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Kevin Grewal
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Kevin Grewal is the founder, editor and publisher of ETF Tutor as well as serves as the editor at www.SmartStops.net, where he focuses on mitigating risk and implementing exit strategies to preserve equity. Additionally, he is the editor at The ETF Institute, which is the only independent... More
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  • ETFs To Play Smartphone Growth
    By Kevin Grewal

    As consumers start to loosen the grip on their wallets and search for a solution to fuel their appetite for innovation, the technology sector is likely to reap the benefits.
    The technology sector as a whole is relatively broad based. Of all the sub-sectors included in the sector, those which are involved, either directly or indirectly, with smartphones will likely benefit the most. According to a research study, the surge in global demand for phones like the Apple (AAPL) iPhone and the Google (GOOG) Nexus One will soon push sales of smartphones past those of personal computers. In fact, sales of smartphones as a whole are expected to triple over the next two years, heading towards the billion-unit category.
    Some suggest that this surge in demand for these mobile devices is primarily driven by the fact that they offer many of the same benefits and functions of personal computers from the palm of one’s hand.   In fact, most of these phones, such as the iPhone, enable users to download applications, or “apps”, directly to their devices which enable them to do everything from read the latest news published on the New York Times (NYT) to utilize social media by posting new comments on their Facebook pages. 
    In fact, Apple’s “app” world has gotten so large that some analysts estimate it constitutes nearly 3% of the company stock value. Demand for “apps” on Google’s Nexus One is expected to mimic that of Apple’s. 
    To further boost the appeal of the sub-sector, demand globally in starting to increase as incomes and purchasing power in developing nations rise and make these technology savvy products more attainable.
    Some ways that investors can capitalize on this trend and grab access to both of these companies include:
    ·         the Technology Select Sector SPDR (XLK), which allocates 8.3% of its assets to Apple and 6.1% to Google. XLK closed at $22.68 on Wednesday. XLK also holds AT & T (T), which is the only wireless carrier for the iPhone.
    ·         the iShares Dow Jones US Technology (IYW), which allocates 9.7% of its assets to Apple and 6.8% to Google. IYW closed at $57.50 on Wednesday.
    ·         The PowerShares QQQ (QQQQ), which allocates more than 15% of its assets to Apple and 4.9% to Google. QQQQ closed at $47.17 on Wednesday.
    Although appreciation is likely in these equities, it is equally important to consider the inherent risks they carry. To help mitigate these risks, the implementation of an exit strategy which triggers price points at which an upward trend could potentially be coming to an end is of importance.
    According to the latest data at www.SmartStops.net, an upward trend in the mentioned ETFs could come to an end at the following price points: XLK at $21.78; IYW at $55.13; QQQQ at $45.28. These price points change on a daily basis as market conditions fluctuate and updated data can be found at www.SmartStops.net.


    Disclosure: No Positions
    Tags: AAPL, GOOG, T, NYT, XLK, IYW, QQQ, Technology, Sector ETFs
    Mar 11 9:08 AM | Link | Comment!
  • Three Tasty ETF Plays
    By Kevin Grewal

    As consumers around the world continue to opt for choices that don’t break the bank, some fast-food eateries remain attractive and for good reason.
    Most recently, the most well known fast food franchise in the world, McDonalds (MCD), reported that same stores sales are on the rise. The retailer stated that sales at restaurants open for at least one year increased 4.8%, marking the largest one month gain in nearly one year. Domestically, analysts suggest that the gains may be attributed to McDonald’s dollar menu, which recently expanded to include breakfast items and promotional items boosted by the Olympics, and is expected to continue to gain share against its competitors.
    To further give the Oak Brook Illinois-based fast food giant a boost, international markets witnessed an exceptional uptick with the Asia Pacific, Middle East and Africa regions seeing the highest gains of over 10%. Additionally, sales in Europe grew by more than 5%, primarily driven by jumps in France and the United Kingdom.
    A second fast food chain that has been performing well is Yum Brands (YUM). This popular fast food parent company which includes Taco Bell, Pizza Hut and KFC offers cheap food and has a large store base which makes it easy for consumers to reach. Additionally, YUM has beaten Wall Street’s expectations in each of the last four quarters and is trading around 14 times earnings making it relatively undervalued.   Lastly, YUM has the largest fast food chain presence in China which is expected to be the fastest growing consumer market in the coming year. 
    Domestically, the economy is far from being mended and consumers remain cautions meaning that cheaper alternatives will continue to reap the benefits. Internationally, the middle class in emerging nations is growing at exponential rates and are being introduced to the Western way of life which includes eating at restaurants like McDonalds and any of the YUM Brand subsidiaries. 
    A good way to gain access to both of these fast food giants includes:
    ·         PowerShares Dynamic Food & Beverage (PBJ) which allocates 4.9% of its assets to MCD and 4.8% to YUM. PBJ closed at $15.18 on Monday.
    ·         PowerShares Dynamic Leisure & Entertainment (PEJ), 4.7% allocated top MCD and 4.7% to YUM. PEJ closed at $14.80 on Monday.
    ·         Vanguard Consumer Discretionary ETF (VCR), which boasts MCD as its top holding and allocates nearly 1.3% of its assets to YUM. VCR closed at $50.34 on Monday.
    Although an opportunity exists in these equities, it is important to keep in mind the inherent risks involved in investing in equities as well as the impact that an unstable labor market can have on consumer discretionary spending. 
    A good way to mitigate these risks is through the implementation of an exit strategy which triggers price points at which an upward trend could potentially be coming to an end and enable one to preserve equity. According to the latest data at www.SmartStops.net, an upward trend in the mentioned ETFs could come to an end at the following price points: PBJ at $14.86; PEJ at 13.36; VCR at $48.57. These price points change on a daily basis as market conditions fluctuate and updated data can be found at www.SmartStops.net.
    Tags: PBJ, MCD, YUM, VCR, PEJ, Consumer Discretionary, Retail, Sector ETFs
    Mar 09 12:02 PM | Link | Comment!
  • China Driving Fate Of ETFs
    By Kevin Grewal
    When it comes to the global economy, China continues to be the talk of the town. To take it a step further, the nation, expected to witness the largest economic growth in 2010, is said to be driving the fate of exchange traded funds (ETFs).
    According to a recent Securities and Commission filing by the Chinese Investment Corporation (CIC), the sovereign wealth fund holds north of $9 billion in U.S. equity investments. The detailed filing further indicates the following allocations:
    ·         $254 million to the iShares S&P Global Materials (MXI)
    ·         $235 million to the Select Sector SPDR TR SBI Int Energy (XLE)
    ·         $207 million to the iShares MSCI EAFE Index (EFA), which holds BHP Billiton (BHP) as one of its top holdings.
    ·         $156 million to the SPDR Gold Trust (GLD)
    ·         $116 million to the Market Vectors Gold Miners ETF (GDX)
    ·         $107 million to the iShares S&P Global Energy (IXC)
    ·         $83 million to the Materials Select Sector SPDR (XLB)
    ·         $79 million to the U.S. Oil Fund (USO)
    In addition to these allocations, the CIC has allocated $6.2 million to Anadarko Petroleum (APC), and $5.2 million to Chesapeake Energy (CHK), which are holdings in XLE and IXC and indirectly influence their performance.
    Aggregately, CIC has invested nearly $420 million in energy based ETFs and nearly $450 million to ETFs that track metals and mining companies. Both of these commodity based sectors are highly valuable to China in that the nation’s appetite for foreign oil and materials is likely to increase pushing up demand for both. 
    China is selling US Treasuries and using these proceeds to reinvest in dollar-denominated securities via ETFs, making the nation’s sovereign wealth fund a major player in the ETF landscape.
    With over $2 trillion in foreign currency reserves, China is likely to continue this trend of buying ETFs due to their vested interest alone being the driving force behind these appreciating equities.
    An opportunity in these aforementioned ETFs exists; however, it is equally important to consider the inherent risks that they carry. A good way to mitigate these risks is through the implementation of an exit strategy which triggers price points at which an upward trend could potentially be coming to an end and enable one to preserve equity. Such a strategy can be found at www.SmartStops.net

    Disclosure: No Positions
    Tags: MXI, XLE, EFA, GLD, GDX, BHP, IXC, XLB, USO, CHK, APC, Energy, China, Metals Mining, Gold, Emerging Markets, Asia
    Mar 08 9:18 AM | Link | Comment!
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