New ETFs On The Block: Db X-Trackers Harvest CSI 300 China A-Shares Fund (ASHR)

Ulli China ETFs Contact

101768508Global markets’ interest in Chinese equities received a major boost after the nation’s new leadership announced sweeping social and economic reforms last week.

Coincidentally, Deutsche Asset & Wealth Management, the asset management arm of Germany’s largest lender, launched a unique China-focused exchange-traded fund on Nov 6 offering US investors direct access to the stocks of the world’s second largest economy.

The db X-trackers Harvest CSI 300 China A-Shares Fund (ASHR) seems to have caught the fancy of investors as it debuted with $108 million in assets, the highest for any ETF since 2007. Total assets under management since jumped to more than $146 million with daily trading volume hitting the 1 million mark on Nov 19.

People familiar with investing in China know it’s difficult for foreigners to access the nation’s lucrative equity market as they must obtain the status of a Qualified Foreign Institutional Investor (QFII) first. Exposure to China A-Shares is restricted mostly to domestic investors and is quoted in Chinese renminbi.

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11-22-2013

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, November 22, 2013

ETF/No Load Fund Tracker StatSheet

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THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:

https://theetfbully.com/2013/11/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-11212013/

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Market Commentary

Friday, November 22, 2013

S&P 500 GAINS SEVEN OUT OF SEVEN

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Seven was a lucky number at least for the S&P 500 index, which managed to rack up gains seven weeks in a row. As the weekly chart above shows, the mid-week dip proved to be another buying opportunity with the index now closing above the 1,800 milestone for the first time, while the Dow frolicked again above the 16,000 level.

Providing ammunition for the continued upward move were increased pace of hiring as well as favorable decisions by European regulators regarding drug makers, which pushed up healthcare stocks with one of our spotlight ETFs (XLV) gaining 1.34% for the day.

News on potential tapering was noticeably absent today, which appears to be the one fly in the ointment that can derail this market at anytime. However, right now the direction continues to be the path of least resistance, which is higher.

Our ETFs in the spotlight confirm this trend, so let’s take a look:

2. ETFs in the Spotlight

In case you missed the announcement and description of this section, you can read it here again.

It features 10 broadly diversified ETFs from my HighVolume list as posted every Monday. Furthermore, they are screened for the lowest MaxDD% number meaning they have been showing better resistance to temporary sell offs than all others over the past year.

In other words, all of them never triggered their 7.5% sell stop level during this time period, which included a variety of severe market pullbacks but no move into outright bear market territory.

Here are the 10 candidates:

MaxDD

All of them are in “buy” mode meaning their prices are above their respective long term trend lines by the percentage indicated (%M/A).

Now let’s look at the MaxDD% column and review the ETF with the lowest drawdown as an example. As you can see, that would be XLY with the lowest MaxDD% number of -5.73%, which occurred on 11/15/2012.

The recent sell off in the month of June did not affect XLY at all as its “worst” MaxDD% of -5.73% still stands since the November 2012 sell off.

A quick glance at the last column showing the date of occurrences confirms that five of these ETFs had their worst drawdown in November 2012, while the other five were affected by the June 2013 swoon, however, none of them dipped below their -7.5% sell stop.

Year to date, here’s how the above candidates have fared so far:

YTD

With the positive tone in the market having returned, most ETFs have made new highs represented by the 0.00% value in the “Off High” column.

3. Domestic Trend Tracking Indexes (TTIs)

Trend wise, our Trend Tracking Indexes (TTIs) rallied with the markets and remain above their long term trend lines by the following percentages:

Domestic TTI: +4.77% (last week +4.79%)

International TTI: +7.42% (last week +7.59%)

Have a great week.

Ulli…

Disclosure: I am obliged to inform you that I, as well as advisory clients of mine, own some of these listed ETFs. Furthermore, they do not represent a specific investment recommendation for you, they merely show which ETFs from the universe I track are falling within the guidelines specified.

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READER Q & A FOR THE WEEK

All Reader Q & A’s are listed at our web site!
Check it out at:

http://www.successful-investment.com/q&a.php

A note from reader Franz:

Q: Ulli: Why is the 39 week SMA used in Trend Tracking? If I missed that discussion please excuse. Thank you.

A: Franz: When I developed the Trend Tracking Indexes back in the 1980s, I experimented with various SMAs but decided that the 39 week SMA was most appropriate. Subsequently, I never found a valid reason to change that.

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WOULD YOU LIKE TO HAVE YOUR INVESTMENTS PROFESSIONALLY MANAGED?

Do you have the time to follow our investment plans yourself? If you are a busy professional who would like to have his portfolio managed using our methodology, please contact me directly or get more details at:

https://theetfbully.com/personal-investment-management/

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Back issues of the ETF/No Load Fund Tracker are available on the web at:

https://theetfbully.com/newsletter-archives/

ETF/No Load Fund Tracker Newsletter For Friday, November 22, 2013

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

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THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:

https://theetfbully.com/2013/11/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-11212013/

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Market Commentary

Friday, November 22, 2013

S&P 500 GAINS SEVEN OUT OF SEVEN

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Seven was a lucky number at least for the S&P 500 index, which managed to rack up gains seven weeks in a row. As the weekly chart above shows, the mid-week dip proved to be another buying opportunity with the index now closing above the 1,800 milestone for the first time, while the Dow frolicked again above the 16,000 level.

Providing ammunition for the continued upward move were increased pace of hiring as well as favorable decisions by European regulators regarding drug makers, which pushed up healthcare stocks with one of our spotlight ETFs (XLV) gaining 1.34% for the day.

News on potential tapering was noticeably absent today, which appears to be the one fly in the ointment that can derail this market at anytime. However, right now the direction continues to be the path of least resistance, which is higher.

Our ETFs in the spotlight confirm this trend, so let’s take a look:

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 11/21/2013

Ulli Market Commentary Contact

ETF/Mutual Fund Data updated through Thursday, November 21, 2013

Table of Content082312

If you are not familiar with some of the terminology used, please see the Glossary of Terms.

 

1. DOMESTIC EQUITY MUTUAL FUNDS/ETFs: BUY — since 10/25/2011

TTI

Our main directional indicator, the Domestic Trend Tracking Index (TTI) broke through its long-term trend line generating a Sell for this area effective 8/9/2011. Over the recent past, we’ve seen the TTI hovering slightly below and above this dividing line between bullish and bearish territory. The clear break to the upside occurred on 10/24/11 and, effective 10/25/11, a new Buy signal for domestic equities went into effect.

As of today, our Trend Tracking Index (TTI—green line in above chart) has bounced off its long term trend line (red) by +4.67% after briefly dipping below it late in June 2013.

To avoid a potential whip-saw, a Sell signal to move out of all domestic equity positions will be generated once we have clearly pierced the line to the downside. Be sure to tune in for the latest updates.

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QE To Wind Down, Phones On Planes And An S&P ETF In China?

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

As an imminent QE wind-down is allegedly likely, Fed officials are beginning to take more seriously the proposal of a cut to the rate paid on excess reserves. The interest rate the Fed pays on excess reserves currently sits at 25 basis points.  Stocks of major U.S. banks were very strong on Thursday, after the Senate Banking Committee approved Janet Yellen’s nomination to succeed Ben Bernanke as the next chair of the Federal Reserve.

An interesting development in the cell phone world today, as the nation’s top telecom regulator will propose allowing passengers to make cell phone calls and use their data plans while on an airplane, officials said Thursday.  The proposed rule change by the Federal Communications Commission would allow phone use once a plane reaches 10,000 feet. Restrictions would still be in place during takeoffs and landings.  This could lead to a large incentive for telecom and data providers to ramp up their in-flight operations and service offerings.

In ETF news, Bosera Asset Management, one of the longest-established fund management companies in China, has launched the first ever exchange-traded fund (ETF) listed in Mainland China to be linked to the S&P 500 Index. The new fund is Bosera’s fifth ETF and its first to offer exposure to non-China markets. By offering access to an overseas market, the launch represents a material acceleration of the development and sophistication of the ETF market in Mainland China.  It will be interesting to see how enticed investors will be to take a bite of this western delicacy in the Chinese market.

Let’s review our ETFs in the spotlight:

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The German Surplus And Some Insight Into An Overlooked ETF Segment

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Wall Street closed in the red on Wednesday as traders responded to slightly more hawkish-than-expected minutes from the Federal Reserve.  Many members of the Federal Reserve’s policy-setting committee said they could see the central bank trimming its $85-billion-a-month bond-buying program at ‘one of its next few meetings,’ minutes from the October meeting indicate.

In global news, the euro fell sharply on a report saying the European Central Bank was considering a negative deposit rate.  Germany’s high current account surplus, which the United States has blamed for hindering the global economy, shrunk in the third quarter, the Finance Ministry said in its monthly report on Thursday.  The long-running surplus (of over 6%) has drawn criticism from Washington that Germany is relying too heavily on exports and that Berlin should focus more on boosting domestic demand to put growth on a sounder footing.

Although ETFs have been performing well overall this year, one segment that is doing quite well is that of the actively managed ETFs. Though actively managed ETFs account for a tiny fraction of the $1.5 trillion plus U.S. ETF market, these are slowly gaining popularity with 15 new product launches so far this year. This corner of the ETF market is still in the initial stage of development and often overlooked by investors due to its lower liquidity and higher costs compared with passive funds.

There are a total of 65 unleveraged active ETFs in the space with total AUM of nearly $15 billion. While these funds may not be the popular or liquid (not a good thing in my mind), these could be interesting picks for those investors considering a more active approach and seeking to target the growing aspects of the ETF industry with innovative strategies. Keep in mind, howver, that an actively managed ETF will not protect you in a bear market scenario. Only a move out of the market and to the sidelines will help limit the downside risk.

Let’s review our ETFs in the spotlight:

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