on the collective efforts of active investors, offering comparable exposure at a fraction of the cost. As long as the index is representative of what active managers in the fund world are doing, it's a good bet that a low-cost index fund will beat the average manager in the category.

An Unconventional Risk-Management Tool
Aug. 20, 2014 - Morningstar, Inc. -  Fear and greed make most investors awful market-timers. It's easy to get excited about an investment after a period of good performance when valuations become stretched, only to turn around and dump it after the pain of a market downturn becomes too much to bear. This behavior is not entirely irrational. Large drawdowns at inopportune times can create a serious threat to investors' goals. 

“Bad News is Good” – A Hard Habit for Investors to Kick
Aug. 18, 2014 - BlackRock Blog -  Last week’s market performance proved that investors are having a hard time kicking a certain habit: treating “bad news as good.” Russ explains, suggesting that investors continue to focus on relative value.

Quiet Excellence for This Dividend ETF
Aug. 18, 2014 - ETF Trends -  With 10-year down a whopping 21.4% this year, a variety of rate-sensitive, income-generating asset classes and sectors have benefited. Master limited partnerships (MLPs), real estate investment trusts (REITs) and the utilities sector are prime examples.

iShares Will Close 18 ETFs

Aug. 18, 2014 - ETF Trends -  BlackRock’s (NYSEArca: BLK) iShares unit, the world’s largest issuer of exchange traded funds, will close 18 of its ETFs, including 10 target date ETFs.

PIMCO to Shutter Four ETFs, Add Three New Funds
Aug. 18, 2014 - ETF Trends -  PIMCO, the eleventh-largest U.S. issuer of exchange traded funds, said four of its ETFs will be closed in September, but the asset manager plans to add three new actively managed ETFs to its lineup.

What Middle East Tensions Mean for Oil Prices & Equity Portfolios
Aug. 15, 2014 - BlackRock Blog -  With turmoil in the Middle East dominating headlines, many investors are wondering what the recent and growing unrest in the region means for oil prices and for equity portfolios. Russ explains why oil prices are likely to remain elevated for the foreseeable future and why there’s a strong case for sticking with energy stocks even if oil prices don’t spike.

How to Be Smarter About Risk Management
Aug. 14, 2014 - Morningstar, Inc. -  In isolation, risk is neither good nor bad. Finance 101 teaches that the market must offer higher expected returns as an asset's probability of declining in value or the potential magnitude of losses increases. Otherwise, given the choice between two investments, no one would hold the riskier one. Investors tend to compete away high-return, low-risk opportunities, so that risk is usually the primary source of investment returns. This is why risky asset classes, such as stocks, have historically offered higher returns than Treasuries over the long run.

Tight Money, Still A Long Way Off
Aug. 12, 2014 - First Trust -  Going into last month’s Fed meeting, most analysts thought that if anyone dissented it would be Dallas Fed President Richard Fisher, the Federal Reserve’s most outspoken hawk. After all, Fisher had publicly called out the dovish Fed majority only days before the meeting (in an unusually aggressive Wall Street Journal Op-ed), pointing to the risk of “staying too loose, too long” given a “rapidly improving employment picture.”

Why Relative Value is Trumping Risk Aversion
Aug. 12, 2014 - BlackRock Blog -  Despite recent rising geopolitical tensions, stocks haven’t completely followed the typical “risk-off” script and a number of high-risk segments have performed relatively well. The simple reason: Investors have found a newfound interest in relative value. Russ explains and shares which market segments potentially offer this value.

What Investors Need to Know about Money Market Fund Reform
Aug. 11, 2014 - BlackRock Blog -  The SEC’s new rules on money market funds carry specific implications for some investors, and for the broader financial system as a whole. Matt Tucker explains.

The “Great Deleveraging” that Never Happened: Why the US Still Has a Debt Problem
Aug. 08, 2014 - BlackRock Blog -  For several years, media headlines have been filled with references to a mythical “deleveraging,” or a reduction in the level of U.S. debt. In reality, U.S. non-financial debt has increased, and this has real long-term consequences for the economy. Russ explains.

A Dividend-Paying ETF in a Consolidating Industry
Aug. 08, 2014 - Morningstar, Inc. -  Morningstar's Take
The United States telecommunications industry is in flux, from the top down. For quite some time, AT&T (T) and Verizon (VZ) had consolidated much of the telecom space, to the point that the sector more or less consisted of those two heavyweights, and then everyone else. Recently, however, a new round of consolidation has been taking place, driven by a desire for greater economies of scale, more telecom spectrum, and a bulwark against cable operators' incursions onto what historically has been telecom firms' turf. Deals in the past 24 months have included T-Mobile (TMUS) buying MetroPCS, AT&T acquiring Leap Wireless, Sprint (S) bringing Clearwire under direct control, and Verizon buying Vodafone's (VOD) 45% stake in Verizon Wireless.

Capital Group Bets on a Different Kind of Tech
Aug. 07, 2014 - Morningstar, Inc. -  Capital Research and Management Company, the firm behind the storied American Funds franchise, has been on the ropes for years. The firm's cold streak began in 2008, and in the intervening six-plus years, the company has seen approximately one quarter of one trillion dollars of investors' money leave its lineup. That said, even after accounting for these outflows, American Funds remains the third-largest fund family in the U.S.

KraneShares, E Fund Management to Partner on China ETF
Aug. 05, 2014 - ETF Trends -  KraneShares, the issuer of U.S.-listed China exchange traded funds, and China’s E Fund Management are partnering to launch a new fixed income ETF.

Events vs. Data
Aug. 04, 2014 - First Trust -  
If you’re an investor looking for a reason to be worried, there are plenty of headlines to light the fuse. Widening war in the Middle East, turmoil in eastern Ukraine (or is that western Russia?), a debt default by Argentina…problems with some Portuguese bank…Ebola…tapering. 

Your Core Portfolio: Sample Strategies for the Long Haul
Aug. 01, 2014 - BlackRock Blog -  Daniel Gamba provides two examples for creating a core portfolio in his latest post for The Blog.

Institutional investors have long been using index investments at the core of their portfolio. As explained in previous posts, core represents the largest part of an investor’s portfolio, which is constructed to balance risk, return and cost over the long term (5+ years). Financial advisors are increasingly using an indexing strategy for core investments, and ETFs are the fastest growing vehicle at the core of investors’ portfolios. 

Diversification for the Sake of Diversification
Aug. 01, 2014 - Morningstar, Inc. -  I don’t know why Vanguard bothered to launch  Vanguard Total International Bond ETF (BNDX), a currency-hedged developed-markets bond fund. When you hedge foreign sovereign bonds, you end up with something that looks a lot like U.S. Treasuries. Vanguard points to some modest historical diversification benefits, but this backward-looking analysis fails to consider how present valuations and economic conditions affect prospective returns and correlations. 

Where to Seek Equity Income
Jul. 31, 2014 - BlackRock Blog -  While Russ would be wary of seeking income at all costs and ignoring valuations, there’s one “bond-like” equity market segment that he believes is worth pursuing: International and global dividend stocks.

Robo-Buffett Funds on the Cheap
Jul. 30, 2014 - Morningstar, Inc. -  In early June, State Street launched a series of foreign-equity SPDR exchange-traded funds tracking MSCI's Quality Mix, or QM, indexes. The funds charge 0.30%, making them the cheapest or near cheapest options in their respective categories.

Investor Fatigue Setting In?
Jul. 29, 2014 - BlackRock Blog -  Despite a generally positive tone to earnings season, investors may be finally showing signs of fatigue, as seen by aggressive selling of risky assets, namely high yield and U.S. equities. Russ K explains the implications.

Bill Gross ETF Not Affected by PIMCO’s Increased Use Of Swaps
Jul. 28, 2014 - ETF Trends -  More investors are utilizing derivatives to make up for liquidity concerns in the fixed-income market. For example, PIMCO is using credit-defaults swaps as an alternative in its flagship fund, but the exchange traded fund version has been left out.

China Opens Its Onshore Equity Markets to Foreigners
Jul. 25, 2014 - Morningstar, Inc. -  Morningstar Take
Five exchange-traded funds that provide direct access to China's onshore equity market (China A-shares) have launched over the past year. These launches are notable in that they provide access to an asset class that in the past had been inaccessible to foreign investors. While there is a degree of novelty to these products, China A-shares are an extremely niche asset class and more suitable for those who are very familiar with risks and opportunities of investing in the emerging markets, and especially in China. 

The Energy Trade Is Still Working For Investors

Jul. 24, 2014 - First Trust -  

View from the Observation Deck 

  1. Today's blog post is an update of one we did last December. The areas shaded in orange represent activity since 9/30/13. The price of a barrel of crude oil stood at $103.12, as of 7/23.

Hidden Risks in Emerging-Markets Debt?
Jul. 23, 2014 - Morningstar, Inc. -  Emerging-markets bonds, along with other higher-yielding fixed-income assets such as junk bonds and bank loans, have seen a surge in flows in recent years. Investor interest has been driven in large part by persistently low yields across the developed world. Growing demand for emerging-markets bonds also reflects a confluence of other fundamental factors. 

It Looks Like Gold & Silver Miners May Finally Be Joining The Bull
Jul. 22, 2014 - First Trust -  

View from the Observation Deck 

  1. Precious metals miners have not participated in the bull market that began on 3/9/09 (see chart). The Philadelphia Gold & Silver Index was actually down 4.78% (cumulative total return) from 3/9/09 through 7/18/14. 
  2. The miners, however, are off to a great start so far in 2014, with a total return of 22.04%, as of 7/18 (see chart). Gold bullion and silver were up 8.91% and 7.30%, respectively, over that period.

Plow Horse GDP Rebound in Q2
Jul. 21, 2014 - First Trust -  The 2.9% drop in real GDP during the first quarter was a fluke caused by a brutal winter and some one-off events. With much of the monthly data in for Q2, it looks like the US will see that drop almost completely reversed. 

Don't Pay Up for Selloff Protection
Jul. 19, 2014 - Barron's -  Worried about a stock-market selloff, and feeling unprepared? You're not alone. The CBOE Volatility Index soared 32% amid Thursday's geopolitical tensions. Fears rose over Russia and Ukraine; nerves were rattled by Israel and Gaza. Grim as it may sound, there are exchange-traded funds created to capitalize on all this -- in fact, dozens. The troubles with these selloff-protection strategies are several: substantial tradeoffs, short track records, and complexity.

Strategic Beta: Taking the Alpha Out of AlphaDEX
Jul. 18, 2014 - Morningstar, Inc. -  Perhaps the biggest surprise in fund flows for exchange-traded products during the past year is the strength of First Trust. The firm has catapulted itself from the 11th largest provider of exchange-traded products to the sixth largest in just one year. Much of the strong flows are accumulating to funds that have been around for years. What has changed is the increasing acceptance of strategic beta. While they may track an index, strategic beta funds are active, so it is no surprise that investors might take a wait-and-see approach before investing, particularly when the methodology appears to be complex and untested. However, of the 23 First Trust AlphaDEX market-cap and sector funds (excluding the international AlphaDEX funds), the average Morningstar Rating is 4 stars, which is truly impressive. Unlike some single factor funds, the methodology behind AlphaDEX is fairly opaque, but their performance warrants a deep dive. 

A Bond ETF for the World’s Diverging Monetary Policies
Jul. 16, 2014 - ETF Trends -  Throughout much of the developed world, investors have become accustomed to low interest rates, but rates in some markets will not stay depressed indefinitely. In fact, some developed economies have already boosted borrowing costs this year.

A Closer Look at the Total Cost of ETP Ownership: Bid-Ask Spreads
Jul. 16, 2014 - Morningstar, Inc. -  Finding the lowest-cost exchange-traded product, or ETP, entails more than simply seeking out the one with the lowest expense ratio. The expense ratio is just one component of the total cost of ownership, which can be broken down into trading costs and holding costs. Investors have some degree of control over trading costs, which are made up of things such as the brokerage commission, the bid-ask spread, and the price impact resulting from large trades. On the other hand, the ETP's sponsor and the portfolio manager are largely responsible for the holding costs. 

How to Utilize Smart-Beta ETFs in Your Portfolio
Jul. 14, 2014 - ETF Trends -  The new batch of strategic- or smart-beta index-based exchange traded funds help diversify investment portfolios beyond traditional cap-weighted holdings, but long-term investors should be prepared to experience cyclical trends.

Tread Cautiously in the Overvalued Utilities Sector
Jul. 11, 2014 - Morningstar, Inc. -  Utilities companies have made up significant ground this year after trailing the broader U.S. equity market by a wide margin in 2013. A broad utilities-oriented exchange-traded fund,  Vanguard Utilities ETF (VPU), has returned 14.5% year to date, versus the S&P 500 Index's 7.7% return during the same interval.

Trying to “Fed Proof” Your Portfolio? Beware of the Risks
Jul. 10, 2014 - BlackRock -  We’ve come a long way since the Fed first hinted at tapering its easy money program a year ago. But, as Del Stafford explains, investors are still a bit unsure of how to position their fixed income portfolios. Here are a few risks to consider before reworking your strategy.

A Rough Road for Financial-Services ETFs
Jul. 09, 2014 - Morningstar, Inc. -  In the first half of 2014, the market performance of the U.S. financial-services sector trailed the broader U.S. equity market by several hundred basis points.

Thus far this year, there have been some small bumps in the road for a sector that has enjoyed a robust comeback during the past five years, but where volatility remains meaningfully high and uncertainty even higher. While no one doubts that large banks, which dominate the financial sector, are far better capitalized than they were heading into the financial crisis, the final results in March of the Federal Reserve's annual stress test on the United States' 30 largest banks demonstrate both a lack of robustness on the part of some large lending institutions--including  Citigroup (C)--as well as the clear presence of a prominent headwind in the form of elevated compliance, regulatory, and legal costs across the industry.

The Philippine Growth Story Looks Set to Continue
Jul. 09, 2014 - Calamos Investments -  As the Philippine equity market has appreciated more than 20% in the first half of 2014, our team has continually analyzed valuations and the degree to which we include Philippine equities within our portfolios. While the recent appreciation in equity prices makes valuations less compelling than last year, we are still finding attractive opportunities.

Cyclical Sector ETFs for an Improving Economy
Jul. 08, 2014 - ETF Trends -  After a string of better-than-expected economic data, investors are rotating back into cyclical sector stocks and related exchange traded funds.

“The jobs report is clearly a sign of continued and accelerating strength of the economy,” Jeff Korzenik, Chicago-based chief investment strategist at Fifth Third Bancorp., said in a Bloomberg article. “The cyclical leadership in many ways will become more pronounced.”

A Rapid Ascent for This MLP ETF
Jul. 08, 2014 - ETF Trends -  Several asset classes have benefited in earnest from the Federal Reserve’s efforts to keep U.S. interest rates low for an extended period of time, though few have benefited in a manner similar to master limited partnerships (MLPs).

Time to Jump on the Silver Bandwagon? Not so Fast
Jul. 07, 2014 - BlackRock Blog -  After rising nearly 12% from its June lows, silver has been garnering some attention lately, leaving many investors wondering whether they should raise their allocations to the precious metal. Russ explains why now probably isn’t the best time to allocate more to either silver or gold.

Rising Rates Defense and Yield in One ETF
Jul. 07, 2014 - ETF Trends -  The interest rate environment has been surprisingly benign in 2014. Ten-year Treasury yields have fallen nearly 12% after ending 2013 flirting with 3%.

The other side of that coin is that those yields are up 4.4% since May 27, a move that has brought some asset classes and exchange traded funds that are positively levered to rising rates back into focus. Conversely, a prolonged upside move in Treasury yields would, as it did last year, pressure scores of fixed income ETFs, many of which are among this year’s most prodigious asset gatherers. [

US Stocks Week Ended July 3, 2014
Jul. 07, 2014 - First Trust -  In last week’s holiday-shortened trading session, the Dow Jones Industrial Average skyrocketed to close at an all-time high of 17,068.26. In addition, the S&P 500 also celebrated the holiday by completing Thursday at a record high of 1,985.44. Through last week, the S&P 500 trades at a multiple of 18 times trailing earnings with a dividend yield of 1.89%. Since the March 9th, 2009 low of 676.53, the S&P 500 has returned more than 200% including dividends reinvested.

A Low-Cost, Currency-Hedged International-Bond ETF
Jul. 04, 2014 - Morningstar, Inc. -  While investing in international-bond funds can help diversify credit and interest-rate risk, high fees and currency risk can diminish their appeal.  Vanguard Total International Bond ETF (BNDX) attempts to address these problems.

Frontier Stocks: Three Reasons They’re Now a Strategic Asset Class
Jul. 03, 2014 - BlackRock Blog -  Frontier markets have had a strong showing so far this year. However, many investors may be approaching the frontier too narrowly, viewing it as a subset of the broader emerging market world. Russ explains three reasons why frontier stocks deserve their own strategic allocation.

Frontier markets have been gaining attention from market watchers and investors alike in recent months.

Currency Hedging Makes International Bonds Easier to Own
Jul. 03, 2014 - Morningstar, Inc. -  It isn't uncommon for investors to diversify their stock holdings abroad. Sure, currency fluctuations can make international equities a bit riskier than their domestic counterparts, but they do not significantly alter the risk profile. In contrast, currency risk can make international bonds significantly more volatile than U.S. bonds. For example, over the past decade, the Barclays Global Aggregate Ex USD Index was more than twice as volatile as the Barclays U.S. Aggregate Bond Index. Currency movements can dominate international-bond funds' performance in the short term. This often makes them more suitable as a bet against the U.S. dollar than as a way to share in the bond returns foreign investors enjoy. Hedging currency risk can solve this problem.

This Fixed-Income ETF Has Its Trade-Offs
Jun. 27, 2014 - Morningstar, Inc. -  Traditional market-capitalization-weighted bond indexes get a lot of flak for assigning the largest weights to the most-heavily-indebted issuers. For instance, it may not be optimal for investors to hold more  General Motors (GM) debt just because GM needs to raise more money. Market-cap-weighted equity indexes share this potential drawback. 

Personal Income Increased 0.4% in May

Jun. 26, 2014 - First Trust -  Implications: Don’t let anyone tell you that workers aren’t earning enough to keep increasing their spending. Private-sector wages & salaries increased 0.5% in May and are up 4.3% from a year ago. Total income – which also includes rents, small business income, dividends, interest, and government transfer payments – increased 0.4% in May and is up 3.5% from a year ago. Yes, government transfer payments – like Medicare, Medicaid, Social Security, disability, unemployment compensation – are still an unusually large share of income. 

Making Contrarian Investing Work
Jun. 25, 2014 - Morningstar, Inc. -  I have always admired contrarians. It isn't easy to think and act independently. Clients evaluate professional managers' performance against a benchmark, often over short windows. Those who underperform for a few years risk losing their clients, even if their investments ultimately pay off. That makes it difficult for many managers to make bold bets. Investing mistakes may also be easier to swallow when everyone is in the same boat. There is comfort in conformity, but this innate social desire can create opportunities for those who have the courage to think independently.

Feeling Anxious about your Golden Years? “The Truth About Retirement Plans and IRAs” May Help
Jun. 24, 2014 - BlackRock Blog -  Like many Americans, Sue feels anxious about her retirement. Whenever she feels uncertain about a topic, her first instinct is to read about it, so she recently turned to Ric Edelman’s new book, “The Truth About Retirement Plans and IRAs.” Here’s her review of the book.

Existing Home Sales Increased 4.9% in May
Jun. 23, 2014 - First Trust -  Implications: Existing home sales increased 4.9% in May to a 4.89 million annual rate, well above consensus expectations. Sales are still hovering just below the average level of the past two years, but we think the gains of the past couple of months are the start of a new upward trend. The best news in today's report is that a lack of inventory, which has been a major culprit behind slow sales, seems to be changing.

Passive vs. Active: Debating International Small Caps
Jun. 20, 2014 - Morningstar, Inc. -  An important decision investors make is whether to use an active or passive strategy in a particular segment of their portfolio. Passive investing is popular for more "efficient" areas of the market, but less-efficient areas, like international small-cap stocks, are thought to provide active managers more opportunities for outperformance.

Why Millennials Should Try Their Luck in Mexico

Jun. 18, 2014 - BlackRock Blog -  BlackRock Chairman and CEO Larry Fink explains why, if he were starting his career today, he would try his luck in Mexico.

A couple of weeks ago, I visited Mexico City—one of my favorite cities in the world. It’s a remarkable place, not least because of the food, the museums, and the culture, but also because of the incredible economic changes taking place in Mexico right now—both in the capital and all around the country.

This REIT ETF Remains Prettiest on the Block
Jun. 18, 2014 - Morningstar, Inc. -  REITs have traditionally been viewed as a liquid way to buy commercial real estate and improve a portfolio's diversification, but the sector's investor base has expanded in recent years to include income- and growth-seekers.  Vanguard REIT Index ETF(VNQ) is a well-constructed and cheap way to gain access to the REIT space. Vanguard often offers the same fund in mutual fund and ETF share classes, and this fund's mutual fund share class,  Vanguard REIT Index (VGSIX), receives a Morningstar Analyst Rating of Gold.

J.P. Morgan Begins Its Push Into ETFs
Jun. 17, 2014 - Morningstar, Inc. -  On Tuesday morning, J.P. Morgan Asset Management rolled out its first-ever exchange-traded fund, a passively managed global-equity-oriented strategic beta ETF that tracks an FTSE index and taps four separate return factors.

Supply, Demand and Interest Rates: Why One thing Leads to Another
Jun. 16, 2014 - BlackRock Blog -  As we approach the mid-point of the year many casual investors are surprised to look in on the market and find that bond yields remain stubbornly low. In fact, aswe have discussed in this space before, they have actually fallen during the year with the 10 year US Treasury declining from 3.03% at the end of December to 2.63% as of June 9th. And it turns out that this overall decline in yields has occurred across global bond markets. There are a lot of drivers of lower yields, including the continued accommodative policies of central banks and the continued slow growth in GDP and inflation in most developed economies.

Your Core Portfolio: How to choose the right ETFs
Jun. 13, 2014 - BlackRock Blog -  The U.S. ETF landscape continues to grow, investors have a vast selection of products to choose from, but not all ETFs are created equal. Daniel Gamba provides a checklist for how to select an ETF for the core of your portfolio.

A Snapshot From The Best Bull Market Ever
Jun. 12, 2014 - First Trust -  View from the Observation Deck  
  1. The current bull market in stocks has lasted 1,920 days. It now ranks as the fifth longest in U.S. history, according to data from Bespoke Investment Group.
  2. Since 1928, the longest U.S. bull market lasted 4,494 days (12/4/87-3/24/00). On a price-only basis, the S&P 500 posted a cumulative return of 582.15% over that period - the highest ever for a U.S. bull market, according to Bespoke.

The Best Fixed-Income Investment
Jun. 11, 2014 - Morningstar, Inc. -  There were 31 short-term bond exchange-traded funds with a combined $60.9 billion in assets as of the end of May. They offer yields ranging from nil, in the case of SPDR Barclays 1-3 Month T-Bill (BIL), to more than 2%, in the case of AdvisorShares Newfleet Multi-Sector Income (MINC). The biggest, Vanguard Short-Term Bond ETF (BSV), yields a little more than 1%.

The Great Rotation Out Of Bond Funds On Hold
Jun. 10, 2014 - First Trust -  View from the Observation Deck  
  1. From 2008 (financial crisis) through 2012, investors liquidated a net $537.33 billion from equity mutual funds, compared to net cash inflows totaling $1.05 trillion for bond mutual funds, according to the ICI.
  2. In 2013, the yield on the benchmark 10-Year Treasury note rose from a calendar year low of 1.63% on 5/2 to 3.03% on 12/31, or a gain of 140 basis points.

BlackRock Broadens Its iShares Core Lineup
Jun. 10, 2014 - Morningstar, Inc. -  On June 10, BlackRock announced the doubling in size of its "iShares Core" lineup of building-block exchange-traded funds, which are aimed at offering investors broad, low-cost exposure to certain asset classes.

The ECB Wants a Free Toaster
Jun. 09, 2014 - First Trust -  Banks used to give toasters away to customers who opened checking or savings accounts, but the world is changing. Soon, customers may need to give toasters to the bank.

Last week, the European Central Bank (ECB) created a “negative” interest rate of 0.1% annually on bank reserves. In other words, banks must pay the ECB to hold excess reserves.

US Stocks Week Ended June 6, 2014
Jun. 09, 2014 - First Trust -  Equities gained to yet another record high as the S&P 500 reached new heights in four out of five trading days for the week. The continued momentum was led by ECB’s further stimulus measures to fight disinflation and weak projected growth. The ECB’s moves included a negative rate for deposits, the first ever negative rate for a major central bank, a decrease in the benchmark rate to 0.15 percent from 0.25 percent, a 400-billion-euro liquidity channel to spur bank lending and a pledge to do more if needed.

Oil ETF Nears Another Rally
Jun. 09, 2014 - ETF Trends -  The Energy Select Sector SPDR (NYSEArca: XLE) is one of this year’s best-performing sector exchange traded funds, an anecdote that highlights the resurgence of energy stocks.

An ETF for This Lagging Sector
Jun. 06, 2014 - Morningstar, Inc. -  The U.S. biotechnology sector has enjoyed an impressive run during the past decade. The industry has dramatically outperformed the broader market over that time frame and also had a tremendous 2013. Large-cap biotech firms have fueled this rally, as they have scored key drug approvals, reaped strong sales from already-approved drugs, successfully integrated acquisitions, and benefited from a favorable regulatory environment. The sector also has seen valuations surge from merger and acquisition activity, as large pharmaceutical firms have sought to spruce up relatively empty drug pipelines by buying innovation in the form of biotech firms.

An ETF for This Lagging Sector
Jun. 06, 2014 - Morningstar, Inc. -  The U.S. biotechnology sector has enjoyed an impressive run during the past decade. The industry has dramatically outperformed the broader market over that time frame and also had a tremendous 2013. Large-cap biotech firms have fueled this rally, as they have scored key drug approvals, reaped strong sales from already-approved drugs, successfully integrated acquisitions, and benefited from a favorable regulatory environment. The sector also has seen valuations surge from merger and acquisition activity, as large pharmaceutical firms have sought to spruce up relatively empty drug pipelines by buying innovation in the form of biotech firms.

Are Actively Managed Nontransparent ETFs Inching Closer to Reality?
Jun. 04, 2014 - Morningstar, Inc. -  For years, traditional open-end mutual fund managers have shied away from offering their actively managed strategies in an exchange-traded fund wrapper for fear of the SEC's requirement that all actively managed ETFs disclose their underlying holdings daily.

Housing Recovery Still on Track
Jun. 02, 2014 - First Trust -  Just a couple of months ago the pessimists were saying the housing recovery was on the ropes. Home sales were down and housing starts had dropped. 

But barely more than a month later this looks like just another head-fake. Existing home sales grew 1.3% in April and, given data on pending home sales, look like they rose another 2% in May. (Existing home sales are counted at closing; pending sales are contracts on existing homes.) Meanwhile, new home sales bounced back in April as well.

Personal Income Increased 0.3% in April
May. 30, 2014 - First Trust -  Implications: After March, when consumers increased spending at the fastest pace in almost five years, consumers took a breather in April, with spending slipping 0.1%. This is not a big deal. Despite the slight decline in April, spending is up at a 6.1% annual rate in the past three months and a 4.7% rate in the past six months. These are faster than the 4.3% gain in the past year, so the underlying trend appears to be accelerating. Personal income matched expectations, rising 0.3% in April and is up 3.6% from a year ago. 

Not All Risk Is Rewarded
May. 30, 2014 - Morningstar, Inc. -  PowerShares S&P 500 High Beta (SPHB) targets some of the riskiest stocks in the S&P 500 Index in an attempt to boost returns during bull markets. However, these stocks will likely lag during market downturns. Investors in this fund should be prepared for a bumpy ride and have a high tolerance for risk. Although it is not suitable as a core portfolio holding, this fund could come in handy for those speculating on a quick rise in prices.

Shrinking Alpha
May. 28, 2014 - Morningstar, Inc. -  Over the past two decades, the share of passively managed equity fund assets has risen. While some lament that passive investors have consigned themselves to merely average returns, the truth is that the average has been pretty good. The return of large-cap U.S. stocks has been about 10% per year on an annualized basis since 1926. This is the baseline upon which we can judge the performance of any U.S.-stock fund. In fact, most of the movement of our funds can be explained by exposure to a broad market index.

Optimism in India
May. 23, 2014 - Morningstar, Inc. -  Investors love a good reform story. Last year, major reforms in Japan and Mexico captured investors' attention. This year, stocks in India and Indonesia have rallied in anticipation that a more business-friendly, reform-minded leader will soon be elected.

A New Frontier for This ETF
May. 21, 2014 - Morningstar, Inc. -  Frontier market stocks, in aggregate, continue to deliver in 2014, even after a very strong 2013. In the year to date, the MSCI Frontier Index is up 16%, far outpacing the MSCI Emerging Markets Index’s return of 4%, and the S&P 500’s 3%. Among the diversified frontier funds, iShares MSCI Frontier 100 (FM) has been the winner in terms of performance and flows in the first four months of 2014--rising 17% and drawing $320 million. And although FM is only 18 months old, it is currently the third-largest frontier market fund, with more than $800 million in assets. 

The Fed Provides The Real Juice For Utilities
May. 20, 2014 - First Trust -  View from the Observation Deck  
  1. The S&P 500 Utilities Index is the top performing major sector so far in 2014. Year-to-date through 5/19, the index posted a total return of 10.21%, compared to 2.80% for the S&P 500.
  2. We believe that some investors have shifted capital to utilities in an effort to get a bit more defensive in the current climate, due in large part to the 0.1% GDP growth rate posted in the U.S. in Q1’14. 

The Fixed Income Landscape: What a Difference a Year Makes
May. 20, 2014 - BlackRock Blog -  Nearly a year after Ben Bernanke first hinted at tapering the Fed’s easy money program, which led investors to abandon their bonds en masse, Matt Tucker evaluates the current fixed income landscape and what the spreads mean for investors.

Can a "Perma-Bull" Turn Bearish?
May. 19, 2014 - First Trust -  During the past five years, stock market forecasts have fallen into three different camps.
  • It’s a Dead Cat Bounce, Sugar High, Artificial, QE-Induced Bubble Stock Market. It will crash any day.
  • It’s a Real Bounce, from Artificial Undervalued Lows, With Technology and Productivity Driving Real Profits. The market is still cheap and will go higher.
  • It was too low in 2009, but, as it moved higher, it became fairly, or over-valued. The risks of the world have risen and a correction or sideways market is due.

America The Youthful? Yes, On a Relative Basis
May. 16, 2014 - BlackRock Blog -  While the United States is aging at a much slower pace than much of the rest of the world, the U.S. population will almost certainly continue to age. As Russ explains, this has three implications for the U.S. economy.

A Strategy With Literally Fantastic Returns
May. 16, 2014 - Morningstar, Inc. -  The S&P 500 Dynamic VEQTOR Index is a shining example of financial innovation gone wrong. Start with the name: If an investment sounds like it came out of a science fiction novel, it's likely too creative for its own good. Products with futuristic names are targeted at people impressed by the veneer of sophistication. They are rarely good investments.

Why Now may be the right time for Emerging Market Bonds
May. 14, 2014 - BlackRock Blog -  The emerging markets fixed income space continues to see some volatility, but, as Matt Tucker explains, there are some potentially attractive entry points.

A Sensible Approach to 'Smart Beta'
May. 14, 2014 - Morningstar, Inc. -  "Smart beta," "alternative beta," "enhanced indexes," "quantamental indexes"--at this point, the list of monikers describing the fast-growing middle of the active-to-passive spectrum extends long enough to put it just a few syllables shy of making a lunar landing. It's an arena that has further blurred the lines between active and passive management (see Exhibit 1), and one which is at the leading edge of the most recent wave of product proliferation within the global exchange-traded products landscape.

ETF “Technology” Gaining Ground: What it means for Your Portfolio
May. 13, 2014 - BlackRock Blog -  A new report from Greenwich Associates reveals that institutional investors are increasingly embracing ETF “technology”. Daniel Gamba takes a closer look at the results and reveals what investors can learn from this trend.

Federal Reserve Gone Wild
May. 12, 2014 - First Trust -  The Fed has massively increased the size of its balance sheet, from roughly $850 billion in 2008 to its current $3.96 trillion. Quantitative Easing was accomplished by having the Fed buy bonds and pay for them by “creating” excess bank reserves – reserves above and beyond those that are required.

US Economy and Credit Markets Week Ended May 9, 2014

May. 12, 2014 - First Trust -  Treasury movements were mixed this week as the yield curve steepened the most since September amid mixed economic data and a speech by Janet Yellen affirming a commitment to gradual increases in interest rates. On Monday, yields spiked when reports showed that service industries expanded at their fastest pace in eight months.

Deep Value in the S&P 500 Index
May. 09, 2014 - Morningstar, Inc. -  Most value index funds target the cheaper half of the market, which tends to sweep in a large helping of blend stocks that dilute their value tilts. In contrast, Guggenheim S&P 500 Pure Value (RPV) targets the cheapest third of the S&P 500 Index and weights its holdings by the strength of their value characteristics. This style purity allows investors to add a value tilt to a diversified portfolio with a smaller investment in this fund than its peers would require.

2014 Earnings Snapshot

May. 08, 2014 - First Trust -  

View from the Observation Deck

  1. Today’s blog post is an updated version of one we did on 2/11/14. Earnings estimates are monitored and adjusted often throughout the calendar year.
  2. The biggest difference between today’s earnings growth rate estimates for 2014 and this past February’s is that there are currently 8 equity indices (see chart) with double-digit projections, compared to 11 on 2/11/14.

Nonfarm Productivity Declined at a 1.7% Annual Rate in the First Quarter
May. 07, 2014 - First Trust -  Implications: After three consecutive quarterly increases, nonfarm productivity fell at a 1.7% annual rate in Q1. This was not due to falling production; output increased at a 0.3% rate. Instead, productivity declined because the number of hours worked increased much faster than output, which means output per hour declined. In spite of the decline in Q1, productivity is still up 1.4% from a year ago. More importantly, we think government statistics underestimate actual productivity growth. There are many examples, in every area of the economy, but the service sector is particularly hard to measure. 

Discipline at the Core
May. 07, 2014 - Morningstar, Inc. -  Investing has always been part art and part science, but leaning more heavily on a scientific approach may help improve consistency. Through fundamental research, a manager may decide to purchase stocks with varying degrees of value, momentum, and market exposure--the elements that appear to drive stock returns. But without directly targeting these dimensions of return, a portfolio's risk and expected return relative to the market can change over time.

Your Core Portfolio: The Case for ETFs
May. 06, 2014 - BlackRock Blog -  Now is a good time for some spring cleaning by reevaluating your portfolio’s core. In the first of a three-part series explaining the how and why of ETFs, Daniel Gamba takes a closer look at why investors may want to consider ETFs when investing for the long haul.

Field Notes: India
May. 06, 2014 - Calamos Investments -  I recently spent a week in Delhi and Mumbai meeting with corporate management teams and local investors to gain insights into the Indian economy and the outlook for upcoming elections. Meetings like these enhance our team’s understanding of how company management teams are thinking about their businesses and the potential impact they believe future macro events (e.g., elections) may have on how they deploy capital and pursue growth initiatives.

US Economy and Credit Markets Week Ended May 2, 2014

May. 05, 2014 - First Trust -  Yields fell this week as the geo-political situation in Ukraine continues to benefit safe assets. President Obama and Chancellor Merkel of Germany met on Friday to weigh additional economic sanctions on Russia, which cloud global growth prospects. In this uncertain environment, gold rose along with bond prices. Positive economic reports were released this week but failed to overcome the concerns surrounding Russia and Ukraine.

April Employment Report
May. 02, 2014 - First Trust -  Implications: Great headlines about the direction of the labor market, but the details of today’s employment report were not as strong. Nonfarm payrolls increased 288,000 in April, the largest gain in more than two years. However, we think some of the gain is payback for harsh winter weather and unusually slow job gains back in December/January. Nonfarm payrolls are up 197,000 per month in the past year and we think the underlying trend is a little faster than that pace. The other piece of good news was that the unemployment rate dropped to 6.3%, well below where even the most optimistic forecasters were predicting. The jobless rate among college grads is only 3.3%. But the drop in the jobless rate was mostly due to an 806,000 drop in the labor force, which pushed the participation rate down to 62.8%, tying the lowest level since 1978.

Millennials: Let’s Grab a Beer, Burger and a Movie. In 2064
May. 02, 2014 - BlackRock Blog -  Asking a 25-year old to save money for his 75-year old future self is like asking him to give money to a stranger. But if you put the future in more relatable terms – like the price of beer, burger and movies – saving may start to make sense.

Minimize Ownership Complications With This MLP Idea
May. 02, 2014 - Morningstar, Inc. -  Unfortunately, there's no perfect way to own master limited partnerships. It can be a paperwork headache to directly own a diversified group of MLP units, and because of various structural complications, even the best exchange-traded funds and exchange-traded notes have their drawbacks. It's rare for an exchange-traded note to be a viable alternative to an exchange-traded fund that tracks the same asset class, but  UBS E-TRACS Alerian MLP Infrastructure ETN (MLPI) is one of these unusual cases. There's nothing revolutionary about this note: MLPI tracks the same Alerian index as most MLP exchange-traded products and its 0.85% expense ratio is average. 

April ISM Manufacturing Index
May. 01, 2014 - First Trust -  Implications: Following temperatures, the ISM index, a measure of manufacturing sentiment around the country, continued to move higher in April. The index now shows manufacturing activity expanding at the fastest pace since the end of 2013, with seventeen of the eighteen manufacturing industries surveyed reporting growth in April. While not quite back to the levels we saw in mid-to-late 2013, the index has stood in expansion territory for eleven consecutive months, and we expect the index to continue to show strength as companies ramp up production and make up for time lost to bad weather. 

Hidden Quality in Dividend ETFs
Apr. 30, 2014 - Morningstar, Inc. -  Interest in quality investing has heated up in recent years, triggering the release of new quality-oriented exchange-traded funds. Several respected academics have released papers that aim to quantify quality/profitability's role as a predictive metric. What are arguably the three most important reports have come in quick succession: "Quality Minus Junk" by Clifford Asness, Andrea Frazzini, and Lasse Pedersen; "The Other Side of Value: The Gross Profitability Premium" by Robert Novy-Marx; and "A Five-Factor Asset Pricing Model" by Eugene Fama and Kenneth French. 

Clearing up 3 Single-Country ETF Misconceptions
Apr. 30, 2014 - BlackRock Blog -  If you have a view about the prospects of a certain country’s market, it’s easier than ever to express it using an exchange traded fund (ETF). The number of so-called single-country ETFs – ETFs focusing on companies based in one particular country—on the market has exploded in recent years.

Commodities Off To A Good Start Relative To Stocks In 2014

Apr. 29, 2014 - First Trust -  

View from the Observation Deck 

  1. For the three-year period ended December 2013, the S&P 500 posted a cumulative total return of 56.82%, compared to a cumulative loss of 22.40% for the Dow Jones-UBS Commodity Index.
  2. Phil Flynn, senior market analyst at the Price Futures Group, noted in a article in December 2013 that the “biggest story” in 2014 would be the direction of commodity prices relative to stock prices.

What Have They Done to My Index Fund?
Apr. 29, 2014 - Morningstar, Inc. -  Question: When reading fund reports I sometimes find references to float-adjusted, spliced, or composite indexes. What do these terms mean?

Answer: On the surface, the way most index mutual funds and exchange-traded funds work isn't all that complicated. They simply seek to track the performance of a given index by owning the same constituents in the same proportion as the index. Often this is done using market-cap weighting, meaning that the percentage of the portfolio allocated to each security is in proportion to its size relative to the other holdings. For a mutual fund or ETF that tracks a market-cap-weighted equity index, such as the S&P 500, a company whose market cap represents 5% of the index's total market cap would make up 5% of the portfolio.

Another way to Build your Fixed Income Portfolio
Apr. 29, 2014 - BlackRock -  As the current low yield environment forces investors to seek income wherever they can find it, Matt Tucker discusses a new fixed income solution.

In today’s interest rate landscape, the search for yield can be a difficult pursuit, particularly when you consider that yields on traditional core bond funds are less than half of what they were in 2008.1 With the Fed and other central banks maintaining low interest rates with accommodative interest rate policies, investors are finding it harder and harder to meet yield and income targets. 

Yield Sucker Bet
Apr. 25, 2014 - Morningstar, Inc. -  There are good and bad ways to achieve one's income targets. The good way takes into account risk and total return. The bad way ignores risk and focuses on income at the expense of total return.

A year ago, bond closed-end funds as a whole were a bad way to get income. They were trading at the highest premiums in at least 15 years. Then-Federal Reserve chairman Ben Bernanke's "taper talk" last May sent yields up and shook lots of investors out of anything that had a whiff of duration, including CEFs. Discounts have remained relatively wide since.

The Price Of Crude Oil Doubled Over The Past Five Years
Apr. 24, 2014 - First Trust -  

View from the Observation Deck 

  1. For the five-year period ended March 2014, which captures all of the economic recovery that began in July 2009, the price of a barrel of crude oil increased by 104.6% to $101.58.
  2. The cumulative total return on the S&P 500 Energy Index was 114.1% over that same five-year period. At first glance, energy stocks essentially kept pace with the rise in the price of crude oil.

Understanding Intrinsic Value
Apr. 23, 2014 - Morningstar, Inc. -  The main tasks of the active value investor are to estimate intrinsic value, buy assets trading at sizable discounts to their estimates, and sell or avoid those trading at premiums. The assumption is that asset prices can't help but gravitate to their fair values over time. However, history shows that prices can become untethered from fair value for years at a time and move in self-fulfilling cycles of fear and greed. A full account of investing needs to acknowledge and manage these short-term movements, but the beating heart of investing should always be fair value.

Be Cautious With Emerging-Markets Dividend ETFs
Apr. 18, 2014 - Morningstar, Inc. -  Investors are dipping back into emerging-markets stocks. In March 2014, flows into diversified emerging-markets open-end funds and exchange-traded funds turned positive after four consecutive months of outflows. Fundamentals in emerging markets have not necessarily improved, but investor sentiment has. According to the Bank of America Merrill Lynch Fund Manager Survey for April, 55% think emerging markets are undervalued, up from 49% in March. More interestingly, only 2% indicated a desire to underweight emerging markets, down sharply from 21% in March.

A Low-Volatility Approach to Emerging Markets
Apr. 16, 2014 - Morningstar, Inc. -  iShares MSCI Emerging Markets Minimum Volatility (EEMV) is suitable for use as a small core holding in a diversified portfolio and is a solid alternative to a cap-weighted emerging-markets index fund. This fund tracks an index that selects about 200 stocks from its parent index (the MSCI Emerging Markets Index) to form a low-volatility portfolio. Low-volatility strategies seek to exploit the observed phenomenon that portfolios with smaller price fluctuations tend to outperform portfolios with larger price fluctuations over the long term.

A Defensive-Stock Fund for Risk-Averse Investors
Apr. 11, 2014 - Morningstar, Inc. -  Low-volatility equity strategies were all the rage two years ago. Investors were looking to tiptoe back into the equity market but could not stomach the volatility, and two newly minted exchange-traded funds were happy to meet the demand.  IShares MSCI USA Minimum Volatility (USMV) and  PowerShares S&P 500 Low Volatility (SPLV) raked in $6 billion in the year through April 2013. Those strong flows came at a time when overall demand for equities was tepid. The organic growth rate for large-blend funds was only about 2% during that period. Since that time, the broad equity market has rallied, and investors have pulled $3 billion out of the low-volatility funds while ramping up investment in the broader equity market. While these funds should lag during bull markets, they may pay off during market downturns. Investors who try to chase performance are likely to be disappointed.

Abenomics Revisited: Finding Value in Japan
Apr. 10, 2014 - BlackRock -  Major reforms in Japan, including the creation of special economic zones and a commitment to escaping deflation, are leading some to wonder what’s in store for the world’s third-largest economy. The Blog takes a look at the fundamentals.

Survivorship Bias
Apr. 09, 2014 - Morningstar, Inc. -  Many funds that were around 20 years ago no longer exist. Not surprisingly, the funds that closed tended to have relatively poor performance. Fund companies have a habit of merging losers with better-performing funds, which allows them to keep their clients' assets and mask poor performance.

Plow Horse Gets De-Iced
Apr. 07, 2014 - First Trust -  For the last couple of months it’s been an open question whether US economic growth was slower because of brutal winter weather or if something more serious and worrisome was going on. 

We have consistently sided with the “weather theory.” The winter of 2014 was one of the coldest and snowiest in the past 30 years, at least in the population centers in the East and Midwest. It was likely enough to slow real GDP growth from the 2.6% pace of the past year to under 1% annualized growth in the first quarter.

March Employment Report 

Apr. 04, 2014 - First Trust -  Implications:  The March employment report was more Plow Horse, with some signs of underlying improvement as weather-related problems eased. The unemployment rate held at 6.7% instead of ticking back down to 6.6%, as we expected, but the details of the report were much better than the headlines. Payrolls increased 192,000 in March, or a total of 229,000 after including upward revisions for prior months.  Including revisions, private payrolls gained 239,000.  What kept the unemployment rate from falling was a 503,000 gain in the labor force, which counteracted the robust 476,000 gain in civilian employment in March– an alternative measure of jobs that includes small business start-ups.  

Partying Like It's 1999
Apr. 04, 2014 - Morningstar, Inc. -  Morningstar's Take
As United States equities continue to hit all-time highs, one of the dynamics capturing plenty of attention in recent weeks has been initial public offerings of high-tech companies and, in particular, Internet firms, such as "Candy Crush Saga" game maker King Digital Entertainment (KING), which went public last week, and Chinese Internet colossus Alibaba Group, which is preparing to list in the U.S.

Job & Economic Growth Could Drive Auto Sales Higher
Apr. 03, 2014 - First Trust -  View from the Observation Deck  
  1. March’s U.S. nonfarm payroll number will be released tomorrow. Bloomberg’s survey of top economists produced a consensus estimate of 200,000 new hires. 
  2. That target is slightly above the 187,540 monthly average posted over the past 12 months, but still below the 250,000-plus economists believe is needed to make a serious dent in unemployment.

Consumer Discretionary Stocks: The Winter of Discontent
Apr. 02, 2014 - Morningstar, Inc. -  Since the start of the year, the United States equity sector that has underperformed the most has been the consumer discretionary sector.

While the U.S. stock market's performance has been slightly better than flat for the year, consumer discretionary names have been battered during the past three months. The weakness has come across many different consumer discretionary subsectors, including media, online retail, and traditional retail.

Biotechnology Ranked 2nd In Funding From Venture Capitalists For 3rd Year In A Row in 2013
Apr. 01, 2014 - First Trust -  View from the Observation Deck  
  1. From 2011-2013, of the 16 major categories tracked, the only one that raised more money from the venture capital (VC) industry than Biotechnology was Software.

Capital Destruction, Inc.
Apr. 01, 2014 - Morningstar, Inc. -  Share prices of the two biggest mortgage real estate investment trusts, Annaly Capital Management (NLY) and American Capital Agency(AGNC), are down more than 30% since last April. Both firms, as of this writing, offer double-digit yields and are buying back shares. Insiders have been buying, too.

Repudiating Milton Friedman
Mar. 31, 2014 - First Trust -  Milton Friedman taught the world that the “transmission mechanism” for central bank policy worked through the quantity of money – the amount of money injected into, or subtracted from, the economy.

Fool's Gold?
Mar. 28, 2014 - Morningstar, Inc. -  Market Vectors Gold Miners ETF (GDX) came strong out of the gate in 2014, after posting three consecutive years of negative returns--declining nearly 66% in aggregate from 2011 through 2013. Is it finally gold miners' time to shine? With a current price/fair value ratio of 0.83, GDX is currently the cheapest of all of the exchange-traded funds for which we calculate this metric. But is there real value here, or are miners stocks just fools' gold? Here's the acid test on GDX.

The V-Shaped Recovery In Stock Dividends Is Now A Check Mark
Mar. 27, 2014 - First Trust -  View from the Observation Deck  
  1. Today’s blog post is an update of one we did on 1/7/14. We intend to continue monitoring the direction of stock dividend distributions over the coming quarters.  
  2. S&P 500 companies paid out $84.98 billion in dividends in Q4’13, up 6.5% from the $79.83 billion distributed in Q4’12.

4th Quarter GDP (Final)
Mar. 27, 2014 - First Trust -  Implications: The biggest news this morning was that initial claims for unemployment insurance declined 10,000 last week to 311,000 and continuing claims dropped 53,000 to 2.82 million. Plugging these figures into our payroll models suggests a solid March gain of 203,000 nonfarm and 205,000 for the private sector. We will be adjusting this forecast to reflect incoming data over the next week, but it looks like the pace of job growth is bouncing back from weather-related problems this winter. 

How European Investors View ETFs
Mar. 27, 2014 - ETF Trends -  The U.S. exchange traded fund industry has attracted a lot of interest. Turning overseas, how has the Europe-listed ETF market fared?

ProShares Launches Global Infrastructure ETF
Mar. 27, 2014 - ETF Trends -  ProShares, the largest U.S. issuer of inverse and leveraged exchange traded funds, continues to expand its lineup of traditional ETFs with today’ launch of the ProShares DJ Brookfield Global Infrastructure ETF (NYSEArca: TOLZ).

February Durable Goods  
Mar. 26, 2014 - First Trust -  Implications: A pleasant upside surprise in the headline for new durable goods orders in February after declines in December and January. But don’t get too excited that durables goods avoided a weather impact. The strength in orders was mostly due to the volatile transportation sector (aircraft and autos); orders excluding transportation increased only 0.2% in February. 

One of the Most Useful ETF Data Points You May Never Have Heard Of
Mar. 26, 2014 - Morningstar, Inc. -  Morningstar's fair value estimate for exchange-traded funds leverages the bottom-up fundamental analysis produced by our global team of equity research analysts, distilling their extensive work into one powerful metric of the estimated intrinsic value of a portfolio of stocks.

One of the Most Useful ETF Data Points You May Never Have Heard Of
Mar. 26, 2014 - Morningstar, Inc. -  Morningstar's fair value estimate for exchange-traded funds leverages the bottom-up fundamental analysis produced by our global team of equity research analysts, distilling their extensive work into one powerful metric of the estimated intrinsic value of a portfolio of stocks.

Our equity analysts evaluate stocks for what they truly are--pieces of a business. Instead of prognosticating short-term price movements or momentum, our analysts focus on determining the value of a business, its risks, and whether the stock price accurately reflects both the value and risk. This philosophy of fundamental research is the foundation for our valuation model. We believe that:

It’s Back To The Future With Dividend-Paying Stocks

Mar. 25, 2014 - First Trust -  View from the Observation Deck  
  1. Dividend-paying stocks have held their own against the broader market over the past decade.  
  2. From 2/04-2/14, the Dow Jones U.S. Select Dividend Index (DJDVY), a commonly used benchmark for dividend-paying stocks, posted a cumulative total return of 94.9%, compared to 99.8% for the S&P 500.
  3. The strong showing has prompted some in the financial media to argue that valuations on dividend-paying stocks have reached levels too rich to justify the potential risks to investors’ capital.

February New Home Sales  
Mar. 25, 2014 - First Trust -  Implications: On February 2nd, Punxsutawney Phil woke up and predicted six more weeks of winter. Boy was he right! Terrible weather has been suppressing both home construction and sales, and today's report appears to be another victim as new home sales fell 3.3% in February to a five month low. Some people may blame the recent slowdown in new home sales on higher interest rates but the US had a bubble in housing during 2003-05, when 30-year mortgage rates averaged 5.8%. Today the rate is 4.3%. The months’ supply of new homes – how long it would take to sell all the new homes in inventory – rose to 5.2 in February, but is still below the average of 5.7 over the past twenty years.

The Buyback Fund
Mar. 21, 2014 - Morningstar, Inc. -  Ordinarily, an index fund that charges anything close to an active management fee would not be competitive. Yet, despite its 0.71% expense ratio, PowerShares Buyback Achievers (PKW) has amassed more than $2.5 billion in assets. That is likely due to its impressive performance record. From its inception in December 2006 through February 2014, the fund outpaced the S&P 500 Index by nearly 2.9% annualized, net of fees. Yet, its strategy is simple. The fund targets U.S. stocks that have reduced their shares outstanding by at least 5% in the previous year and weights these holdings by market capitalization, subject to a 5% cap. This results in a portfolio of quality, shareholder-friendly companies that may continue to generate attractive returns.

The Default Portfolio
Mar. 19, 2014 - Morningstar, Inc. -  Investing can seem like a daunting task. But low-cost index funds make it easy for the average investor to do better than he would with most professionally managed offerings, after fees. A broad-market index reflects the collective portfolio of all market participants and their view on the value of its holdings. In order for one investor to beat the market, someone else must underperform. Competition for superior performance creates a reasonably efficient market that is tough to consistently beat without taking on greater risk. The average actively managed dollar must underperform the average passively managed dollar because it incurs higher fees and, in aggregate, active investors define the market portfolio (1). 

S&P 500 Top-Line Growth Estimates
Mar. 18, 2014 - First Trust -  View from the Observation Deck  
  1. Today’s blog post is intended to supplement our post from 2/20/14 (“S&P 500 Earnings Beat Rate On The Mark For Q4’13”).
  2. In that post we noted that 66.5% of S&P 500 companies, on average, had beaten their quarterly earnings estimates since Q3’11.
  3. Nearly two out of every three S&P 500 companies has managed to top analysts’ quarterly forecasts, in part, by cutting costs, such as labor, and boosting productivity via the implementation of cutting-edge technology. 

S&P 500 Top-Line Growth Estimates
Mar. 18, 2014 - First Trust -  View from the Observation Deck  
  1. Today’s blog post is intended to supplement our post from 2/20/14 (“S&P 500 Earnings Beat Rate On The Mark For Q4’13”).
  2. In that post we noted that 66.5% of S&P 500 companies, on average, had beaten their quarterly earnings estimates since Q3’11.
  3. Nearly two out of every three S&P 500 companies has managed to top analysts’ quarterly forecasts, in part, by cutting costs, such as labor, and boosting productivity via the implementation of cutting-edge technology. 

The Consumer Price Index Increased 0.1% in February
Mar. 18, 2014 - First Trust -  Implications: Consumer prices continued to move higher in February, though at the same tepid 0.1% pace we saw in January. In the past year, consumer prices are up 1.1%. “Core” prices, which exclude food and energy, also rose 0.1% in February and are up 1.6% in the past year. So, for the time being, neither overall inflation nor core inflation is setting off alarm bells. Instead, they suggest the Fed’s preferred measure of inflation, the PCE deflator (which usually runs a ¼ point below the overall CPI) will remain well below the Fed’s target of 2%. 

Buffett's Latest Letter
Mar. 18, 2014 - Morningstar, Inc. -  Warren Buffett's latest letter to shareholders of  Berkshire Hathaway (BRK.B) came out on March 1. It's excellent. Every serious investor should read the whole thing. I've pulled out a few interesting nuggets to elaborate upon

No Extension Needed

Mar. 17, 2014 - First Trust -  No one can know with absolute certainty exactly how much the brutal winter weather affected jobs. But, the 162,000 increase in February private sector payrolls was a positive shock to the consensus. January, at 145,000, was surprising, too. 

High Quality, High Fees
Mar. 14, 2014 - Morningstar, Inc. -  Investors have plenty of options when it comes to dividend exchange-traded funds. These funds follow a variety of strategies: Some focus on high income, some on total return, others on quality, and some focus on a combination of all three. One interesting choice is  First Trust Value Line Dividend Index (FVD), a low-volatility dividend strategy ETF that uses proprietary research by Value Line to construct its portfolio. Although "dividend" is in the fund's name, its most attractive qualities are its relative stability, emphasis on quality stocks, and significant value tilt. 

Understanding Securities Lending in ETFs
Mar. 12, 2014 - Morningstar, Inc. -  A well-run index fund is typically characterized by its ability to effectively track its index, lagging only by the amount of its expense ratio. In theory, it should not be possible for an index fund to come any closer to its benchmark's return--but some do, including funds that utilize full replication of their index's holdings. A handful of funds even beat their benchmark while perfectly replicating its holdings. How can this be? In many cases, this is an example of securities lending at work.

Look to Africa for Faster Growth
Mar. 07, 2014 - Morningstar, Inc. -  The top holdings of  iShares MSCI South Africa Index (EZA) are primarily well-run financial services, telecom, and consumer firms, many of which have operations across different African markets. As such, this exchange-traded fund can be used to gain exposure to healthy growth trends on the African continent. It is one of only a few funds to focus on this region. This ETF can also be used tactically to add South African exposure to a diversified portfolio--South African stocks account for about 7% of the value of the MSCI Emerging Markets Index. 

Who uses Fixed Income ETFs? The Answer may Surprise You
Mar. 05, 2014 - BlackRock Blog -  The use of fixed income ETFs is on the rise. Matt Tucker explores who is utilizing these investments and why they’re growing in popularity.

Last month I had the opportunity to speak on a panel at the Inside ETFs Conference. The focus of the panel was the growing usage of ETFs by institutional investors. We talked about why institutions were increasingly turning to ETFs, and discussed some of the investment strategies that they are employing.

Where Are the Opportunities in Emerging Markets?
Mar. 05, 2014 - Morningstar, Inc. -  Last month, I wrote an article entitled Are Emerging Markets Cheap? to shed some light on some of the assumptions that underlie the opinion that emerging markets are trading at attractive valuations. As a follow-up, and to address a number of reader requests, this article will focus on investment ideas in emerging markets. First, I will take a look at emerging-markets fund managers' recent purchases for some investment ideas that can be executed via exchange-traded funds. 

Finding Value in Frontier Markets as Ukraine Crisis Continues
Mar. 04, 2014 - BlackRock Blog -  Recent turmoil in Ukraine, Nigeria and other frontier markets leaves many investors wondering if there’s volatility on the horizon for this asset class. Dodd Kittsley takes a closer look at past momentum and discusses whether he thinks it’s likely to continue.

Ukraine Fears Temporary
Mar. 03, 2014 - First Trust -  It’s a huge week for economic data, and US stock indices just made new highs, but who cares – Vladimir Putin sent troops into the Ukraine and this was blessed by a vote in the Duma. Previously, Ukraine’s elected president, an ally of Russia, was forced from office for ordering troops to fire on protestors. That departure was ratified by Ukraine’s parliament.

Vanguard Announces Lower Expense Ratios for 5 International-Stock ETFs
Mar. 03, 2014 - Morningstar, Inc. -  Last week, Vanguard revealed that expense ratios for five large exchange-traded funds had fallen between 5% and 20%, depending on the ETF.

All of the affected ETFs, which already were the lowest-priced or second-lowest-priced options in their respective categories, are devoted to international equities. And with the cuts, all of the funds now either rank as the lowest-cost option in their category or are in a tie for being the lowest-cost option in their respective category.

A Tough Spring Ahead for Stocks?
Mar. 03, 2014 - BlackRock Blog -  Despite last week’s disappointing economic data, stocks rallied to record highs. Russ explains what’s behind this disconnect and why stocks may be vulnerable come the spring.

February ETF Performance Report
Feb. 28, 2014 - ETF Trends -  Equities and stock exchange traded funds are looking rosier as markets quickly recovered over February, with broad benchmark indices breaking record highs after growth concerns induced a January correction.

The Good, the Bad, and the Ugly
Feb. 28, 2014 - Morningstar, Inc. -  As an observer of the exchange-traded fund business, I see a lot of folly. While I find the genre of "best" or "worst" list articles to be regrettable, I'm writing one because I hope to prod readers, both individual investor and industry insider alike, in the right direction.

iShares Introduces Two New ETFs Thursday
Feb. 27, 2014 - ETF Trends -  BlackRock’s (NYSEArca: BLK) iShares unit, the world’s largest issuer of exchange traded funds, will roll out two new ETFs Thursday.

S&P Index Changes Pressure BDC ETFs
Feb. 26, 2014 - ETF Trends -  Business development company-related exchange traded funds are weakening after S&P Dow Jones Indices decided to remove BDCs from its U.S. indices.

The Market Vectors BDC Income ETF (NYSEArca: BIZD), which tracks U.S.-listed BDCs, has dropped 1.6% over the past week. Additionally, BDC-related exchange traded notes, E-TRACS Wells Fargo Business Development Index ETN (NYSEArca: BDCS) and UBS E-TRACS 2x Wells Fargo Business Development Company Index ETN (NYSEArca: BDCL), declined 2.0% and 3.5% over the past week, respectively.

Understanding Factor Models
Feb. 26, 2014 - Morningstar, Inc. -  Yesterday, I briefly explainedthe three major risk factors that determine most assets' behavior: economic growth, inflation, and liquidity. These three ingredients are why stocks, bonds, and many alternative strategies have higher expected returns than cash.

Treading Water: Four Economic & Market Trends Likely to Continue in 2014
Feb. 25, 2014 - BlackRock Blog -  Like stocks last week, economic fundamentals are treading water. Russ explains the economic and market trends that are likely to continue in coming months.

An Opportunity in a Fairly Valued U.S. Equity Landscape
Feb. 21, 2014 - Morningstar, Inc. -  U.S. stocks have little to show for themselves thus far in 2014, with the S&P 500 Index posting a slightly negative return (negative 0.8% as of this writing). However, after U.S. equities' tremendous gains in 2013, Morningstar's equity analysts consider the U.S. stock market to be fairly valued. The S&P 500 Index currently trades at a price/fair value of 1.01, while Morningstar's coverage universe is trading at a price/fair value of about 1.03.

Three Reasons Frontier & EM Equities Are Not Created Equal
Feb. 21, 2014 - BlackRock Blog -  With all the turmoil in emerging markets recently, some investors may be especially wary of investing in so-called frontier markets. Russ explains why frontier and emerging markets are separate asset classes, each deserving of a strategic allocation.

To Hedge or Not to Hedge?
Feb. 19, 2014 - Morningstar, Inc. -  Currency-hedged exchange-traded funds have come into vogue of late. Investors' interest has been piqued by the recent performance of the oldest and largest of them all:  WisdomTree's Japan Hedged Equity (DXJ). DXJ gained nearly 42% in 2013, as a massive dose of monetary stimulus contributed to an 18% decline in the value of the Japanese yen and steady improvement in the global economy gave Japan's stock market an additional shot in the arm. Meanwhile,  iShares MSCI Japan ETF (EWJ)--which does not hedge its yen exposure--increased by 26% in calendar 2013. 

Adding Some Gangnam Style to Your Portfolio
Feb. 14, 2014 - Morningstar, Inc. -  The South Korean market may be described as having somewhat of a split personality. South Korea is still considered an emerging market by index provider MSCI but is classified as a developed market by its close competitors in the index arena, FTSE and S&P. Many South Korea firms are export-oriented, with customers in both the emerging and developed markets. So it is not surprising that the South Korean market can sometimes march to its own beat.

Are Emerging Markets Cheap?
Feb. 12, 2014 - Morningstar, Inc. -  Emerging-markets stocks are typically viewed as an asset class offering the potential for higher, albeit volatile, returns, and as a source of diversification. While these traits may still generally hold, this asset class has evolved significantly over its relatively short life span, so any analysis of current valuations of emerging markets should be viewed in this context.

The New Treasury Security: What it Means for Investors
Feb. 12, 2014 - BlackRock Blog -  The U.S. Treasury’s recent issuance of a new security type has several implications for investors. Matt Tucker explains.

What I Learned From Ray Dalio
Feb. 11, 2014 - Morningstar, Inc. -  I try to learn from the best. Ray Dalio is one of them. He founded Bridgewater Associates, one of the biggest hedge funds in the world. Many retail investors have not heard of him, probably because his funds are open only to big institutions. It's a terrible mistake to limit yourself to listening only to the musings of mutual fund managers. Doing so means that you will ignore many of the best investors.

Preparing for the Unexpected with Commodity Futures ETFs
Feb. 10, 2014 - First Trust -  
Three straight years ofnegative returns forbroad commodity benchmark indices, suchastheDowJones-UBS Commodity Total Return Index, have ledsome investment advisors (and their clients) to begin questioning the rationale forincluding commodity futures ETFs1 in their asset allocation models

The Recovery Is Not A Sugar High
Feb. 10, 2014 - First Trust -  What happened to stocks in January and early February is nothing new. It’s happened quite a few times in the past four years and eleven months. Ever since mark-to-market accounting was fixed in March/April 2009, these corrections have been short-lived and relatively mild. And once they were over the market went higher. It’s been a very strong bull market.

3 Things to Know about Currency Hedging
Feb. 10, 2014 - BlackRock Blog -  As investors seek international equity exposure as a means of enhancing portfolio diversification to reduce risk, Dodd Kittsley explains why it’s important to take note of the impact of currency on total returns.

Nonfarm Payrolls Increased 113,000 in January

Feb. 07, 2014 - First Trust -  Implications: Something for everyone in today’s report. Nonfarm payrolls increased a tepid 113,000 in January, the second straight month with payroll gains noticeably under consensus expectations. Private-sector gains were a healthier 142,000, but that’s still below the average of 191,000 in the past year. Although the weather appeared to have held down payrolls in December, Labor Department data say the number of people who couldn’t work due to weather was smaller than usual in January. However, the household survey that generates that weather effect also shows an overall gain of 638,000 in civilian employment for the month. As a result, despite the labor force increasing by 523,000

Bonds as the Ballast
Feb. 07, 2014 - Morningstar, Inc. -  After a blockbuster year for stocks and concerns about rising interest rates, some investors might be entertaining the idea of ditching their bond holdings. We've all heard the argument, "interest rates can't go much lower." Fair enough. And while interest rates have inched up since the summer of 2013, they are still close to historic lows. I can't tell you whether rates will continue their move higher by the summer, year-end, or 2016. But I can tell you that bonds play a critical role in a balanced portfolio.

What Puerto Rico’s Downgrade Means for Investors
Feb. 05, 2014 - BlackRock Blog -  After much speculation and anticipation, the island of Puerto Rico has been downgraded to junk. Peter Hayes discusses the implications (or lack thereof) for the municipal market.

Puerto Rico has been making headlines for months. Yesterday, the clincher finally appeared: 
Howdy, Partner
Feb. 05, 2014 - Morningstar, Inc. -  Even as the exchange-traded fund industry has matured, many large traditional fund managers have remained on the outside looking in. The core cadre of ETF providers has changed little over the past few years, and much of the activity from the more traditional fund managers has involved their applications to issue actively managed ETFs. For the most part, brand-new issuers whose first ETFs have started trading have been small fries. And many traditional managers have applications pending to issue actively managed ETFs. Whether players such as Dreyfus, John Hancock, Neuberger Berman, T. Rowe Price, Principal, and Eaton Vance, for example, ever actually start issuing actively managed ETFs might be an open question, but all (along with many others) have placed serious proposals to do so before the SEC.

US Economy and Credit Markets Week Ended Jan. 31, 2014

Feb. 03, 2014 - First Trust -  Treasury prices rose significantly over the course of the week on a volatile and poor equity market. On Wednesday, the Federal Reserve announced that it would continue to taper bond purchases by another $10 billion, which caused equities to drop significantly and gold to drop 1.9%. This actually caused Treasury prices to rise as investors were seeking the safety of Treasuries. On Monday, Treasury prices dropped on a poor housing report but rebounded Tuesday on a solid 2-year auction and a poor durable goods report. 

Should You Consider a Convertible-Bond ETF?

Jan. 31, 2014 - Morningstar, Inc. -  One of the fastest-growing exchange-traded funds may come as a surprise:  SPDR Barclays Capital Convertible Securities (CWB), the only convertible-bond ETF. Convertible bonds are a niche asset class with an estimated market cap of less than $500 billion and are traditionally considered the purview of active managers. Only a handful of convertible-bond mutual funds and closed-end funds exist. Nonetheless, CWB almost doubled in size over the past year to more than $2 billion in assets, making it the third-largest convertible-bond fund of any kind. CWB is the sole passively managed option and is worth a look by investors searching for an asset class that can offer compelling risk-adjusted return and some extra yield compared with traditional equity investments.

A Duration Story, in Pictures
Jan. 30, 2014 - BlackRock Blog -  Fixed income ETFs today hold $354 billion in assets, accounting for about 15% of total assets—triple their share in 2005. While the fixed income portion of the total ETF pie shrunk in 2013 as money flooded into developed equity funds, growth has remained firm in the current rising interest rate environment, as noted in our latest close-up of the segment. Steady demand for yield, along with increased investor awareness (and use) of the multitude of bond ETF exposures available today, is likely to fuel continued bond ETF growth in 2014 and beyond.

Active vs. Passive: The REIT Edition
Jan. 29, 2014 - Morningstar, Inc. -  Passive investing is rooted in the efficient-market hypothesis, which questions if active managers are able to consistently generate excess returns over a stated benchmark. Many investors have begun to employ passive strategies in more “efficient” areas of the market, such as U.S. large caps. However, in smaller niches of the market, such as real estate, there is less of a consensus on the active versus passive debate.

Jan. 28, 2014 - Morningstar, Inc. -  "I believe in the discipline of mastering the best that other people have ever figured out. I don't believe in just sitting down and trying to dream it all up yourself. Nobody's that smart."--Charlie Munger

In early 2012 I had some cash in my taxable account I wanted to put to work. I had always wanted to be a shareholder of  Berkshire Hathaway (BRK.B), the stock looked cheap, and it didn't pay a dividend. I bought a couple hundred shares over a few days and kept on accumulating through the year.

After Last Week’s Sell-off: More Volatility Ahead
Jan. 27, 2014 - BlackRock Blog -  Russ explains the two major factors behind last week’s U.S. equity market sell-off as well as why investors should expect more volatility ahead and consider international stocks.

After a rocky first few weeks of the year, U.S. equity markets fell sharply last week. The media blamed much of the decline on market turmoil in emerging markets.  China reported some surprisingly weak economic data, and financial turmoil in Argentina and Turkey led to a sell-off in EM currencies.

iShares to Shutter 10 ex-U.S. ETFs
Jan. 27, 2014 - ETF Trends -  

BlackRock’s (NYSEArca: BLK) iShares unit, the world’s largest ETF issuer, said it will close and liquidate ten funds that make up the iShares All Country World Index (ACWI) ex-U.S. sector suite.

The announcement was made after the close of U.S. markets last Friday. iShares will close the 10 funds based on ongoing reviews, client feedback and limited interest in ex-U.S. sector strategies, according to a statement.

Gold ETF Flows Reveal Speculators Have Had Enough
Jan. 26, 2014 - ETF Trends -  

Gold exchange traded fund outflows are slowing down as speculators and short-term traders exit their position after a dismal year for precious metals.

Physically backed gold ETFs saw record outflows of $19.6 billion in the second quarter but the bleed slowed to $4.2 billion in the third quarter, reports Myra P. Saefong for MarketWatch.

How the Safe Havens Stack Up
Jan. 24, 2014 - BlackRock Blog -  For investors who are worried about a correction, Russ provides a look at which traditional safe-haven assets tend to perform best during times of uncertainty.

Given stocks’ stellar rise over the last year, investors worried about a correction are asking me where they can park their money.

How Fundamental Index ETF Could Help Bolster Your Portfolio
Jan. 24, 2014 - ETF Trends -  

Fundamental index-based exchange traded funds have taken off as investors broaden their scope and scour for new ways to improve returns.

ETF Trends’ Tom Lydon recently sat down with Rob Arnott, Chairman and Chief Executive Officer of Research Affiliates, to explain fundamental indexing and its impact on investing.

Low Volatility Abroad
Jan. 24, 2014 - Morningstar, Inc. -  In the context of investing, volatility usually isn't a good thing. Sure, in theory, the market should compensate investors with higher expected returns for accepting greater risk that cannot be diversified, but it hasn't always turned out that way in practice. Historically, the most volatile stocks and bonds have offered the lowest risk-adjusted returns, according to a study by AQR principals Andrea Frazzini and Lasse Pedersen. In other words, incremental increases in risk have not been matched with commensurate improvements in return. More problematically, volatility tends to encourage the perverse tendency that investors have to buy high and sell low. It may also deter investors from adequately diversifying into international stocks.

2013 - A Strong Year for ETFs
Jan. 24, 2014 - First Trust -  
Strong ETF Net Inflows for 2013
US-listed ETF1 net inflows totaled $185.5 billion in 2013, setting a new record.2 While the largest percentage of net inflows remained
concentrated among a relatively small group of the 1521 US-listed ETFs, investors broadened their horizons more in 2013 than in previous years, as 312 ETFs had net inflows exceeding $100 million.

Does the Small-Cap Premium Exist?
Jan. 22, 2014 - Morningstar, Inc. -  It is intuitive to presume that small-cap stocks should outperform their large-cap counterparts over the long run. After all, small caps do tend to have more limited financial resources, weaker competitive advantages (if any), and lower profitability than large caps. They also tend to be more volatile and have less analyst coverage--which may increase the risk of mispricing. An efficient market should compensate investors for accepting greater non-diversifiable risk with higher expected returns. Consistent with this view, United States small-cap stocks historically have outpaced their large-cap counterparts over the long term.

Q4 GDP - Stronger than Keynes Predicted

Jan. 21, 2014 - First Trust -  
Please don’t accuse us of ignoring “everything” John Maynard Keynes said. The truth is we ignore just 99%. What most people are taught about Keynes is that government spending is the equivalent of, or through the spending multiplier, more powerful than, private spending. 

Very few ever try to argue with this idea, especially after teachers pull out the officious, yet full of hocus-pocus, IS-LM curves. Politicians want to believe the idea of the Keynesian multiplier because they really actually do believe they themselves are bigger than real life. As a result, politicians around the world have elevated Keynes to legendary status even though big government spending has left economic mayhem and poverty strewn everywhere.

US Economy and Credit Markets Week Ended Jan. 17, 2014
Jan. 21, 2014 - First Trust -  Treasuries gained this week as housing starts declined in December, industrial production came in as expected and consumer confidence unexpectedly fell. This is the third consecutive week of gains for Treasuries following the 10 year yield peaking at 3.05% on January 2nd. On Tuesday, the December Retail Sales Report showed a 0.2% increase in December and sales up 4.1% versus a year ago.

Best Ideas
Jan. 17, 2014 - Morningstar, Inc. -  I'm often asked about  Market Vectors Wide Moat ETF(MOAT). It puts me in a bit of a pickle. MOAT tracks the Morningstar Wide Moat Focus Index. Any recommendation to invest in it would be rightly perceived as coming from a conflicted party, hence the long disclosure prefacing this article. For what it's worth, I had nothing to do with MOAT's creation and am not compensated in any way by the exchange-traded fund's success or failure. I honestly think MOAT is an interesting strategy that deserves a hard look, and I also happen to be well-placed to do so in an insightful manner.

Semiconductor Sales Were A Good Barometer For The Technology Sector In 2013
Jan. 16, 2014 - First Trust -  

View from the Observation Deck 

Today’s blog post is an update of a post we did on 2/2/12 where we encouraged investors to monitor the recovery in semiconductor sales and use it as a barometer for the overall health of the technology sector.

What You Need to Know about “Strategic Beta”
Jan. 15, 2014 - BlackRock Blog -  Strategic beta captured nearly a third of total ETF industry flows in 2013. Dodd Kittsley defines strategic beta and explains why this trend is here to stay.

In my final post of 2013, I highlighted several trends within the ETF industry that caught our attention last year. One major development that really stood out to me, more so than the others, was the considerable growth we saw in strategic beta – an investing strategy that we believe will continue to be a significant contributor to ETF flows in 2014 and for years to come.

How Hegemons Fall
Jan. 14, 2014 - Morningstar, Inc. -  Warren Buffett once said, "It's never paid to bet against America." The same could have been said for the United Kingdom before World War I or Rome before Commodus' reign. While extrapolating the historical trend line is actually a pretty good prediction strategy, it's not the way to make money. Fortunes are made (or preserved) anticipating big economic shifts, and successful prediction requires good theory. Buffett admits his expertise is not in timing macroeconomic shifts. Ray Dalio's is. And he thinks the United States is an empire in relative decline.

Taking Stock of the S&P 500 Index
Jan. 10, 2014 - Morningstar, Inc. -  Since 2005, equity investors have put nearly $1 trillion into passive mutual funds and exchange-traded funds while pulling $300 billion out of active funds. Although the Dow Jones Industrial Average may be older and more widely cited, the S&P 500 Index's market-cap weighting makes it closer to the ideal "market portfolio" envisioned in the efficient-market hypothesis. The S&P 500 has become the most popular index that mutual funds and ETFs track. There are 54 distinct mutual funds indexed to the S&P 500 and three ETFs. Of these, only a handful can justify their existence.

Three lessons Learned in 2013 From ETF Fund Flows
Jan. 08, 2014 - Morningstar, Inc. -  U.S.-listed exchange-traded funds attracted $188.4 billion in 2013, just shy of 2012’s record $190.1 billion haul. Those inflows represent a growth rate of about 14% of beginning assets compared with the projected growth of about 3% for long-term mutual funds. Strong inflows, combined with market appreciation, have allowed ETF assets to hit $1.7 trillion, or about 13% of long-term mutual fund and ETF industry assets. Let's take a look at some things we can learn from these strong ETF flows.

Beginner Mistakes
Jan. 07, 2014 - Morningstar, Inc. -  Being competent requires avoiding major mistakes. Yet I see time and time again investors making basic errors while spending a lot of time and effort trying to beat the market. That's like trying to join the NBA without knowing how to dribble the ball--the only difference is the NBA won't let you play, even if you show up to a game wearing a jersey and carrying a bagful of cash. The finance industry and its satellites, on the other hand, are more than happy to take your money.

Vanguard Dominates the Fund Industry Again in 2013
Jan. 03, 2014 - Morningstar, Inc. -  Vanguard continued to dominate the fund industry in 2013. Through the first 11 months, the firm raked in $117 billion of long-term mutual fund and ETF assets compared with $425 billion for the industry. Vanguard has finished first or second in terms of flows in all but two of the past 20 years. This has allowed the firm to increase its market share to 18% from just 8% two decades ago and places it well ahead of rivals Fidelity and American Funds, both of which have lost market share over the past five years.

Moving the Goal Posts
Dec. 24, 2013 - Morningstar, Inc. -  On March 11, 2011, the president of the Federal Reserve Bank of New York, William Dudley, lectured a working-class audience in Queens, New York, on why inflation wasn't a problem. A skeptical audience member asked, "When was the last time, sir, that you went grocery shopping?" The economist, a former Goldman Sachs partner with a Ph.D. from Berkeley, conceded that food and energy prices were rising, but pointed out that overall inflation was still tame. He went on to explain, "Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful."

6 New Bond and Currency ETFs From WisdomTree
Dec. 23, 2013 - Morningstar, Inc. -  Pax World to Exit ETF Business, Merge Socially Responsible ETF Into an Open-End Fund
On Thursday, Dec. 12, Pax World announced that it plans to merge its socially responsible ETF into a newly created open-end mutual fund.

The firm announced that sometime in early 2014, it will merge the $55.5 million Pax MSCI EAFE ESG Index ETF (EAPS) and a Pax open-end mutual fund, the $44.5 million Pax World International Fund (PXIRX), into a newly created fund, to be named Pax World International ESG Index Fund. The new mutual fund will seek returns before fees and expenses that closely correspond to the price and yield performance of the MSCI EAFE ESG Index, which is the index that EAPS has tracked.

Some Newer ETFs Attract Considerable Interest
Dec. 23, 2013 - S&P Capital IQ -  
Including more than 100 exchange-traded funds (ETFs) launched in 2013, the ETF landscape continues to change, with some of the newer ETFs attracting considerable interest. By our calculation, the 20 largest equity or fixed income ETFs debuting in 2013 recently had aggregate net assets or market capitalization of about $4.2 billion. This includes five ETFs that were each at more than $200 million.

Our MarketScope Advisor (MSA) reports offer a tool for looking under the hood at what ETFs own, plus analytics related to performance, risk and cost. Also, within a few months of an ETF’s debut, we can offer an Overall Ranking on an ETF within its asset class, based on our proprietary analytical models.

Drilling for Value
Dec. 20, 2013 - Morningstar, Inc. -  It can be challenging to find attractive investment opportunities in a market that is at (or near) all-time highs. It has been an excellent year for equities, as the S&P 500 Index has soared more than 27% through mid-December. Now, with a price/fair value of 1.01, according to Morningstar equity analysts, the S&P 500 currently appears to be fairly valued.

Some sectors have fared better than others. Taking a step back to view the market through a sector lens reveals that the energy sector has trailed the broader market this year and is currently trading at a 6% discount to Morningstar's fair value estimate. Energy stocks also have the lowest price/earnings, price/sales, and price/cash flow ratios of any equity sector. Along with its attractive relative valuation, the sector is also in solid financial condition. In fact, the energy sector's debt as a percentage of total capital is the lowest of any sector. Yes, that even includes technology stocks.

2013 in Review: Surprises from the ETF Industry
Dec. 19, 2013 - BlackRock Blog -  Dodd Kittsley takes a look back at major trends within the ETF landscape. While some were in line with expectations, there were a few surprises. The Blog has our Top 10.

Despite continued volatility in the stock, bond and commodity markets, along with year-long speculation about the Fed’s bond buying program, the year ends with near-record highs for the global ETF industry. Flows total more than $209.9 billion to date. Here, our top 10 surprises for 2013*.

A Look at 2013’s Top Staples ETF
Dec. 19, 2013 - ETF Trends -  

Consumer staples stocks are notoriously slow-moving, but the sector’s reputation for dependable dividend growth and decent yields has made it a favored destination for scores of income investors.

Those attributes have also compelled investors to pour billions of dollars into exchange traded funds tracking the consumer staples sector. But in a strong bull market, such as the one investors have been treated to in 2013, lower beta sectors, including staples, have a propensity to lag the broader market. For example, the two largest staples ETFs are up an average of 23% while the S&P 500 is higher by 27.7%.

For ETFs, Capital Gains Distributions Remain Few and Far Between
Dec. 18, 2013 - Morningstar, Inc. -  Tax efficiency is one of the hallmark benefits of exchange-traded funds.

Unlike traditional open-end mutual funds, which redeem shares for cash, requiring funds to sell securities and potentially realize capital gains, most ETFs continually dodge the capital gains tax bullet by redeeming securities in kind. This allows ETF providers to swap out low-cost-basis securities without having to realize as many capital gains.

Rising Rates Turn Some Dividend ETFs Into Laggards
Dec. 16, 2013 - ETF Trends -  

Since April 30, 10-year Treasury yields have surged a jaw-dropping 71.2%.

Although 2013 has been a remarkable year for dividend ETFs, both in terms of increased number of products and asset-gather acumen, that rise in Treasury yields has turned some of the largest dividend ETFs into market laggards.

“The Dow Jones U.S. Select Dividend Index has lagged behind the Standard & Poor’s 500 Total Return Index by 4.6 percentage points on a total-return basis since April 30,”report Anna-Louise Jackson and Anthony Feld for Bloomberg.

IShares Rolls Out Actively Managed, Short-Duration ETF
Dec. 16, 2013 - Morningstar, Inc. -  On Friday, Dec. 13, iShares rolled out another exchange-traded fund in its short-duration product suite, unveiling an actively managed ETF that holds short-term bonds and money market instruments and targets an effective duration of less than six months.

IShares Liquidity Income ETF
ICSH is the latest addition to the battery of short-duration ETFs. ICSH is managed by  BlackRock's (BLK) cash management team, which employs fundamental research and analysis of issuers' creditworthiness and valuation to select securities.

The Missing Piece
Dec. 13, 2013 - Morningstar, Inc. -  The Barclays US Aggregate Bond Index has become a widely accepted benchmark for investors seeking broad passive exposure to the U.S. investment-grade bond market. But until recently, there were no index funds that offered similar exposure to international bonds. Investors had to assemble this portfolio piecemeal with separate international government- and corporate-bond funds. More problematically, currency fluctuations have a significant impact on most of these funds' returns and volatility, limiting their ability to diversify credit and interest-rate risk. 

Dividends--A Better Approach to Value?
Dec. 11, 2013 - Morningstar, Inc. -  Low interest rates have encouraged investors to accept greater risk in pursuit of higher yields to make up for lost income. While greater risk tends to accompany higher-yielding assets, a naive strategy of targeting stocks with high dividend yields to generate income would have historically outperformed the broad market, with lower volatility. But this return premium isn't unique to dividend-paying stocks. It's no secret that cheap stocks have historically outperformed their more expensive counterparts over the long run, a phenomenon known as the value effect. Dividend investing is essentially a repackaged value strategy. However, it may offer investors a lower-risk way to harness the value premium than traditional value strategies that rely on a broader range of metrics to identify cheap stocks.

A Noble Lie
Dec. 10, 2013 - Morningstar, Inc. -  A common nugget of wisdom passed down from on high to the masses is to "buy and hold," which really means several things: Set fixed allocations to stocks, bonds, and cash; dollar-cost average into the portfolio with periodic purchases; and, above all, stay the course. I tell investors to do these things all the time, too, because on the whole it's good advice.

It's also a noble lie, an untruth told to investors to keep them from hurting themselves.

Pessimists Get Desperate

Dec. 09, 2013 - First Trust -  Payrolls keep growing. Economic data stays positive. The stock market makes new highs. It’s been consistent for nearly five years. And so has the pessimism. In fact, the pouting pundits of pessimism get more determined each month, trying to prove that things are really bad out there.

We really do tip our hats to those who dive deeply into the details of job reports – even though they don’t really understand the data – to find that one nugget of negative information that will boost hits on their webpages and get them retweeted. 

Cambria Launches Foreign 'Shareholder Yield' ETF
Dec. 09, 2013 - Morningstar, Inc. -  On Tuesday, Dec. 3, Cambria Investment Management rolled out another exchange-traded fund in its series of "shareholder yield" ETFs, devoted to foreign stocks.

The passively managedCambria Foreign Shareholder Yield ETF (FYLD) is the second ETF that the firm issues, although Cambria also is the subadvisor on the actively managed AdvisorShares Cambria Global Tactical ETF(GTAA). Last week's launch of FYLD follows the $170 million, actively managed Cambria Shareholder Yield ETF (SYLD), which debuted in May and holds U.S. stocks offering significant shareholder yield through dividend payments, share repurchases, and price appreciation. The new foreign shareholder yield fund, however, holds stocks from foreign developed-markets countries and is passively managed. As a result, FYLD tracks a Cambria-managed index of 100 companies with the best combined rank of dividend payments and net stock buybacks. The index also screens for value and quality factors and for companies demonstrating low financial leverage.

October Personal Income and Consumption 
Dec. 06, 2013 - First Trust -  Implications: Another Plow Horse report on income and spending in October shows the consumer is doing just fine. This report is one more nail in the coffin for the supposed concerns about the partial government shutdown in October affecting consumer spending for the month. Spending rose 0.3% overall, absolutely unaffected from the drama out of Washington. Although income fell 0.1% in October, this comes after eight consecutive months of gains, and most of the decline was due to farm income which has been very volatile. Wages and salaries continued to grow and are up 3.2% from a year ago. Income growth has accelerated over the past three months, growing at a 3.7% annual rate versus a 3.4% gain the past year. 

Quality Pays Dividends With This ETF
Dec. 06, 2013 - Morningstar, Inc. -  Suitability
The enduring popularity of dividend-strategy funds means exchange-traded funds like  Schwab U.S. Dividend Equity ETF (SCHD) are competing in one of the most crowded areas of the industry. Schwab recently cut this relatively young fund's expense ratio to 0.07%, making it the cheapest dividend ETF available. Its price isn't the only thing that recommends it, however. This dividend-focused ETF targets stable stocks that pay moderate, sustainable income. The resulting portfolio is one of the most quality-oriented among dividend ETFs, with almost all holdings earning either a wide or narrow Morningstar Economic Moat Rating. SCHD's portfolio also has high projected earnings growth relative to competitors and a conservative payout ratio of under 50%. We think this fund is an appropriate core holding for most investors, even in the face of rising interest-rate concerns.

Much Ado About REITs
Dec. 04, 2013 - Morningstar, Inc. -  The lackluster performance of REIT funds this year has been a sharp contrast from their previous market-beating returns since 2009. REIT exchange-traded funds like   Vanguard REIT Index ETF (VNQ) outperformed the S&P 500 in each of the past four years, often by a significant margin. However, year to date through the end of November 2013, REITs have only returned 2.2% compared with  SPDR S&P 500's(SPY) 29% return. It's been a bumpy ride, too, as VNQ's one-year standard deviation was 80% greater than SPY's, which is well above the three-year average difference in volatility. Earlier this year, after the Fed first mentioned that it may scale back its bond-buying program, REITs slid more than 15% between May 20 and June 20.

Losing My Religion
Dec. 03, 2013 - Morningstar, Inc. -  When I first began investing, I caught the passive investing bug bad. The efficient-markets hypothesis, or EMH, was like a divine revelation to me. It was elegant--almost beautiful--and blessed by an impressive-sounding body of authorities. The University of Chicago was my church, Eugene Fama my high priest, and Jack Bogle a saint. He still is, of course.

I’d like to think I wasn’t a blind convert. I had, after all, looked at the data and listened to the experts. As far as I could tell, there was a consensus: Beating the markets is close to impossible. And there was a corollary: Active management is a sin.

The ISM Manufacturing Index Increased to 57.3 in November
Dec. 02, 2013 - First Trust -  Implications: The ISM index, a measure of manufacturing sentiment around the country boomed in November coming in at the highest level since April 2011, easily beating consensus expectations, and rising for the sixth consecutive month. According to the Institute for Supply Management, an overall index level of 57.3 is consistent with real GDP growth of 4.7% annually. We don’t expect real GDP to grow anywhere near that pace in Q4, but we do expect much faster growth in 2014. 

Consumers Doing Fine
Dec. 02, 2013 - First Trust -  According to the National Retail Federation, Thursday to Sunday holiday sales dropped 3% versus last year. No doubt, this will wake up some dozing bears. And, we are sure that when we say it’s not as bad as you think, many will argue we are perma-bulls, naïve, or downright stubborn. You can think what you want, but we don’t believe sales are falling.

First, other reports conflict with the NRF data. ShopperTrak, a Chicago-based firm that monitors sales traffic at 40,000 retail outlets and malls around the country, reported a 2.3% gain in sales for Thanksgiving and Black Friday.

US Economy and Credit Markets Week Ended Nov. 29, 2013
Dec. 02, 2013 - First Trust -  Treasuries ended the holiday-shorted week flat with a slight yield curve twist as the Federal Reserve tried to shift attention away from the bond buying program and toward keeping short-term policy rates low. This is because long-term yields rose much faster short-term yields in November. Monday and Tuesday saw very good demand for Treasury auctions on poor economic data. On Monday, sales of previously sold homes were lower than expected, while Tuesday showed the Confidence Board consumer confidence index fell again to its lowest point since April. 

Cambria Could Introduce New Forex, Income ETF
Dec. 02, 2013 - ETF Trends -  Mebane Faber’s Cambria Funds has filed plans with the Securities and Exchange Commission to possibly introduce the Cambria Global Income and Currency Strategies ETF.

The filing shows the Cambria Global Income and Currency Strategies ETF would have total annual operating expenses of 0.79% and trade on the New York Stock Exchange under the ticker “FXFX.” The new ETF will be actively managed. A filing including an expense ratio and ticker could be a sign the fund is close to being introduced.

ALPS Draws Up Plans for Emerging-Markets 'Dividend Dogs' ETF
Dec. 02, 2013 - Morningstar, Inc. -  On Nov. 22, ALPS filed with U.S. regulators seeking permission to create a passively managed exchange-traded fund that would hold high-dividend-paying stocks from emerging-markets countries.

The proposed ALPS Emerging Sector Dividend Dogs ETFEDOG would be the latest in ALPS' suite of funds that follow the so-called "Dogs of the Dow" theory, which holds that a high dividend yield may indicate that a firm's share price has bottomed out and a rebound is imminent.

10 Great Diversified Europe ETFs
Nov. 28, 2013 - ETF Trends -  

The Eurozone’s sovereign debt crisis is still fresh on investors’ minds , but 2013 has been kind to Europe exchange traded funds.

That applies to single-country and diversified ETFs and the outlook for 2014 is rosy, too. Although risks remain in the Eurozone, Goldman Sachs forecast a 12% rise next year for the Stoxx Europe 600 Index.  [Goldman Forecast Bullish for Europe, Japan ETFs]

New Orders for Durable Goods Declined 2.0% in October

Nov. 27, 2013 - First Trust -  Implications: New orders for durables declined 2.0% in October. However, almost all the decline was in the transportation sector – particularly civilian aircraft – which is extremely volatile month to month. Orders were down 0.1% excluding transportation. The best news in today’s report was that unfilled orders for core capital goods rose 0.3% in October, hitting a new record high. The news on unfilled orders supports our optimism about business investment. In addition, the recovery in home building should generate more demand for big-ticket consumer items, such as appliances. Expect more plow horse growth in the months ahead. In other manufacturing news, the Richmond Fed index, which measures mid-Atlantic factory sentiment, increased to +13 in November from +1 in October. The Chicago PMI, which measures factory sentiment in that region, declined to 63.0 in November from 65.9 in October.

Warren Buffett and Time-Horizon Arbitrage
Nov. 27, 2013 - Morningstar, Inc. -  "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." --Warren Buffett

Buffett must have had those words in mind when he and private-equity firm 3G Capital offered to buy out H.J. Heinz Company for a hefty 20% premium to market value. At the time (not too long ago), consumer staples stocks were widely thought to be expensive. Eyebrows were raised, and some went as far as to say he and 3G overpaid. A few months later, he confounded expectations again by agreeing to buy out  NV Energy (NVE) at a 23% premium, again when the consensus was that utilities were expensive.

Three Ways to Invest in Emerging Markets Now
Nov. 26, 2013 - BlackRock Blog -  Ongoing speculation that the Federal Reserve will soon begin to taper its easy money program, along with other global economic events, drove an increase in emerging market equities outflows this month. Dodd Kittsley explores why contrarian investors may want to give this sector another look.

Emerging market equity ETFs have had outflows of $4.3 billion for the month of November so far. Outflows total $9.4 billion year-to-date. What we’re seeing here is that investors are very concerned about a potential tapering by the Federal Reserve in the near term. As a result, they are reducing their exposure to emerging markets. We saw this earlier in the year, when June outflows swelled to $4.5 billion. This surge followed Ben Bernanke’s suggestion that the Fed would pull back on its bond buying program before year end.

December Taper or Not: 2 Reasons Easy Money Will Likely Continue
Nov. 25, 2013 - BlackRock Blog -  Many market watchers are obsessed with when the Fed will begin tapering. However, those who expect the start of tapering to mean the end of easy money, and possibly of related market gains, are missing an important nuance. Russ explains.

As the Federal Reserve (Fed)’s December policy meeting approaches, many market watchers are obsessed with when the Fed will announce that it’s starting to scale back, or “taper,” its asset purchase program.

December Taper or Not: 2 Reasons Easy Money Will Likely Continue
Nov. 25, 2013 - BlackRock Blog -  Many market watchers are obsessed with when the Fed will begin tapering. However, those who expect the start of tapering to mean the end of easy money, and possibly of related market gains, are missing an important nuance. Russ explains.

As the Federal Reserve (Fed)’s December policy meeting approaches, many market watchers are obsessed with when the Fed will announce that it’s starting to scale back, or “taper,” its asset purchase program.

QE: Not That Big of a Deal
Nov. 25, 2013 - First Trust -  The most frequent question we get lately is “what happens to long-term interest rates when quantitative easing ends?” Many analysts argue that the Federal Reserve is buying and holding a huge share of Treasury debt and once QE ends other buyers will suddenly have to absorb more. This will cause interest rates to soar, bust the housing market, undermine stocks, and possibly cause a recession.

US Economy and Credit Markets Week Ended Nov. 22, 2013

Nov. 25, 2013 - First Trust -  Near-term Treasury yields declined slightly amid mixed economic data and the Federal Reserve’s continued commitment to very low short-term interest rates. Longer-term bond yields continued increasing during the week and the yield curve continues steepening as investors prefer shorter duration bonds in anticipation of an eventual roll-back of Fed asset purchases. Higher interest rates may encourage banks to extend more loans, as they will collect more on higher yielding loans. On Wednesday, there were major reports offering the latest information on the health of the consumer. MBA Mortgage applications disappointed for the third straight week as refinancing activity stretched to a two week low.

Targeting Income and Reduced Volatility, Horizons Launches Financials-Sector Covered-Call ETF
Nov. 25, 2013 - Morningstar, Inc. -  On Nov. 18, Horizons rolled out its second exchange-traded fund--a passively managed, covered-call ETF devoted to the financials sector.

The launch of Horizons S&P Financial Select Sector Covered Call ETF (HFIN) comes some five months after the launch of Horizons' first United States ETF, Horizons S&P 500 Covered Call ETF (HSPX).

Chasing Returns in Emerging Markets
Nov. 22, 2013 - Morningstar, Inc. -  PowerShares DWA Emerging Markets Momentum Portfolio (PIE) is currently the only fund to offer a momentum strategy in emerging markets. Momentum strategies seek to capitalize on the phenomenon that securities that have recently outperformed will continue to do so in the short run, and those that have underperformed will continue to lag. This passively managed fund tends to perform best, relative to the cap-weighted MSCI Emerging Markets Index benchmark, when there is a large difference between the best- and worst-performing emerging-markets countries. This fund also does not have some of the drawbacks of a cap-weighted index fund--namely, a consistent, significant exposure to government-controlled entities and global cyclical firms.

Frontier Markets Could See EM-Style Volatility
Nov. 21, 2013 - ETF Trends -  

Frontier markets exchange traded funds, led by the iShares MSCI Frontier 100 ETF (NYSEArca: FM), have witnessed a noticeable uptick in popularity this year. From a return perspective, the adulation is well-deserve.

Year-to-date, FM has surged 18.5% while the iShares MSCI Emerging Markets Index (NYSEArca: EEM) is down 4.6%. ThePowerShares MENA Frontier Countries Portfolio (NasdaqGS: PMNA), a frontier fund with a heavy emphasis on Middle East and North Africa nations, has 8.5%.

Is 'Frontier' the New 'Emerging'?
Nov. 20, 2013 - Morningstar, Inc. -  The performance of emerging-markets stocks has been very disappointing in 2013, due, in part, to taper talk in the United States and slowing growth among many of the high flyers of the last decade, including China and Brazil. Frontier markets, on the other hand, have had a standout year, with the MSCI Frontier Markets Index returning 21.1% in the first 10 months of the year, trouncing the MSCI Emerging Markets Index's return of 0.3%. Aren't frontier markets just less developed emerging markets? Why has there been such a discrepancy in performance?

Fool's Gold
Nov. 19, 2013 - Morningstar, Inc. -  As they are often used, back-tests are merely a legal way of fabricating a statistically bogus history of outperformance and implicitly taking credit for it. I don't think I'm being too cynical. Most back-tested strategies I've seen are problematic. The worst claims are from newsletters and trading-software providers, who can say almost anything without legal repercussions under the aegis of the First Amendment. I've seen claims of "low-risk" 30%-plus monthly returns (or 2,230% annualized), though most typically keep their back-tests in the range of 20%–50% annualized in a sad attempt to maintain a semblance of believability. It appears index providers and exchange-traded fund sponsors have also produced some unbelievable back-tests.

World Gold Council Sees Changing Influences on Gold Prices
Nov. 18, 2013 - ETF Trends -  

Gold exchange traded funds lost their luster this year, but gold is a global story that weighs shifting supply and demand over short-term volatility and long-term trends.

ETF Trends’ Tom Lydon sat down with Juan Carlos Artigas, Head of Investment Research for the World Gold Council, to discuss how gold is acting and what investors can expect from the bullion market moving forward.

WisdomTree, State Street Draft Floating-Rate Treasury ETFs
Nov. 18, 2013 - Morningstar, Inc. -  Recently, two exchange-traded fund providers submitted paperwork with United States regulators seeking permission to create passively managed ETFs that would track the performance of the U.S. Treasury's floating-rate public obligations.

In January 2014, the U.S. Treasury Department is set to roll out floating-rate securities, which will be its first new product since introducing Treasury Inflation-Protected Securities in 1997. The issuance is aimed at expanding the department's investor base, financing the government at the lowest possible cost over time, meeting continued investor demand for government debt, and dealing with a significant amount of government bonds that are maturing.

10 Best Global Equity Markets By Single-Country ETFs
Nov. 15, 2013 - ETF Trends -  

For most of the world’s major equity bourses, 2013 has been a good year. However, few markets can hold a candle to Venezuela.

As of Tuesday, Venezuelan stocks were up an astounding 466% in local currency (bolivar) terms. Even when adjusting that number into dollar terms, it was still 287%. Alas, there is no Venezuela ETF and that might be a good thing given the country’s penchant for currency devaluations and hyper-inflation.

A Buffett Pop for Energy ETFs?
Nov. 15, 2013 - ETF Trends -  

Warren Buffett’s Berkshire Hathaway (NYSE: BRK-A) acquired 40 million shares of Dow component Exxon Mobil (NYSE: XOM), the largest U.S. company, during the third quarter, according to filing with the Securities and Exchange Commission.

Based on Thursday’s closing prices, Berkshire’s Exxon stake was worth $3.74 billion. Berkshire hasn’t held any ExxonMobil since the end of 2011, when it sold a relatively small stake of 421,800 shares,according to CNBC.

A Low-Cost Way to Complete a Large-Cap Portfolio

Nov. 15, 2013 - Morningstar, Inc. -   Vanguard Extended Market Index ETF (VXF) is an ideal supplement to a large-cap portfolio as it is designed to be paired with an S&P 500 Index fund. This fund tracks the S&P Completion Index, which holds virtually every liquid U.S. stock outside of those in the S&P 500 Index.

Filling the gaps in the S&P 500 means that the fund holds a handful of large-cap names that are not in the S&P 500, such as Facebook (FB) and  Las Vegas Sands (LVS). These include companies that don't meet the S&P 500 Index's 50% public float requirement, companies that don't meet the index's domicile requirement, and recent initial public offerings that don't meet its six to 12 month seasoning requirement. The charts below graph the weightings of the largest 3,500 stocks in the S&P 500 and the S&P Completion Index ranked from largest to smallest. A few things stand out when looking at these charts. The first is the skew of the S&P 500 toward mega-cap stocks.

Is Europe Making a Comeback?
Nov. 14, 2013 - BlackRock Blog -  

A move by the European Central Bank to cut interest rates to a record low of 0.25% has specific implications for improving investor confidence. Dodd Kittsley explains.

A battered Eurozone seems to be on a slow road to recovery. Spain finally emerged from its two-year recession in the third quarter, and this summer marked the first time in three years that the Eurozone didn’t suffer from a financial crisis. Last week, the European Central Bank lowered interest rates to 0.25%. These signs of life highlight improving economic signals and investor confidence in the region – a sentiment echoed by our own Russ K – and are sparking a surge in select European ETF flows.


Making Sense of Acquired Fund Fees in BDC ETFs
Nov. 13, 2013 - ETF Trends -  

Exchange traded funds that cover small-capitalization equities may include exposure to business development companies. However, investors should not be intimidated by the higher “prospectus expense ratio.”

According to Securities and Exchange Commission regulatory rules, funds are required to include in their prospectus expense ratio the pro-rata – a fraction every shareholder is assigned equal to the proportion for each share he or she owns – share of any expenses from investments in other funds, writes Michael Rawson forMorningstar.

Are Business Development Companies Obscuring the Cost of Your Fund?
Nov. 13, 2013 - Morningstar, Inc. -  In comparing the costs of exchange-traded funds and index funds tracking similar segments of the market, every basis point matters. Making apples-to-apples comparisons of the expense ratios of small-cap ETFs and index funds can be difficult. That's because those funds tracking indexes with even a minuscule weighting in business development companies, or BDCs, are forced to include "acquired fund fees" in their prospectus net expense ratio.

Taper Talk
Nov. 11, 2013 - First Trust -  Tapering…please bring it on. We wanted it yesterday, or last month, or even years ago. We never thought QE helped the economy and certainly don’t think keeping it around is a good idea. It’s created uncertainty at an unprecedented level. 

But, we aren’t holding our breath waiting for the Fed to change course. Despite better data on the economy, the Fed will take its sweet time, possibly waiting until March before slowing the pace of “quantitative easing,” the monthly purchase of $85 billion in long-term securities. With Vice-Chair Janet Yellen on tap for the top spot at the Fed and more potential budget fights looming in January/February, it’s hard to imagine the Fed rushing to do something that might spook the markets.  

Franklin Templeton Launches First ETF, Targeting Short-Duration U.S. Government Debt
Nov. 11, 2013 - Morningstar, Inc. -  On Tuesday, Nov. 5, Franklin Templeton finally entered the exchange-traded fund space, rolling out an actively managed ETF holding short-duration bonds issued by the U.S. government and related agencies.

Franklin Short Duration U.S. Government ETF 
(FTSD) is the latest actively managed fund to target the short-duration bond market. It's been a popular theme for active fixed-income managers, as stricter money market fund rules have artificially limited yields in short, high-quality debt. Fund firms have seen that portfolio managers can create value by investing in that in-between land that is just beyond money markets' credit-quality and duration limits but too short for most short-duration bond funds.

The Case for Managed Futures ETFs
Nov. 08, 2013 - First Trust -  
After enduring one of themost tumultuous periods ofmodern US stock market history, investors have gained a renewed interest in strategies aimed atreducing the volatility of their investment portfolios. Traditionally, this hasmeant increased exposure to bonds along with decreased exposure to stocks. The problem with thisstrategy today, however, istwofold: first, inmany cases bond yields are too lowtomeet investors’ return objectives; second, after an extended period of low interest rates, many investors have concluded that the risk that rates will rise in the future (sending bond prices lower) is much greater than the likelihood that rates will continue to decline (sending bond prices higher). As a result, an increasing number of investors are considering “alternative” investment strategies in order to potentially decrease risk and enhance risk-adjusted returns in their investment portfolios.

Our Favorite Tech ETF: A Low-Cost Way to Tap Into Mobile-Computing Growth
Nov. 08, 2013 - Morningstar, Inc. -  Morningstar's Take
As the U.S. stock market has continued its climb in 2013, investors in large- and mid-cap U.S. technology stocks might wonder whether there's much more runway left. Certain technology subsectors, such as Internet and semiconductors, have done very well, while some tech players, such as Apple (AAPL) and IBM (IBM), have underperformed both the sector and the broader market.

The bull case for the U.S. technology sector revolves around companies that have lagged the broader market but are expected to benefit nicely from continued strong growth in mobile computing, such as Apple, Qualcomm (QCOM), and Broadcom (BRCM). These firms all possess structural competitive advantages, economic moats, reasonable valuations, and exposure to mobile computing. Further gains in the tech sector likely will come from companies benefiting from mobile computing, such as these firms.

IPO and Social-Media ETFs Set to Welcome Twitter
Nov. 06, 2013 - Morningstar, Inc. -  It's been a terrific year so far for the United States stock market, but an even better year for U.S. initial public offerings, with IPO volume through the end of September already topping the total IPO volume for all of 2012. As Morningstar equity analyst Jim Krapfel recently noted, there have been 179 offerings versus 131 in 2012, and that also represented an increase from 2011. In fact, offerings are on pace with what took place from 2004 until 2007.

More #PlowHorse in Q3 

Nov. 04, 2013 - First Trust -  Despite the shutdown, the sequester, talk of tapering, and meteors in the night sky, the US economy just keeps plowing along. Reported later this week, we expect Q3 real GDP grew right on trend at a 1.9% rate – another, #PlowHorse report. 

It’s somewhat slower than we expected at the start of the year, but we still expect an acceleration in 2014-15 given loose monetary policy, a downward trend in government spending (relative to GDP), explosive new technology, record high corporate profits, and a forceful housing recovery. 

Here’s our “add-em-up” calculation of real GDP growth in Q3, component by component.

US Economy and Credit Markets Week Ended Nov. 1, 2013

Nov. 04, 2013 - First Trust -  Treasury debt fell this week as manufacturing and consumer spending grew faster than expected. Spending and inflation reports are carefully reviewed for any potential impact they may possibly have on the Federal Reserve’s decision to taper or not and strong spending and production growth are seen as increasing the probability of asset purchase tapering by the Fed. On Monday, MoM Industrial Production increased at .6% vs an expected .4%. Tuesday revealed wholesale prices fell in October with an unexpected decrease in the producer price index mostly due to decreased food costs.

US Stocks Week Ended Nov. 1, 2013

Nov. 04, 2013 - First Trust -  Last week, stocks were mixed with large cap stocks outperforming small caps. The Dow Jones rose for the fourth consecutive week. This performance comes amid signs the Chinese economy has been strengthening. China’s official Purchasing Manager’s Index rose more than expected last month and is now at an 18 month high. The Wall Street Journal reported that Barclays and Royal Bank of Scotland have suspended traders in possible connection to rigging interbank lending rates. 

ALPS Launches Energy Infrastructure ETF
Nov. 04, 2013 - Morningstar, Inc. -  On Friday, Nov. 1, ALPS debuted a passively managed exchange-traded fund that holds companies that operate in the North American energy infrastructure sector.

ALPS Alerian Energy Infrastructure ETF (ENFR) tracks an Alerian index of 30 companies headquartered or incorporated in the United States and Canada that operate in the midstream energy space. Alerian structures the index so that certain categories of issuers comprise specific weightings in the index. As a result, midstream energy infrastructure master limited partnerships make up 25% of the index, U.S. MLP affiliates comprise another 30%, Canadian MLP affiliates make up another 10% of the index, U.S. energy infrastructure and power companies comprise 15% of the index, and Canadian energy infrastructure firms make up the remaining 20% of the index. Then, Alerian equally weights companies within their categories. The index contains 30 securities.

Once Again on Top
Nov. 01, 2013 - Morningstar, Inc. -  On Sept. 3, 2013, a deposed monarch was crowned again. Few took notice, as his domain is the still tiny realm of actively managed ETFs. On that day,  PIMCO Enhanced Short Maturity ETF (MINT) unseated its younger sibling,  PIMCO Total Return ETF (BOND), to retake its throne as world's largest actively managed ETF.

Though a minor drama, it's part of a bigger movement by investors to reduce their bond-duration risk. Ben Bernanke kicked off the process when he mentioned during a question-and-answer session that the Fed might "taper" its bond purchases later in the year (which didn't happen). The news that Uncle Ben's helicopter drops of money might slow down earlier than expected sent investors stampeding out of bonds. Faced with capital losses on rising rates and zero yields in cash, some have compromised by piling into ultra-short-duration bond funds, until recently a sleepy backwater of the fund world.

Beyond U.S. Borders: 3 International Investment Trends Happening Now
Oct. 30, 2013 - BlackRock Blog -  Despite the potential benefits of international investing, the typical U.S. investor’s portfolio is disproportionately weighted toward domestic securities. Dodd Kittsley digs into ETF flows to highlight three investment ideas outside the U.S. that are trending now.

Does your portfolio suffer from home country bias?  If so, you’re not alone.  Despite the fact that almost 80% of global economic output and about two-thirds of the world’s equity market capitalization come from countries outside of the United States, the typical U.S. investment portfolio is disproportionately weighted toward domestic securities.

September CPI  
Oct. 30, 2013 - First Trust -  Implications: The Federal Reserve is comfortable with today’s inflation report. Consumer prices rose a consensus expected 0.2% overall and only 0.1% excluding food and energy. Energy and rent led the gains. Compared to a year ago, overall consumer prices are up 1.2% while core prices are up 1.7%. Neither of these figures sets off alarm bells. Instead, they suggest the Fed’s preferred measure of inflation, the PCE deflator (which usually runs a ¼ point below the overall CPI) will remain below the Fed’s target of 2%. We don’t expect this to last. Inflation bottomed in April when it was up only 1.1% from the prior year, and we expect it will be noticeably higher a year from now. Recent figures underscore a slight acceleration in inflation, with the overall CPI up at a 1.7% annual rate in the past three months. However, for the Fed, the key measure of inflation is its own forecast of future inflation. So, even if inflation moves higher, as long as the Fed projects the rise to be temporary it will not react to that inflation alone by raising short-term interest rates.

Active ETFs Wait for Their Heyday
Oct. 30, 2013 - Morningstar, Inc. -  As a fan of the Chicago Cubs, I am all too familiar with the spring mantra: "This is our year." So, as someone who is also charged with analyzing the exchange-traded funds industry, I wince when I hear talk of the "year of the active ETF." Each of at least the past three years has been heralded as such by the financial media and industry watchers (including Morningstar). But there is no doubt that the active-ETF space has been long smoke and short fire with a few notable exceptions. I've examined the current crop of actively managed ETFs and highlight the characteristics that are hallmarks of a fund worthy of your investment.

September PPI
Oct. 29, 2013 - First Trust -  Implications: We’ve been waiting a while for an acceleration in inflation and now it looks like we’re going to have to wait at least a bit longer. Overall producer prices declined a slight 0.1% in September, led by a 1% drop in food costs more than offsetting a 0.5% rise in energy and slight increases elsewhere. Producer prices are up only 0.3% in the past year, but up at a 1.6% annual rate in the past six months, which we think is closer to the underlying trend. “Core” producer prices, which exclude food and energy, are up 1.2% from a year ago. As a result, some analysts still say the Federal Reserve has room to continue quantitative easing at a pace of $85 billion per month. We think this would be a mistake but the Fed is likely to continue QE full throttle anyhow until about March, when we expect it to finally start tapering its purchases.

ETF Securities: Gold Shines in U.S. Shutdown Aftermath
Oct. 29, 2013 - ETF Trends -  Gold and silver prices rally on the weak US data and dollar. Gold and silver prices continued to recover last week on the back of the delayed release of the September US unemployment report and on-going USD weakness.

ETF Spotlight: Market Vectors Israel
Oct. 28, 2013 - ETF Trends -  ETF Spotlight on the Market Vectors Israel ETF (NYSEArca: ISRA), part of an ongoing series.

Fidelity Launches 10 U.S. Equity Sector ETFs
Oct. 28, 2013 - Morningstar, Inc. -  On Oct. 24, Fidelity rolled out its long-awaited batch of 10 passively managed, U.S. equity sector exchange-traded funds.

Tracking MSCI indexes and subadvised by BlackRock, the new ETFs are managed by Fidelity's new SelectCo unit. Most notably, the new ETFs launched with the lowest expense ratios of any equity sector ETFs available--just 0.12%. That undercuts both Vanguard, which offers many of its equity sector funds for 0.14%, and State Street, whose SPDR sector funds cost 0.18%.

Why Stocks Advance Despite Mediocre Economic Data
Oct. 28, 2013 - BlackRock Blog -  The basic takeaway from last week’s economic data seems to be that we’re still in a world of 2% US economic growth with little evidence of a pickup. Yet stock markets have advanced and can move higher over the next six to 12 months? Russ explains why.

With the shutdown finally a thing of the past, the bottleneck on economic data was lifted last week and investors started to receive some important clues on where the U.S. economy is heading as the year ends.

An Attractive European ETF for Intrepid Investors
Oct. 25, 2013 - Morningstar, Inc. -  Europe is fraught with risk. Unemployment is close to 11%, fiscal imbalances in Spain and Italy threaten to drag down the rest of the eurozone, and austerity measures could keep demand soft for years. Yet, recent Markit Purchasing Manager Index data suggests that the region is starting to stabilize. Macroeconomic news is typically quickly incorporated into stock prices. However,  Vanguard FTSE Europe ETF (VGK) is one of the best options for investors who believe that this nascent recovery will gain traction. While not for the faint of heart, its holdings are trading at reasonable valuations and may grow faster than their U.S. counterparts as conditions in Europe improve.

How Real Estate Impacts the US Economy
Oct. 25, 2013 - BlackRock Blog -  Despite appreciating more than 10% over the past year, home prices still look reasonable and housing affordable. However, while there is little risk of another housing bubble, a significant pickup in interest rates could dampen housing activity and by extension, the recovery.

Be careful what you wish for. With home prices rebounding strongly, many investors are now starting to wonder whether we’re back in another housing bubble. Fortunately, I think the answer is no, although housing still poses a risk to the economy and markets, albeit for different reasons.

JPMorgan Eyes ‘Smart-Beta’ Developed Global ETF
Oct. 22, 2013 - ETF Trends -  

Financials giant J.P. Morgan Asset Management plans to expand its exchange traded fund line up, filing with the Securities and Exchange Committee to launch a “smart-beta” index strategy.

According to the SEC filing, the JPMorgan Global Equity ETF will try to track an index comprised of equity securities from developed global markets based on a “multi-factor” investment selection process.

IShares Launches 2 Short-Duration Corporate-Bond ETFs
Oct. 21, 2013 - Morningstar, Inc. -  With an eye toward what widely are expected to be higher interest rates in the future, iShares on Thursday debuted two passively managed exchange-traded funds that hold corporate bonds with between zero and five years left to maturity.

IShares 0-5 Year Investment Grade Corporate Bond ETF (SLQD) and iShares 0-5 Year High Yield Corporate Bond ETF (SHYG) both track Market iBoxx indexes, but they are different in that one holds investment-grade corporates while the other holds high-yield corporates. Both are shorter-duration versions of iShares' popular pair of longer-duration corporate-bond funds,  iShares iBoxx $ Investment Grade Corporate Bond ETF(LQD) and  iShares iBoxx $ High Yield Corporate Bond ETF(HYG), which target the entire duration spectrum for their respective corners of corporate debt.

The Academic Commodity ETF
Oct. 18, 2013 - Morningstar, Inc. -  Strategies that eschew traditional market-cap weighting are the current trend in exchange-traded funds. Funds that use fundamental indexing or other rules-based weighting methodologies are popping up in almost every sector. In the commodities space, there's  United States Commodity Index (USCI), which launched in 2010 and uses market-price signals to construct its index. Most commodity indexes weight by consumption or production, but USCI's strategy is based on research by academics Geert Rouwenhorst and Gary Gorton. In a 2007 paper, Rouwenhorst and Gorton found that the futures contracts of commodities with low inventory consistently outperformed those of commodities with high inventory.

Assessing Dividend ETFs in a Rising-Rate Environment
Oct. 16, 2013 - Morningstar, Inc. -  Despite the Federal Reserve's pullback on its tapering plans, investors remain spooked by the prospect of rising rates this Halloween season. Fixed-income investors aren't the only ones with cause to worry; dividend exchange-traded funds, a popular strategy during the recent years of record low rates, are also sensitive to rate increases. Dividend ETFs are not made equal, however. Their portfolios can vary widely from strategy to strategy depending on the methodologies of the indexes they track. Two of the largest dividend-strategy ETFs,  Vanguard Dividend Appreciation ETF (VIG) and  iShares Select Dividend (DVY), have such different methodologies that only 17% of their portfolios overlap.

Washington Woes Drive ETF Flows
Oct. 16, 2013 - BlackRock Blog -  With recent headlines dominated by news of the Fed and the debt ceiling debacle, it’s not surprising that policy decisions continue to drive investment behavior this year. Dodd Kittsley examines the “new normal” of a policy-driven market, and explains how investors can cope.

With the constant barrage of news reports discussing the Fed’s actions, thegovernment shutdown and the debt ceiling debacle, it’s little wonder what’s preoccupying the minds of investors these days.  A quick look at ETF flows over the past few months paints a picture of an increasingly uncertain investor population reacting – almost real-time – to each new development out of Washington.

Two More Reasons to Like Equities: Growth & Inflation
Oct. 15, 2013 - BlackRock Blog -  I’ve long been advocating that investors should overweight equities relative to bonds, and while equity valuations are no longer at their cheapest and there are risks inherent in stocks, I still hold this view. In fact, all the factors I look at, including the economic backdrop, inflation trends, monetary policy and corporate fundamentals, suggest that investors should still consider overweighting equities.

Muni ETFs With Reduced Rate Risk
Oct. 15, 2013 - ETF Securities -  Amid elevated interest rate risk and escalating concerns about states’ pension and retiree health obligations, 2013 has been a rough year for municipal bond investors. Losing streaks for some muni bond ETFs have stretched into months and investors have not been shy about pulling cash from these funds.

Matt’s Master Class: The ABCs of Bond ETF Distributions
Oct. 14, 2013 - BlackRock Blog -  

Welcome back to our master class on bond ETFs, where we go beyond the basics to help investors understand the mechanics and benefits of these innovative funds.  So far in this series, we’ve stayed pretty high level – covering the basic elements of bond ETFs, how they compare to stock ETFs and how they compare to individual bonds.  Today we’re going to dive in a bit deeper as we discuss how bond ETF distributions work.

Distributions are an important aspect of a bond ETF because they represent interest payments from the bonds in the fund.  For some investors the interest, or coupon, is the main reason they’re investing in bonds to begin with.  But receiving coupon payments from an individual bond differs from the experience of receiving distributions from a bond ETF, and that can sometimes cause confusion.

3 Investing Implications of Washington Drama
Oct. 14, 2013 - BlackRock Blog -  

While a potential debt ceiling deal failed to gain much traction over the weekend, I’m still reasonably optimistic that some sort of patchwork and limited deal to, at least temporarily, extend the debt ceiling will be reached around this Thursday’s deadline.

But while I believe a US default will be avoided, the continuing political drama does have implications for investors. As I write in my latest weekly commentary, there are three:

1.    Economic growth will be slower than it otherwise would be.Were it not for all of the political turmoil and uncertainty, I would expect fourth-quarter US economic growth somewhere between 2.5% and 3%. Given the drama in Washington, 2% gross domestic product (GDP) growth is a more likely number.

A New Blue-Chip-Themed 'Dividend Aristocrats' ETF From ProShares

Oct. 14, 2013 - Morningstar, Inc. -  On Thursday, Oct. 10, ProShares rolled out a passively managed ETF that holds the 54 companies in the S&P 500 Index that have raised their dividend payments each year for the past quarter-century.

The equally weightedProShares S&P 500 Aristocrats ETF (NOBL) tracks the S&P 500 Dividend Aristocrats Index, a benchmark aimed at offering investors some measure of income along with quality, as dividend increases are considered a measure of a company’s financial strength. The index places a 30% cap on the exposure of any one sector to ensure diversification.

ETFs Enjoy Strong Flows in the Third Quarter
Oct. 09, 2013 - Morningstar, Inc. -  Exchange-traded funds garnered $53 billion in net inflows during the third quarter of 2013. This is despite the fact that it was an extremely volatile three-month stretch that included the largest month of ETF outflows on record in August. The flows were driven by investor interest in equity funds, as U.S. equity funds brought in $22 billion while international-stock ETFs brought in $21 billion. A rebound of flows in September allowed the taxable-bond category to eke out a net increase for the quarter, but selling off municipal-bond ETFs continued unabated. Selling within the precious-metals category pressured the commodities category group, although the pace of selling slowed from the second quarter. For the year to date, ETF flows are slightly behind last year’s record-breaking pace. While equity fund inflows are ahead of last year's, bond funds are off pace and commodity exchange-traded products have experienced net redemptions.

Low-Hanging Fruit
Oct. 09, 2013 - Morningstar, Inc. -  Investing is a lot like harvesting fruit from a tree. The typical investor, overconfident, ignores the smallish, plain but certain fruit dangling within his grasp. He’d rather clamber up the tree in search of bigger, sweeter fruit. So up he climbs, joining the other would-be fruit-pickers. More often than not, they all end up on a narrow branch that can’t support their weight. And they fall.

Simple Chart Show Cocoa ETN’s Stunning Performance
Oct. 09, 2013 - ETF Trends -  In an otherwise glum year for commodities, particularly soft commodities, at least one exchange traded product has stood tall. At the start of trading Tuesday, the iPath DJ-UBS Cocoa TR Sub-Index ETN (NYSEArca: NIB) was sporting a year-to-date gain of 22.5%

Silver ETF Slams GLD Over Past Two Months
Oct. 07, 2013 - ETF Trends -  

Silver prices, along with related exchange traded funds, are outshining gold as uncertainty fuels safe-haven investments, but industrial activity could help silver keep up its momentum.

The iShares Silver Trust (NYSEArca:SLV) rose 2.9% Friday while the SPDR Gold Shares (NYSEArca: GLD) gained 1.1%. Since the early August low, SLV has increased 14.4%, whereas GLD is only up 3.2%.

Deutsche Bank Launches 3 Overseas Hedged Equity ETFs
Oct. 07, 2013 - Morningstar, Inc. -  On Tuesday, Oct. 1, Deutsche Bank rolled out three more currency-hedged equity exchange-traded funds devoted to foreign markets.

Borrowing a page from the playbook of WisdomTree, whose  WisdomTree Japan Hedged Equity (DXJ) this year has attracted tremendous investor interest, Deutsche Bank now has debuted hedged equity ETFs devoted to the United Kingdom, Europe, and areas of Asia outside of Japan. In some respects, the trio of new ETFs suggests that Deutsche Bank is following something of a copycat strategy relative to WisdomTree, given that the firm recently launched WisdomTree United Kingdom Hedged Equity (DXPS) and since 2010 has issued WisdomTree Europe Hedged Equity (HEDJ).

An ETF for China's Next Act
Oct. 04, 2013 - Morningstar, Inc. -  It's been hard for investors to make money in China over the past few years. After a decade of 9%-10% annual gross domestic product growth, driven by exports and fixed-asset expenditures, China is facing a new normal: weaker external demand for exports and slowing infrastructure spending. Another significant concern over the past few years has been uncertainty regarding the stability of China's financial system, which includes the banking and property industries. All of these issues have weighed heavily on the performance of Chinese equities.

Morningstar Announces 2013 Awards for Best U.S. ETFs and ETF Providers
Oct. 03, 2013 - Morningstar, Inc. -  Morningstar is pleased to announce the winners of its second-annual Morningstar Awards for ETFs. These awards recognize fund families for providing low-cost, index-based investments and are based on the number of winners in each category group. This year, iShares won three ETF Provider awards while Vanguard won one. At the category level, iShares had 31 category winners, Vanguard had 23, and SPDR had 10. PowerShares, Schwab, WisdomTree, First Trust, and Guggenheim also had category winners.

Indonesia ETFs: Value Plays?
Oct. 02, 2013 - ETF Trends -  Few emerging markets ETFs have under siege as much as the Market Vectors Indonesia ETF (NYSEArca: IDX) and theiShares MSCI Indonesia ETF (NYSEArca:EIDO). Declines for the two have been ongoing since the second quarter when “tapering” became a financial markets buzzword. Indonesia, Southeast Asia’s largest economy and the fourth-largest country in the world by population, was exposed as vulnerable to the loss of easy money from U.S. quantitative easing.

Shale Revolution Lifts Unheralded ETF to All-Time Highs
Oct. 02, 2013 - ETF Trends -  Nearly 60 ETFs hit new all-time highs on Tuesday. Some are well-known, heavily traded, multi-billion dollar funds. Others, well, not so much, but that obviously is not a bad thing. Just look at the Market Vectors Unconventional Oil & Gas ETF (NYSEArca: FRAK).

Get Direct Exposure to Emerging-Markets Consumers With This ETF
Oct. 02, 2013 - Morningstar, Inc. -  There is a lot to like about  EGShares Emerging Markets Consumer (ECON). This fund invests in 30 large-cap consumer services and consumer goods firms domiciled in the emerging markets (which in this case excludes Taiwan and South Korea). Many of these companies, such as Brazilian brewer and soft drink company  AmBev(ABV), Mexican convenience store operator and coke bottler  FEMSA (FMX) and Russian grocery chain Magnit are well-run, market-dominating companies with industry-leading profit margins. 

Energy Distribution Tops Energy Production Over Past 5 Years
Oct. 01, 2013 - First Trust -  

View from the Observation Deck

  1. As high as crude oil prices are today, they were nearly as high five years ago. The price of a barrel of oil stood at $102.33 on 9/30/13, up 1.68% from $100.64 on 9/30/08, according to Bloomberg.
  2. The price of natural gas, however, was cut in half over the past five years. It stood at $3.56 per million British thermal units on 9/30/13, down 52.15% from $7.44 on 9/30/08, according to Bloomberg.
  3. Even with the absence of any significant supply constraints for oil or gas in the past five years, investors favored energy master limited partnerships (MLPs/pipelines and storage) over energy production.

ETF Asset Managers Offer Up Their Own Unique Recipes
Oct. 01, 2013 - ETF Trends -  

Exchange traded fund managed portfolios provide ETF investors with an additional layer of discipline, strategy, and personality that the ETF industry has lacked.

Since 1993, many institutions, advisors and average investors have come to enjoy ETFs’ liquidity, low fees, tax efficiency and ability to access a broad range of asset classes.

SeptemberISM Manufacturing Index
Oct. 01, 2013 - First Trust -  Implications: While Washington offers us more drama, the private sector keeps moving forward. Despite supposed fears about a government shutdown, a very strong report today for the ISM index, a measure of manufacturing sentiment around the country. The ISM came in at the highest level since April 2011, easily beating consensus expectations. According to the Institute for Supply Management, an overall index level of 56.2 is consistent with real GDP growth of 4.4% annually.

Shutdown: A Good Thing?
Sep. 30, 2013 - First Trust -  It looks like House and Senate won’t come to a budget agreement by midnight and, as a result, the federal government is going to partially shut down starting Tuesday morning.

Run for the hills? Armageddon: right? Nope!

As we said a few weeks ago, a shutdown is not as scary as it seems. Money still flows into the Treasury Department and money still flows out, for Social Security or to make interest payments on the debt, for example.

This ETF Offers Compensation for Emerging Markets Risk
Sep. 27, 2013 - ETF Trends -  In what has been, until recently, a rough year for emerging markets equities and ETFs, investors have been reminded that getting compensated for taking on the elevated risk associated with developing economies is a good idea. ETF issuers have obliged with recent introductions that marry the emerging markets and income themes.

Not Social Media, But Old Media ETF Keeps Chugging
Sep. 27, 2013 - ETF Trends -  Thanks to Facebook (NasdaqGM: FB) and a swath of Chinese Internet names, social media stocks and the Global X Social Media Index ETF (NasdaqGS: SOCL) have been star performers this year. That does not mean investors should gloss over so-called “old media” stocks.

WisdomTree Launches Emerging-Markets Consumer Growth ETF
Sep. 27, 2013 - Morningstar, Inc. -  On Friday, Sept. 27, WisdomTree rolled out the latest passively managed exchange-traded fund devoted to offering exposure to the emerging-markets consumer.

ETF sponsors continue to launch funds that hold companies that would benefit as incomes rise in emerging-markets countries. As a result, we have seen a steady stream of new ETFs that either hold small-cap companies from emerging markets (which by definition focus more on their respective domestic markets) or that hold consumer-oriented companies from those regions.

A Better MLP Mousetrap?
Sep. 27, 2013 - Morningstar, Inc. -  Master limited partnerships, especially the kind that owns pipelines and other oil- and gas-related infrastructure, have high yields and tax-deferred distributions. These partnerships are also fairly stable entities, as many of them operate as regional monopolies. Unfortunately, there's no perfect way to buy MLPs. Owning individual MLPs requires investors to file cumbersome K-1s, and placing MLPs in tax-advantaged accounts can cause even further tax headaches. One way to avoid K-1s is to invest in an MLP fund. MLP funds handle K-1s for investors and send a standard 1099 during tax season, but the convenience comes at the price of an additional layer of taxation. Ideally, an exchange-traded fund would be able to invest exclusively in MLPs and remain a pass-through vehicle. 

The Quintessential U.S. Equity ETF
Sep. 25, 2013 - Morningstar, Inc. -  Vanguard Total Stock Market (VTI) is our favorite equity exchange-traded fund for passive exposure to the U.S. stock market, as it provides the broadest possible exposure for the incredibly low cost of 0.05%, or $5 for every $10,000 invested. While  SPDR S&P 500 (SPY) may attract more trading volume, it is not the best choice for broad exposure to the U.S. market. Because large-cap stocks dominate the S&P 500 Index, SPY does not include most mid-caps or any small-cap and micro-cap stocks. In contrast, VTI invests in most liquid U.S. stocks, sweeping in more than 3,500 holdings across the market-cap spectrum. Over the long run, small-cap stocks tend to outperform their larger counterparts. This may partially explain why VTI has generated a slightly higher annualized return during the past 10 years (8.04%) than SPY (7.23%).  

Is 60/40 the Right Portfolio Mix for You?
Sep. 25, 2013 - BlackRock Blog -  The so-called 60/40 portfolio is widely used as a benchmark for asset allocation when it comes to portfolio construction. But does this strategy always hold up? Daniel Morillo decided to sift through the numbers to see.

Since my last post on the merits of using equities to balance the risk of rising rates, I’ve been asked well, what is the right mix of equities and fixed income? Almost everyone’s top-of-mind answer is, of course, 60/40. It’s a portfolio that holds 60% equities and 40% bonds, and it’s widely used as a benchmark for numerous multi-asset or “balanced” allocation products. Financial professionals tend to use it as a reference point during portfolio allocation discussions with clients, and it’s widely quoted in the media.

ETF Mythbusting: Diving Beneath the Surface of ETF Liquidity
Sep. 24, 2013 - BlackRock Blog -  Analyzing ETF flows is a great way to help investors identify emerging trends, but it only scratches the surface in terms of ETF trading volume that’s happening in the market each day. Dodd Kittsley takes a break from talking flows to dive into the benefits of secondary market liquidity for ETFs

Loose and Looser

Sep. 23, 2013 - First Trust -  Larry Summers took his name out of the hat and won’t be considered for the top spot at the Federal Reserve. And while nothing is a slam dunk, it looks very much like current Vice Chair Janet Yellen is going to get the call from President Obama to step up and replace Bernanke.

US Economy and Credit Markets Week Ended September 20, 2013
Sep. 23, 2013 - First Trust -  Treasuries prices rallied as the Federal Reserve decided against tapering its 85 billion monthly bond buying program. Yields fell sharply as they move inversely to prices. The continued weakness in treasury yields is seen as a boon for REIT, Utility and other high yielding sectors. Friday, however, yields on the 10-year fell slightly as concern over the federal budget debate began weighing on gains from the Federal Reserve’s tapering decision.

Calamos Proposes Actively Managed, 'Select Growth' ETF
Sep. 23, 2013 - Morningstar, Inc. -  In June, Calamos Investments filed with U.S. regulators seeking approval to create actively managed exchange-traded funds and indicated that its first actively managed ETF would be Calamos Focus Growth ETF.

Now, Calamos has altered its plans with an updated filingthat is proposing that its first actively managed fund would beCalamos Select Growth ETF.

A Decade of Low Volatility with High Dividends
Sep. 23, 2013 - First Trust -  
Over the past few years, both “low volatility” and “dividend” strategies have resonated with ETF investors, many of whom were seeking more conservative approaches by which to increase exposure to stocks. Adding further demand for these strategies is a growing body of evidence that suggests an association between both factors and improved risk-adjusted returns.

4 Reasons To Have EM Exposure Now
Sep. 20, 2013 - BlackRock Blog -  Russ explains the four reasons why investors underweight or not exposed to emerging markets (EM) should consider gaining some exposure to this asset class despite EM stocks’ underperformance year-to-date.

Homebuilders and the Fed: An ETF for Investors Seeking Housing-Sector Exposure
Sep. 20, 2013 - Morningstar, Inc. -  Following the surprise news that the Federal Reserve will continue with its easy-money policy and not taper its bond-buying program, interest rates fell across the board on Wednesday, with rates reversing some of their recent rises and the 30-year mortgage rate settling in around 4.5%, or 10 basis points less than it had been a week earlier. Since May, the 30-year mortgage rate has risen more than 100 basis points, and mortgage rates still are much higher from their all-time lows earlier this year. Still, Wednesday's news from the Fed was great news for the equity markets, with the S&P 500 Index rising 1.2% on Wednesday.

August Existing Home Sales
Sep. 19, 2013 - First Trust -  Implications: Despite all the fear-mongers saying higher mortgage rates would kill the housing recovery, today we got our second look at sales that would be affected by higher rates, and boy were they wrong, again! Existing home sales were up 1.7% in August, up a very strong 13.2% versus a year ago, and hit the highest level since February 2007. It sure doesn’t look like higher rates are having any negative effects and there are a few reasons for this. First, higher rates reflect expectations of faster economic growth. 

5 Years Later: The Crisis We Haven’t Tackled Yet
Sep. 19, 2013 - BlackRock Blog -  Five years after the Lehman bankruptcy, the proximate causes of the 2008 crash are no longer threats. But while the risk of another imminent financial system crisis has abated, there are two major issues that foretell a coming retirement funding crisis.

Beyond Income: Examining Popular New ETF Launches and Their Underlying Strategies
Sep. 18, 2013 - Morningstar, Inc. -  With United States equity markets near record highs, the U.S. economy regaining strength, unemployment slowly declining, and interest rates finally on the rise, investors sit at something of a crossroads.

U.S. equity market valuations are expensive, but interest rates remain near historic lows. For investors with cash on their hands, these are daunting times. What are some of the more compelling investment opportunities available to investors? One possible source of ideas comes from recent exchange-traded product launches, which continued unabated, as ETP providers have debuted 100 ETPs in 2013 alone.

IShares Targets Retirement Market with 4 Proposed Actively Managed Fund of Funds ETFs
Sep. 16, 2013 - Morningstar, Inc. -  
On Sept. 6, iShares unveiled plans for a quartet of proposed, actively managed, exchange-traded funds that would join its low-priced line of "core" ETFs.
IShares filed with U.S. regulators for permission to create the four fund of funds ETFs, which would have varying risk profiles and thus be target-risk funds. The proposed ETFs would hold other iShares ETFs--including other iShares "core" ETFs--and seem aimed squarely at the retirement market.

The New Dow Jones Industrial Average
Sep. 13, 2013 - Morningstar, Inc. -  Since its inception in 1896, the Dow Jones Industrial Average has served as a barometer of the U.S. stock market by tracking a select group of the country's industrial leaders. Earlier this week, S&P Dow Jones Indices announced that  Visa (V),  Nike (NKE,) and  Goldman Sachs (GS) will replace  Hewlett-Packard (HPQ),  Alcoa (AA), and  Bank of America (BAC) in this iconic index, effective Monday, Sept. 23. Because the index weights its constituents by their share price, rather than by market capitalization, these changes will have a significant impact.

For TIPS, Shorter Is Better
Sep. 04, 2013 - Morningstar, Inc. -  Thanks to several years of historically low rates, funds like  iShares Barclays TIPS Bond (TIP) have been the most popular exchange-traded way to invest in Treasury Inflation-Protected Securities. However, with rates increasing and subdued inflation expectations, long-duration ETFs like TIP may no longer be the best choice for most investors. Broad TIPS ETFs such as TIP are highly sensitive to interest-rate changes, are a poor inflation hedge, and protect against unexpected inflation over a time period that might be too long for most. Investors worried about rising rates should consider targeting the short end of the curve instead. Shorter-duration TIPS funds are less exposed to interest-rate risk, and are also slightly more correlated to inflation than their longer-dated brethren. 

Emerging Market Equities Fit The GARP (Growth At A Reasonable Price) Profile
Sep. 03, 2013 - First Trust -  

View from the Observation Deck

While U.S. stocks have set multiple all-time highs in 2013, emerging market equities stood 30.6% below their all-time high (10/29/07) at the close of August, as measured by the MSCI Emerging Markets Index.

After having posted a cumulative total return of 392.12% (USD) from 12/01-10/07 (all-time high on 10/29/07), the MSCI Emerging Markets Index declined 18.25%, on a cumulative basis, from 10/07-8/13.

The combination of commodity-fueled inflationary pressures in 2010 and 2011, tempering of growth in China, the world’s biggest consumer of raw materials, and Europe’s recession induced profit taking, in our opinion.

4 Signposts To Watch for an Emerging Markets Turnaround
Sep. 03, 2013 - BlackRock Blog -  

Since the Federal Reserve (Fed) first hinted at the possibility of a taper in May, anxiety has roiled emerging markets (EM).

Over the last three months, EM stocks have fallen 12% in dollar terms, underperforming developed markets by 10%, and EM currencies on average have tumbled by 7% versus the dollar[1]. And as numerous market watchers have pointed out, the EM rout has only intensified this week amid concerns about an escalating conflict in Syria and rising oil prices.

The Bond Bear is Waking Up

Sep. 03, 2013 - First Trust -  We’ve been bond bears for quite some time, and we still are. The good news is that the violent part of the bear market has passed. We expect a slower, but still painful and consistent, move higher in interest rates during the quarters ahead. The 30-year bull market in bonds is over.

AugustISM Manufacturing Index
Sep. 03, 2013 - First Trust -  Implications: A surprisingly strong report today for the ISM index, a measure of manufacturing sentiment around the country. The ISM came in at the highest level since June 2011, easily beating consensus expectations. In particular, the new orders index boomed in August, coming in at 63.2, the highest since April 2011. According to the Institute for Supply Management, an overall index level of 55.7 is consistent with real GDP growth of 4.2% annually. We don’t expect real GDP will grow anywhere near that pace in Q3, probably more like a 1% to 1.5% rate instead, but we do expect that by late this year growth will pick up noticeably from the roughly 2% trend over the past few years. 

US Economy and Credit Markets Week Ended August 30, 2013
Sep. 03, 2013 - First Trust -  Selling of Treasuries cooled during the week as tensions surrounding potential conflict in the Syria increased demand for safe assets. However, for August, U.S. Treasury bonds slid for a fourth consecutive month and since the start of May the 10-Year Treasury is up over a full point from continued concerns over the Federal Reserve potentially unwinding its bond buying program. Oil rose during the week as Middle East turmoil gives rise to supply concerns. 

July Personal Income and Consumption
Aug. 30, 2013 - First Trust -  Implications: Another month, another Plow Horse report on income and spending. Income grew a tepid 0.1% in July, with dividends, rents, and farm income offsetting a drop in wages & salaries. At this point we don’t read much into a one-month drop in wages & salaries. We notice the same thing happened last July, so it could be difficulties making seasonal adjustments. Or it could just be normal statistical noise that might later be revised away. However, we will be following the data closely to see if any weakness becomes persistent, which might be attributable to the roll-out of Obamcare. In the meantime, overall personal income is up 3.3% from a year ago while wages & salaries are up 3.4% and private-sector wages & salaries are up 4.2%. Adjusting for inflation, real income is up 1.9% from a year ago, private wages & salaries are up 2.8%. Despite what some pundits are saying, there is still no evidence that the end of the payroll tax cut or federal spending sequester is hurting consumers. 

Hidden Value in Small-Cap Dividends
Aug. 30, 2013 - Morningstar, Inc. -  Holdings can say a lot about a fund's investment style, but they don't always tell you everything. Take  WisdomTree SmallCap Dividend (DES) for example. It invests in dividend-paying small-cap companies that meet certain liquidity requirements. It then weights them by the dollar value of dividends they are expected to pay out over the next year. While its holdings skew toward the small-value side of the Morningstar Style Box, on average they trade at richer valuations than the holdings of its peers, which explicitly target small-value stocks (see the Portfolio Characteristics table below). Yet, since its inception in July 2006, DES has behaved like a deeper value fund than nearly all of its peers.

For Those Who May Not Subscribe To A Buy And Hold Investment Strategy
Aug. 29, 2013 - First Trust -  

View from the Observation Deck

While we subscribe to a buy and hold investment strategy, we do acknowledge that many investors may seek to potentially exploit opportunities within days, weeks or months. 

Seasonal investing is one such approach and it has been documented through the years in the Stock Trader’s Almanac. The chart features five areas that have demonstrated a seasonality effect beginning in October.

Leveraged and Inverse ETFs Making Waves
Aug. 28, 2013 - BlackRock Blog -  A recent paper has sparked renewed discussion about leveraged and inverse ETFs. In response, David Mann restates the iShares position on this niche category, reminding investors that leveraged and inverse funds are not suitable for everyone.

The Hidden Risk of Investing in Stable Companies
Aug. 28, 2013 - Morningstar, Inc. -  Fear of rising interest rates has a lot of investors on edge, to say the least. Clearly, rising interest rates are bad for bond and equity investors. It's easy to reduce interest-rate risk in a bond portfolio because interest-rate sensitivity, or duration, is directly related to the timing of cash flows. Bond investors can cushion the blow of rising rates by swapping out long for short duration bonds. But for investors who want to stick with stocks in a rising interest-rate environment, the options for reducing interest-rate risk are less clear. While some investment styles may help limit the damage the Fed can inflict on your portfolio, it's important not to lose sight of the big picture.

Middle East Tensions, Oil Prices and the US Economy
Aug. 28, 2013 - BlackRock Blog -  A further escalation of violence in the Middle East will not only have a terrible human toll, it could also lead to rising oil prices, which in turn could hurt consumers and the global recovery. Russ explains the situation and shares how investors can prepare.

Retail Investors Still Somewhat Leery Of Stocks
Aug. 27, 2013 - First Trust -  
View from the Observation Deck
1.  The S&P 500 posted a total return of 17.79% from 12/31/12 through 8/26/13. It posted a cumulative total return of 43.31% (7.46% annualized) in the 5-year span depicted in the chart.
2.  Despite these positive returns, there remains a huge distinction in the sentiments towards equities between institutional investors (top chart/block trades) and retail investors (bottom chart/non-block trades).

Why Rising Mortgage Rates Matter for the US Recovery
Aug. 27, 2013 - BlackRock Blog -  As long-term Treasury rates have increased in recent months, mortgage rates have followed suit. Russ K explains why investors should pay close attention, since rising rates could hurt the US recovery through their impact on the housing market.

July Durable Goods
Aug. 26, 2013 - First Trust -  

New orders for durable goods dropped 7.3% in July (-7.2% including revisions to June), coming in well below the consensus expected decline of 4.0%. Orders excluding transportation slipped 0.6% (-0.4% including revisions to June). The consensus expected a gain of 0.5%. Overall new orders are down 0.3% from a year ago, while orders excluding transportation are up 5.9%. 

US Economy and Credit Markets Week Ended August 23, 2013
Aug. 26, 2013 - First Trust -  Amid mixed economic reports and debate over the status of the Federal Reserve’s Quantitative Easing program longer dated Treasuries rose this week while those with duration between 1 and 7 years fell. On Monday, in the absence of major economic data, Treasury yields approached their highest levels since 2011 as speculation grew that the Fed would trim bond purchases as early as next month. On Tuesday, Treasuries rallied as value oriented investors scooped up the securities. 

US Economy and Credit Markets Week Ended August 23, 2013
Aug. 26, 2013 - First Trust -  Amid mixed economic reports and debate over the status of the Federal Reserve’s Quantitative Easing program longer dated Treasuries rose this week while those with duration between 1 and 7 years fell. On Monday, in the absence of major economic data, Treasury yields approached their highest levels since 2011 as speculation grew that the Fed would trim bond purchases as early as next month. On Tuesday, Treasuries rallied as value oriented investors scooped up the securities. 

First Trust Launches International Multi-Asset Diversified Income ETF
Aug. 26, 2013 - Morningstar, Inc. -  After its successful launch of a passively managed exchange-traded fund that holds a range of income-paying securities from the United States across a mix of asset classes, First Trust on Friday rolled out a similar ETF devoted to international income-paying securities.

First Trust International Multi-Asset Diversified Income Index Fund YDIV is the international version of the U.S.-focused First Trust Multi-Asset Diversified Income Index Fund (MDIV), which began trading in August 2012 and now has close to $500 million in assets.

Another Buffett-in-a-Box?
Aug. 23, 2013 - Morningstar, Inc. -  "Quality" is one of those slippery investment terms. Who doesn't love high-quality companies, of course run by able managers and bought at low prices? I admit I've added to the confusion by using the word inconsistently or imprecisely myself. At its worst, quality simply becomes indistinguishable from "good." The most logical and useful definition I know of is Warren Buffett's concept of the economic moat, a durable competitive advantage that allows a firm to reap above-average returns on its capital even when faced with aggressive competitors. Quality stocks have wide moats; they're insulated from the ravages of creative destruction. 

The Science of Investing
Aug. 21, 2013 - Morningstar, Inc. -  Though it sometimes is hijacked by ideologues, the scientific method works. The most successful societies entrust scientifically trained workers with the most specialized tasks, such as performing brain surgery, designing airplanes, and setting marketwide interest rates. And yet, many individuals regularly entrust their fortunes to the investing equivalents of witch doctors and astrologers. Or they take matters into their own hands for no good reason other than a vague belief that they can do it if they put their minds to it. Unlike good scientists, they're not skeptical enough of themselves or others.

Matt’s Master Class: The 3 Key Elements of a Bond ETF
Aug. 20, 2013 - BlackRock Blog -  Because bond ETFs are still a relatively new investment vehicle, it’s understandable that investors are still getting to know them. Matt Tucker’s new “master class” series is designed to help investors understand the mechanics and benefits of these innovative funds – starting with the basics in this first installment.

As the head of fixed income strategy for the largest ETF provider[1] in the world, I sometimes take for granted the fact that bond ETFs are still something of a mystery to many savvy investors.  This is partially due to the fact that these funds are still relatively new: iShares launched the first bond ETF only 11 years ago, about 75 years after the first mutual fund was launched.  And although fixed income ETFs have come avery long way in a very short time, it’s understandable that the investing public is still getting to know them.

The Key Economic Report to Watch Now
Aug. 20, 2013 - BlackRock Blog -  Stocks and bonds came under pressure last week as investors reacted to a stronger-than-expected initial jobless claims report. Russ explains why the selloff was unnecessarily extreme – and reveals the number investors should be paying attention to instead.

Emerging Global Rolls Out Emerging-Markets High-Dividend ETF
Aug. 19, 2013 - Morningstar, Inc. -  On Thursday, Aug. 15, Emerging Global Advisors launched an equally weighted, passively managed exchange-traded fund that holds 50 emerging-markets stocks that pay high dividends.

EGShares EM Dividend High Income ETF (EMHD) tracks an FTSE index that contains the 50 highest-yielding and liquid, emerging-markets stocks found in a broader FTSE parent index. To ensure diversification, the benchmark caps the number of stocks per country and industry at 10.

Nonfarm Productivity Increased at a 0.9% Annual Rate in the Second Quarter
Aug. 16, 2013 - First Trust -  Implications: Nonfarm productivity increased at a Plow Horse-like 0.9% annual rate in Q2, as hours increased at a healthy clip, but output climbed even faster. After surging rapidly in 2009, productivity grew at a moderate pace in 2010 and has since slowed down even further. In fact, productivity is now unchanged from a year ago. One possibility is that the government is having a hard time measuring production in the increasingly important service sector, which means both output growth and productivity growth are higher than the official data show. 

Housing Starts Increased 5.9% in July to 896,000 Units at an Annual Rate
Aug. 16, 2013 - First Trust -  Implications: The good news is that housing starts rebounded sharply in July after being depressed by unusually wet weather in many states in June. Like blizzards in the winter, heavy rains in the summer sometimes make it tough to break ground for foundations, adding volatility to the starts data. The so-so news is that the rebound in July was all due to multi-family homes, which are always volatile; single-family starts declined 2.2% in July. 

class="portal_thumbnail" > Morningstar's Guide to Investing in Chinese Stocks via ETFs
Aug. 16, 2013 - Morningstar, Inc. -  The Chinese economy and equity market continue to demonstrate their importance and impact on the global economy and markets. Our global exchange-traded fund research team has just published "Morningstar's Guide to Investing in Chinese Equities via ETFs" to help investors better understand the nuances of investing in Chinese stocks. The report also gives a comprehensive overview of the global menu of ETFs offering exposure to Chinese equities and highlights key considerations that investors should take into account before making an investment decision.

The Clock Is Ticking And Returns Are Diminishing
Aug. 15, 2013 - First Trust -  

View from the Observation Deck

  1. While today’s message is intended for those investors who still own packaged products with a high exposure to Treasuries, it may also be applicable to some degree to other investment-grade debt securities. 
  2. We believe that many investors felt compelled to seek refuge in Treasuries during the financial crisis in 2008. Trading up in credit quality while in the midst of an economic contraction is understandable, in our opinion

Volatile Emerging-Markets ETF Flows Mask Growing Allocations to the Developing World
Aug. 14, 2013 - Morningstar, Inc. -  Historical asset flow and Morningstar Investor Returns data show that investors tend to chase performance. Emerging-markets funds would seem to be particularly susceptible to performance-chasing given their pronounced volatility. For example, in 2008, the MSCI Emerging Markets Index plummeted 53% and then rallied 79% in the following year. 

Pairs of A Kind
Aug. 13, 2013 - First Trust -  

View from the Observation Deck

  1. On page two of our Quarterly Newsletter from July 2012 (click here to view), we featured four 50/50 split-ticket investment ideas for investors to ponder. They are featured in the chart.
  2. Our goal was to show how investors can combine two investment vehicles targeting the same theme or sector in an effort to diversify risk, increase the potential for capturing appreciation, or both. 

“Shiller P-E” No Reason to Sell
Aug. 12, 2013 - First Trust -  In terms of market calls, few academics or economists can match Yale University economics professor Robert Shiller. In his 2000 book, “Irrational Exuberance,” he argued that 10-year averages of corporate earnings smoothed out the ups and downs of the business cycle. Then, using this “cyclically-adjusted” level of earnings and comparing it to current stock prices he claimed to generate a better version of the P-E ratio. 

Schwab Readies Launch of Family of 6 Fundamental ETFs
Aug. 12, 2013 - Morningstar, Inc. -  
On Thursday, Aug. 8, Charles Schwab announced its plans to launch a family of six fundamentally indexed exchange-traded funds this week.

Schwab announced it will roll out ETFs tracking the Russell Fundamental Index Series, which is based on research developed by Rob Arnott and Research Affiliates. Schwab currently has five mutual funds tracking this approach, and it plans on creating ETFs tracking those same indexes. The firm also will create a sixth ETF tracking a very broad market index.

July ISM Non‐Manufacturing Index
Aug. 05, 2013 - First Trust -  Implications: Just like its manufacturing sister report, the ISM service report boomed in July easily beating not only consensus expectations but the predictions from all of the 84 economics groups that made a forecast. Both reports signal a pickup in economic growth in Q3. The ISM service report expanded at the fastest pace in five months. The business activity index, – which has a stronger correlation with economic growth than the overall index – boomed to 60.4, while the new orders index also showed notable growth to 57.7.

US Economy and Credit Markets Week Ended August 2, 2013
Aug. 05, 2013 - First Trust -  Treasuries had a mixed week as yields on 1, 2, 3, and 5 year Treasuries dropped while yields on 10 and 30 year Treasuries rose. This yield curve twist occurred as comments from the Federal Reserve on Wednesday suggested that the bond purchase program would continue as it has for the foreseeable future. The Federal Reserve downgraded the outlook for U.S. economic growth from “moderate” to “modest,” which led to speculation that tapering of bond purchases will not occur as soon as expected.

Mutual Funds or ETFs?
Jul. 31, 2013 - Morningstar, Inc. -  A lot of people use the terms mutual fund and exchange-traded fund interchangeably. While similar in many respects, these two investment vehicles have key differences. Mutual funds, particular those low costs ones following indexes, tend to be ideally suited for long-term, “evidenced-based”, asset allocation oriented investors. ETFs, on the other hand, are able to be traded intra-day, tend to be cheaper than active mutual funds and have the potential to be more tax-efficient if utilized in an active management context.

Heightened Deal Activity Puts Merger-Arbitrage ETFs in Spotlight
Jul. 31, 2013 - Morningstar, Inc. -  This week began with a flurry of merger-and-acquisition activity. While global M&A activity hit a three-year low in the first half of 2013, U.S. deal activity has been up nicely for the year to date (up 34%) relative to 2012. Some of the biggest deals have been  Berkshire Hathaway's (BRK.A) acquisition of H.J. Heinz,  Anheuser-Busch Inbev (BUD) acquiring Grupo Modelo, the merger of  T-Mobile US (TMUS) and MetroPCS, and  Comcast (CMCSA) acquiring from  General Electric (GE) the balance of NBC Universal that it didn't already own. Plenty of other major deals are pending, including  Dell's (DELL) proposed leveraged buyout,  Office Depot's (ODP) bid to acquire  OfficeMax (OMX) in what's being termed a merger of equals, the merger of  US Airways (LCC) and American Airlines parent AMR, and Linn Energy's (LINE) proposed buyout of Berry Petroleum (BRY).

8 Questions to Ask Before You Follow Your Advisor Into ETFs
Jul. 29, 2013 - Morningstar, Inc. -  I received an email from a friend a few weeks back, in which she noted that her advisor was recommending she ditch her portfolio of mutual funds and switch into exchange-traded funds instead. What did I think about that idea? 

As I drafted my response to her, I realized that plenty of other investors are probably wrestling with a similar question. ETFs and other index products have been raking in the assets during the past few years, and much of that asset growth is coming from advisors shifting out of traditional mutual funds. 

Should You Consider Floating-Rate Bank Loans Today?
Jul. 24, 2013 - Morningstar, Inc. -  Back in October 2012, I wrote an article titled "Are Bank-Loan Funds Ready to Be Loved Again?" in which I discussed the potential benefits of bank-loan funds--particularly in the context of a period of rising interest rates. If you're unfamiliar with the bank-loan sector, take a peek at that article before reading on.

In my previous piece I noted that bank loans have tended to have low average default rates versus high-yield bonds, above-average yields, and very low duration (given that they pay floating rates), are negatively correlated to Treasury bonds, and have historically generated above-average returns in rising interest-rate environments. All of these features are still valid today. 

A Dividend-Focused Fund Adds REITs but Yields Few Benefits
May. 28, 2013 - Morningstar, Inc. -  Diversification is an important tool for investors to not only understand, but to implement. But deciding whether diversification across sector asset classes should be done by managers (by holding a fund that invests across sector and asset class) or by investors themselves (by mixing and matching various sector- and/or asset class-specific funds) is a common question. It's easy to leave the decisions to fund managers, but often the results are subpar.

Cohen & Steers (CNS) is known for its real estate expertise and has a number of successful real estate funds. But an attempt to combine a large-cap value strategy with REITs in an unleveraged closed-end fund has largely fallen flat. Cohen & Steers Dividend Major(DVM) has a mediocre track record that has easily been outperformed by a combination of two low-cost exchange-traded funds.

Investment Process
The fund's process is fairly straightforward, though it has changed a bit since its launch in 2005. Originally, the fund focused on common stocks with above-average dividend yields that were selected using a quantitative screening process. In March 2009, the fund's board approved a modification of the strategy, removing the restriction of the quantitative screening process. The fund now focuses on large-cap dividend-paying value stocks. In addition, at least 35% of the portfolio must be invested in REITs (this requirement remains unchanged from the fund's launch), and generally the fund holds about 50% in REITs and real-estate securities.

How Risky Are International Dividend ETFs?
May. 22, 2013 - Morningstar, Inc. -  The most popular domestic and international dividend exchange-traded funds are differentiated by more than just their regional exposure. The domestic ETFs with the largest share of inflow over the past year are constructed to offer total return by focusing on high-quality dividend payers. As a result, these funds tend to have yields only slightly higher than that of the S&P 500, but they outperform over time on both a total return and risk-adjusted basis. The most popular international dividend ETFs are somewhat riskier and boast dividend yields that tend to be significantly higher than that of the popular benchmark MSCI EAFE Index. These ETFs are more speculative and volatile than the quality dividend strategies that are so popular for U.S. stocks. Investors looking for total return should carefully examine international dividend ETFs to ensure they're not unwittingly taking on more risk than expected.

Top Domestic Dividend ETFs Eschew High Yield for Total Return
The case for dividends is strong, both in the U.S. and abroad. Historically, dividends have been the primary driver of stock market total return: reinvested dividends generated almost half of the annualized return of both the domestic stock market and the MSCI EAFE Index over the past century. Dividend-paying stocks also dependably outperformed nonpayers during most time periods, and with less volatility. By paying and maintaining (or increasing) a dividend, managers must allocate cash prudently. Companies that consistently pay a dividend generally have dependable cash flow, and various studies show that a high dividend payout ratio is correlated with faster future earnings growth. This is the case for individual companies as well as the broad market. In aggregate, dividends provide income and also signal shareholder-oriented and disciplined management.

Fund Face-Off: First Trust Long-Short High-Yield Funds
May. 21, 2013 - Morningstar, Inc. -  With many income-investors petrified of rising interest rates, some are turning to alternative fixed-income strategies. As my colleague Cara Esser previously noted, senior loan funds offer some potential advantages, as the floating-rate coupon payments lower these funds' durations. But with many of the closed-end funds, or CEFs, in this sector trading at hefty premiums, it might be worth exploring other options.

This week, we take a look at two funds designed to accomplish similar goals:  First Trust High Income Long/Short(FSD) (a CEF) and First Trust High Yield Long/Short (HYLS)(an exchange-traded fund). At first glance, the funds appear to be identical, despite being packaged in different wrappers. However, investors interested in the strategy should note that there are some notable differences between the two funds.