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Matt Erickson  

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  • Is The Healthcare Sector Rolling Over? [View article]
    You're welcome. Best of luck to you!
    Apr 30, 2015. 12:46 PM | Likes Like |Link to Comment
  • Sectors On The Move [View article]
    I can't disagree with the long-term demographic shift driving increased demands for health care Hardog, however one should be cautious with how much each of these sub-sectors of health care have already run. Recall similar arguments were made regarding the technology sector coming into the 2000's, and we all know how that played out.
    Apr 25, 2015. 12:34 PM | Likes Like |Link to Comment
  • Building A Better MPT Portfolio [View article]
    Thanks Hardog, I hope you found it to be a worthwhile read.
    Apr 22, 2015. 10:54 PM | Likes Like |Link to Comment
  • The Beginning Of The End [View article]
    Thanks Brian and Happy Easter to you and yours!
    Apr 2, 2015. 12:32 PM | Likes Like |Link to Comment
  • The Beginning Of The End [View article]
    Harm, I believe you may be taking things a bit too literal here. "Beginning of the End" as in reference to questioning whether recent market conditions will potentially lead to an end of our consecutive streak of quarterly gains.
    Apr 2, 2015. 09:49 AM | 1 Like Like |Link to Comment
  • Playing The Strong Dollar With Currency Hedged ETFs [View article]
    Mont I generally agree... I believe I mentioned a weakening dollar would cause the currency hedged equities to lag. The purpose was to point out for those investors who believe the dollar will continue to rise versus the euro, etc. that there are ways to optimize returns in the international ETF space. The reality is these ETFs have had a great run already. Personally, and I am NOT a currency specialist, I think the dollar will continue to gradually strengthen versus the euro for a while longer (while European stimulus continues), I just don't think it will be anywhere near as dramatic as it has been.
    Mar 28, 2015. 10:39 AM | Likes Like |Link to Comment
  • Playing The Strong Dollar With Currency Hedged ETFs [View article]
    Liusing, if that is what you prefer, it sounds like those are the obvious 2 you should be looking at...

    WisdomTree and Deutsche x-trackers also offer currency hedged Germany ETFs as you likely know, but there really is not that much difference between the three. Performance for EWG over the trailing 12 months has been -0.79%, HEWG 24.34%, Wisdom Tree Germany Hedged (DXGE) 24.14%, Deutsche hedged Germany (DBGR) 24.40%.

    Internal expense ratios among the three range from 0.45 to 0.53, so not much difference. Even EWG itself has an expense ratio of 0.48.

    As far as "size" among the Germany currency hedged ETFs it is not even close... HEWG has over $872 million in AUM, Wisdom Tree $290 million, and Deutsche only about $100 million. This is reflected in average trading volume too, with HEWG much higher.

    Bottom line, if that is your objective, sounds like you are using the right ones.
    Mar 28, 2015. 10:34 AM | Likes Like |Link to Comment
  • HEDJ: How Oil And Interest Rates Will Drive European Equities Higher [View article]
    Koral Capital, you may also be interested to know that of all US based equity ETFs during the first two months of the year, HEDJ had more inflows than any other ETF, with estimated net inflows of $5.3 billion! The next closest ETF (strangely) was the iShares iBoxx High Yield Corporate Bond ETF (Ticker: HYG), and they were more than $2 billion behind with estimated net flows of just shy of $3.2 billion.
    Mar 28, 2015. 12:58 AM | Likes Like |Link to Comment
  • Which Is Better: Cap-Weighting Or Equal-Weighting? [View article]
    John this is good stuff to put out there for the masses, most people really don't know how to break this down. I would add however, by going to alletf.com and typing in the two ETFs you are comparing you can get a quick look at the differences in performance returns in a given year (use the quilt function), and can take a deeper look by using "compare".

    I think the other points to consider here are concentration in top holdings, and what your purpose is. Personally, I am not a fan of sector ETFs that have ridiculously high concentrations in the top 10 companies. For example, the SPDR Health Care ETF has 44% in the top 10 holdings, whereas the equal weight is less than 20%.

    As far as "risk", it all depends on your use. For buy and hold sector investors, the cap weight may be good since it is mega-cap oriented and they tend to have lower betas. For tactical rotational portfolio allocations, the often significant upside you get out of equal weight and fundamental weight (see First Trust AlphaDEX ETFs) can be dramatic. If using them in an asset rotation based tactical strategy, the fact that these are higher beta does not matter since you are likely completely out of them during prolonged equity declines. I discuss this further in my book, Asset Rotation, published last year by Wiley & Sons.

    Again, John thanks for the article and I think you are covering good points the majority of investors really need to familiarize themselves with.

    All the best,

    Matt
    Mar 28, 2015. 12:49 AM | Likes Like |Link to Comment
  • Choosing The Right Health Care ETF [View article]
    I do like the Vanguard sector ETFs as opposed to the far more heavily traded cap weighted State Street SPDRs. However, despite a low internal expense ratio of only 0.12%, the performance is not similar whatsoever, nor is the composition. From 1/1/2008 to 2/28/2015 VHT had an average annual return of 13.48% (recall FXH was 17.7%) and a cumulative return of 147.46% (versus 221.55 for FXH). Also, 44% of VHT is in the top 10 holdings, the fund is 38% in pharma, and heavily tilted towards mega cap. VHT is a better option than XLV, but not as good as the other two, particularly in a rotational strategy where the added beta and upcapture can be to your benefit.
    Mar 25, 2015. 11:41 AM | 1 Like Like |Link to Comment
  • Choosing The Right Health Care ETF [View article]
    Ummm... "diversified" health care, not just pharma.
    Mar 24, 2015. 01:12 PM | Likes Like |Link to Comment
  • How To Beat The Market Using Tactical Asset Rotation: Part II [View instapost]
    Using the trailing "63 days" (aka 3 month) model... Your intuition is spot on, though volatility surprisingly stayed the same:

    1/1/2004-3/19/2015

    CAGR: 23.3%
    Volatility: 21%
    Cumulative Return: 940.5%
    Max Drawdown: -21.3%
    Sharpe: 0.99
    Mar 19, 2015. 10:05 PM | Likes Like |Link to Comment
  • How To Beat The Market Using Tactical Asset Rotation [View article]
    Bruce, I exchanged emails today with Chris Greene, CEO and Co-Founder of ETF Replay. With Chris's permission I am pasting below his very well articulated and defined response:

    "There are a different amount of trading days in each month. Morningstars method is to use 'entire month data' regardless of how many trading days there are. ETFreplay uses a trailing day count, which is consistent with how daily quantitative finance data works.

    In years that aren't shortened by unusual events like 9/11 or hurricane Sandy, there are the same 252 trading days in a given year. And people like options market participants widely use this 252 count to make various volatility calculations.

    If you work from 252, you get 252 / 12 = 21. Thus, there are on average 21 trading days a month. 3 months is then 3x21 = 63 days.

    So ETFreplay begins on 12/31/14 and counts back 63 trading days. This takes you to Oct 1, 2014. MDY was a slightly better performer over this period. It is very close as you can see. I have included Bloomberg screen shot to cross-validate our returns. We have processes in place to ensure our data matches institutional sources such as Bloomberg. Our data is correct."

    So there you have it Bruce, it just comes down to a matter of definition. Using the trailing 63 trading days I come up with the same data as ETF Replay and Bloomberg.
    Mar 16, 2015. 07:10 PM | Likes Like |Link to Comment
  • How To Beat The Market Using Tactical Asset Rotation [View article]
    Just the top 2 period, so you can be 100% equity, 50/50, or 100% bond.
    Mar 16, 2015. 10:47 AM | Likes Like |Link to Comment
  • How To Beat The Market Using Tactical Asset Rotation [View article]
    Good question Bruce. ETF Replay indicates MDY for January, then TLT for both February and March. Meaning, you took the downside in equities to start the year, then rotated into TLT as it began to unwind. It should be noted, this can happen to ANY asset rotation based portfolio over a short period of time. Speaks to my points about correlation, etc.

    Regardless, this is a very good point. On ETF replay you can choose to either trade the portfolio on the last trading day of the month or the first. Presumably, if you use the last as I did in this simple illustration, you are using the trailing 3 month data from that date (assuming prior close) and not the close of the day. Either way, using total return data from Morningstar Direct (from which we build our custom screens into excel), we concur TLT comes up based on trailing 3 month whether you use either Dec 30 or 31 closing data. It is true MDY went down on Dec 31 from the Dec 30 close, 266.73 to 263.97. At the same time TLT was up from 125.68 to 125.92. Even if you try and account for some sort of dividend payment it was not enough to make up for the fact that TLT, as verified by Morningstar Direct was up over 2% more. Now we have Direct set up to measure Total Return, maybe ETF Replay does not.

    I am going to relay this question to one of the developers / owners of the company tomorrow morning. We'll see if he wishes to address this.

    As I stated, we do not actually use ETF Replay for our portfolios, as our investment selection process is more complex. Hopefully, I hear something back Bruce and I will be happy to share what they tell me.
    Mar 16, 2015. 12:29 AM | Likes Like |Link to Comment
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