Emerging Global, the emerging markets focused ETF, has announced the launch of EGShares Beyond BRICs ETF (BBRC), a fund that seeks exposure to an often overlooked emerging market segment, giving investors an opportunity to diversify their portfolio.
EGshares is one of the first companies to move away from the MSCI Emerging markets Index to other more diversified and balanced benchmarks since the MSCI Index focuses heavily on quasi developed nations like Taiwan and South Korea.
Funds tracking the MSCI benchmark generally have extremely heavy exposure in the BRIC nations; stocks from Brazil, Russia, India and China make up for about 40 percent of the MSCI Emerging Markets Index, implying significant concentration risk in a handful sectors and nations.
The EGShares Beyond BRICs ETF gives investors an opportunity to get away from the BRIC nations to a host of new emerging markets. BBRC focuses on 15 other less developed emerging markets in four continents that include Chile, Colombia, Czech Republic, Egypt, Hungary, Indonesia, Malaysia, Morocco, Mexico, Peru, Philippines, Poland, South Africa, Thailand and Turkey. The fund replicates the Indxx Beyond BRICs Index which uses a free-float market-cap weighted methodology and holds 50 stocks.
US, EUROPE STOCKS RALLY AFTER BERNANKE HINTS AT QE 3 IN JACKSON HOLE SPEECH
US stocks rallied Friday to cap a disappointingly low volume August with more gains following the US Fed Chairman Ben Bernanke’s speech at Jackson Hole where the US central bankers hinted at more accommodative measures if elevated unemployment levels didn’t come down.
The Dow Jones Industrial Average (DJIA) added 0.7 percent on the day while the S&P 500 Index (SPX) rose 7 points, adding two percent for the month and capping its third straight monthly gain.
Treasuries advanced, pushing 10-year yields to the lowest level in almost four-weeks while 30-year Treasury yields fell to its lowest level since August 7 after Bernanke said US labor market stagnation was a “grave concern” and further bonds purchases by the Federal Reserve remained an option.
While the Fed did not make any definite promises, ex-Fed governor Robert Heller provided a translated version in this video (hat tip to ZeroHedge for this link):
The US dollar sank to its lowest level in more than three months on the last trading day of August after the Fed Chairman said “nontraditional policies” can’t be ruled out if the situation warrants, while addressing economists and central bankers at the Kansas City Fed’s annual symposium at Jackson Hole.
The dollar index, a gauge of the greenback’s strength against six of its global rivals, fell to 81.242, the least since May 21. Down 0.5 percent for the week, the index shaved 1.7 percent on the month.
Meanwhile, European stocks rallied after surging banking stocks pushed indexes into the green territory after US Fed dropped broad hints of another round of asset purchases to boost growth, without giving any time frame.
European economic data calendar was relatively light Friday. The annual consumer price index, a barometer of inflation, accelerated to 2.6 percent in August from 2.4 percent in July while unemployment rate hit an all-time high of 11.3 percent in July.
Spanish stocks emerged as the biggest percentage gainers after media reports suggested ECB board member Benoit Coeure has confirmed that the central bank is working on a way to intervene in the bond markets, particularly in the short maturity segment. The IBEX 35 index jumped 3.1 percent, capping a 10 percent gain for August. Lets’ wait and see if these ideas can be successfully run by the paymaster in charge, namely Germany.
Buoyed by banks, the German DAX 30 index rose 1.1 percent, up 2.9 percent for the month. The French CAC 40 index added 1 percent Friday, marking a 3.7 percent gain for the month. The British FTSE 100 index however bucked the day’s trend as oil firms declined, losing 0.1 percent on the day. On the month, the index added 1.4 percent.
In the ETF space, gold and silver linked funds exploded after Bernanke’s speech. Mining funds outperformed the broad market with the Van Eck Market Vectors Junior Gold Miners ETF (GDXJ) vaulting an incredible 5.45 percent while the Van Eck Market Vectors TR Gold Miners ETF (GDX) surged 4.17 percent. Other precious metal funds like the iShares Silver Trust (SLV) and the Global X Silver Miners ETF (SIL) also made impressive gains, adding 4.59 percent and 5.30 percent, respectively on the day.
Our Domestic Trend Tracking Index (TTI) improved while the international one slipped but remained on the bullish side of the trend line.
Here’s how we ended the month:
Domestic TTI: +3.06% (last week +2.95%)
International TTI: +0.99% (last week +1.69%)
Have a great week.
Ulli…
Disclosure: No holdings
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READER Q & A FOR THE WEEK
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Q: Ulli: Just a question. What is your impression of the Low Volatility ETF’s introduced last year? They are having a marvelous run-up as I can see. SPLV & EEMV have made large jumps this yr alone. I looked and did not find the 6 new funds in your tables but that is possibly my fault for looking too fast.
A: Frank: Yes, the use of low volatility ETFs can be extremely valuable in that you can avoid the sell stop triggers occasionally. I especially like SPLV, which has done better than its index, and I will add it to the data base, since it now features sufficient volume.
Personally, in my advisor practice, I have preferred lower volatility products this year. For example, while my preference has been model portfolio #2, I had substituted DVY for VTI for many clients with the result that we never got stopped out and therefore have handled the usual market fluctuations much better.
Actually, when you chart the S&P, DVY and SPLV, you will see that the less volatile of the 3 have outperformed the index. While I don’t own SPLV at this time, I may very well make it a part of some of the model portfolios in the future.
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US, EUROPE STOCKS RALLY AFTER BERNANKE HINTS AT QE 3 IN JACKSON HOLE SPEECH
US stocks rallied Friday to cap a disappointingly low volume August with more gains following the US Fed Chairman Ben Bernanke’s speech at Jackson Hole where the US central bankers hinted at more accommodative measures if elevated unemployment levels didn’t come down.
The Dow Jones Industrial Average (DJIA) added 0.7 percent on the day while the S&P 500 Index (SPX) rose 7 points, adding two percent for the month and capping its third straight monthly gain.
Treasuries advanced, pushing 10-year yields to the lowest level in almost four-weeks while 30-year Treasury yields fell to its lowest level since August 7 after Bernanke said US labor market stagnation was a “grave concern” and further bonds purchases by the Federal Reserve remained an option.
While the Fed did not make any definite promises, ex-Fed governor Robert Heller provided a translated version in this video (hat tip to ZeroHedge for this link):
ETF/Mutual Fund Data updated through Thursday, August 30, 2012
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
The domestic 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 broken above its long term trend line (red) by +2.78%. A break back below it will generate a Sell signal to move out of all domestic equity positions. Be sure to tune into my blog for the latest updates.
US equity ETFs retreated Thursday as a string of positive economic data dimmed hopes of further monetary stimulus ahead of Friday’s speech by Chairman Ben Bernanke.
A Labor Department report showed number of Americans filing for first-time unemployment benefits for the week ending August 25 remained flat at 374,000, slightly higher than an estimated 370,000 by analysts polled by Briefing.com.
A separate Commerce Department report showed the core PCE inflation number, a gauge of prices linked to consumer spending, gained only 1.3 percent in the 12 months ended in July against the Fed’s target of two percent, the least since October 2009, indicating there’s room for further expansion.
The Dow Jones Industrial Average (DJIA) shed 107 points, with the breadth within the 30-stock blue-chip index turning overwhelmingly negative as decliners outran gainers 28-to-2.
The S&P 500 Index (SPX) fell 11 points to close below the 1400 mark for the first time in four weeks.
The major indexes finished Wednesday with slim gains after the Federal Reserve’s Beige Book showed the US economy grew gradually across 12 districts with improving service-sector and retail activity offset by weak manufacturing.
On another dull August trading day, stocks remained largely range-bound after the release of mixed economic reports on the day. A Commerce Department report showed the US economy expanded at 1.7 percent in the second quarter, more than the previous estimate of 1.5 percent, while a separate report from the National Association of Realtors showed pending home sales jumped 2.4 percent in July, their highest level in two years, when a home-buyer tax-credit was set to expire.
While not overwhelming, economic data paint a picture of some improvement, which may be disappointing to those looking for an all-out QE 3 commitment by the the Fed’s
Bernanke during his upcoming speech on Friday. Personally, I think that he will disappoint the QE addicts, since I simply can’t see a major announcement with the economy chugging along while the market indexes are hovering multi-year highs.
Emerging Global, the emerging markets focused ETF, has announced the launch of EGShares Beyond BRICs ETF (BBRC), a fund that seeks exposure to an often overlooked emerging market segment, giving investors an opportunity to diversify their portfolio.
