7 ETF Model Portfolios You Can Use – Updated through 2/19/2013

Ulli Model ETF Portfolios Contact

The market direction over the past week was predominantly sideways, but yesterday’s upward swing pushed the S&P 500 to a gain of 0.79% since the last ETF model portfolio report was issued.

Ongoing merger activity (M&A) was the driver for this move as the theory spread that there was still value in the market despite the indexes closing in on their all-time highs. These new deals have helped support the risk appetite in that the slight dips we’ve seen were used as buying opportunities.

Still, with the automatic spending cuts effective March 1 looming large, it’s hard to explain what could drive the indexes to further gains. However, since we are in a centrally planned market environment, anything is possible; even if it does not make sense based on underlying economics.

Here’s the latest update for our Model ETF Portfolios:

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US Indexes Hit Fresh Five-Year Highs; European Stocks Rally As German Sentiment Improves

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

US stocks finished higher Tuesday, sending the Dow Industrials and S&P 500 to new five-year highs, buoyed by a rise in corporate deal making and an improvement in German investor sentiment.

OfficeMax Inc vaulted 21 percent while Office Depot Inc jumped 9.4 percent after the Wall Street Journal reported Monday (a market holiday) that the companies were in advanced merger talks and may announce a deal as early as this week. The latest news, coming close on the heels of last week’s acquisition of Heinz by Warren Buffet and US Airways’ merger with American Airlines parent AMR, shows the mountain of cash corporate America has piled up. They are now pressured into either pursuing deals, raising dividends, or buying back stocks, analysts observed.

On the Economic news front, an index of homebuilders slipped 1.2 percent in February from the more than six-year-high hit in the prior month. A report by the Washington-based National Association of Homebuilders showed the builder confidence index dropped to 46 from 47 in January.

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ETFs/Mutual Funds On The Cutline – Updated Through 2/15/2013

Ulli ETFs on the Cutline Contact

Below are the latest ETF Cutline reports, which show how far above or below their respective long-term trend lines (39 week SMA) my currently tracked ETFs/MFs are positioned.

The first report covers the ETF Master List from Thursday’s StatSheet and includes 398 ETFs, of which currently 359 (last week 167) of them are hovering in bullish territory.

The second report includes only High Volume ETFs. To clarify, High Volume (HV) ETFs are defined as those with an average daily volume of $10 million or higher.

These ETFs are generated from my selected list of some 93 that I use in my advisor practice. It cuts out the “noise,” which simply means it eliminates those ETFs that I would never buy because of their volume limitations. 82 ETFs (last week 83) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 808 (last week 808) above the line and 51 below it out of the 859 that I follow.

Take a look:

1. ETF Master Cutline Report

2. ETF High Volume Cutline Report

3. MF Cutline Report

In case you are not familiar with some of the terminology used in the reports, please read the Glossary of Terms.

Last Week In Review: ETF News And Blog Posts To 2/17/2013

Ulli Market Review Contact

In case you missed it, here’s a summary of the ETF topics and market reviews I posted to my blog during the week ending on 2/17/2013.

It just does not seem possible that the trading range can get any tighter than it has been this past week. The S&P 500 gained 2 points from a week ago and featured a weekly range of 4 points with the low and the high being 1,517 and 1,521 respectively.

Volume was conspicuously absent, which could be interpreted as investors not having much interest in more equity exposure at these lofty levels. It’s not a secret that the markets are out of whack with economic reality and that some sort of meaningful correction is way overdue.

Nevertheless, the question remains as to whether we will continue to bounce against this glass ceiling and eventually break through to higher levels, or this was the high for this post election rebound.

Fortunately, when following trends, we don’t concern ourselves with the unknown answer to this question; we will simply let our sell stops be our guide to exit our positions should the need arise.

Over past week, we covered the following:

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How Crucial Is The Euro Exchange Rate?

Ulli Europe Contact

91551519There has been a divergence of opinion recently among the eurozone policymakers over the common currency’s valuation. While French President Francois Hollande had called for the euro’s devaluation, Bundesbank chief Jens Weidmann ruled out any intervention by the European Central Bank, stating the euro’s valuation is in line with the region’s fundamentals and any currency manipulation may result in higher inflation later.

Peter Bofinger, economics professor at the University of Wuerzburg in Germany and an economic adviser to German Chancellor Angela Merkel, thinks the ECB should keep an eye on the euro since a strong currency can harm exports.

Asked to comment about Jens Weidmann’s (German central bank chief) position in the ECB, Peter said the Bundesbank is a bit isolated in the ECB, but the more important point is that the OMT announcement by ECB President Mario Draghi has really helped to stabilize the region’s economy and Jens is happy about it.

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New ETFs On The Block: First Trust Preferred Securities And Income Fund (FPE)

Ulli Income ETFs Contact

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First Trust, the Wheaton, Illinois-based investment manager and exchange-traded funds provider, has launched the First Trust Preferred Securities and Income ETF (FPE), the first actively-managed preferred securities fund. The new ETF aims to provide robust current income by primarily investing in preferred securities and income-producing debt securities including corporate bonds, convertible securities and high-yield securities.

The fund portfolio consists of about 80 companies with low concentration ratio for the top ten funds to avoid Concentration Risk and offer better diversification. Stonebridge Advisors, a specialist in hybrid and preferred securities manages the portfolio and serves as the fund’s sub-advisor.

FPE is focused on financials with insurance (20.74 percent), commercial banks (19.50 percent), real estate investment trusts or REITs (17.73 percent) and capital markets (14.75 percent) being allocated the top slots. Diversified financial services (5.01 percent), consumer finance (3.50 percent), diversified telecommunication services (3.50 percent) and wireless telecommunication services (2.49 percent) are the other important holdings of the fund. However, the fund is classified as “non-diversified” and hence, may invest a relatively high percentage of assets in a handful of issuers.

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