SA News • Mar. 25, 2014
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Mar. 25, 2014, 4:27 PM
- Schwab's fundamental index ETFs - Research Affiliates Fundamental Index (RAFI) - get a thumbs-up from Morningstar's Samuel Lee. They're cheap - 3-12 basis points less expensive than PowerShares' lineup of FTSE RAFI finds and lower than Schwab's earlier lineup of Russell Fundamental Index Funds - but they're not the cheapest (VLUE charges less, as does WisdomTree's offerings).
- Lee, however, likes the Schwab offerings because of their exposure to smaller cap stocks, which historically have generated most of the value alpha. He also prefers RAFI's use of multiple valuation metrics as opposed to WisdomTree's reliance on either dividends or earnings. "Multiple metrics can cancel out some of the idiosyncratic noise attributable to a single metric, thereby producing cleaner exposure to the value factor."
- The funds: FNDB, FNDX, FNDA, FNDF, FNDC, FNDE.
Feb. 21, 2014, 2:48 PM
- Maybe sensing the moderate early-2014 selloff is done with, investors poured $13.4B into equities in the latest week, according to BAML - the strongest in 12 weeks and bringing YTD equity asset-gathering back to flat.
- Emphasizing the risk appetite theme, flows into high-yield bonds of $2.4B were the highest in 17 weeks, and money-market funds saw outflows of $40.45B after receiving inflows of $11.55B the previous week.
- Still, emerging market debt and equity continues to be sold. In fact, outflows from EM equities over the past four weeks have risen to 2.2% of AUM - just shy of the 3% level which signals a contrarian "buy" signal, says BAML.
- Turning into a pretty good contrarian signal himself, is Hugh Hendry, who dropped his multi-year caution in December to get "long pretty much anything." His Eclectica Fund subsequently lost 3.6% in January - its worst monthly tally ever.
- Related ETFs: PRF, VUG, VTV, SDOG, VV, SCHX, MGK, DEF, NY, SCHG, SCHV, PWV, FLAG, MGV, DOD, JKD, FEX, EQL, IWY, PWB, JKE, EZY, IWX, FTC, EEH, SPXH, JKF, SFK, TRSK, RWG, FWDD, FNDX, PXLC, ERW, PXLV, GVT, SYG, ALTL, PXLG, SYE, SYV, IELG
Jan. 7, 2014, 1:12 PM
- The future looks like the recent past to Citi Private Bank, which - in its 2014 outlook - says stocks have room to run, but beware fixed income. Citi's projections are based on its Adaptive Valuation Strategies which looks at long-term valuation averages to gauge what an asset might offer in the coming decade.
- "Our long-term AVS return estimates for government, investment-grade corporate and high-yield bonds are only 1.9%, 3.4% and 2.9% respectively. The recent rise in bond yields has helped emerging markets where estimated returns have now risen to 5.1%."
- Don't toss away fixed-income entirely, says Citi, but instead cut duration exposure, look for credit risk instead of rate risk, diversify into MLPs, REITs, and dividend stocks, and favor floating-rate investments.
- Broad fixed-income ETFs: AGG, BOND, BND, BSV, BIV, BLV, SCHZ, LAG, SAGG, ILTB, ISTB, GVI, GBF, FWDB, MINC, GIY, AGND, AGZD
- Broad equity ETFs: PRF, VUG, VTV, SDOG, VV, SCHX, MGK, DEF, SCHG, SCHV, PWV, MGV, FLAG, DOD, JKD, FEX, IWY, EQL, JKE, EZY, PWB, IWX, FTC, EEH, JKF, SPXH, TRSK, SFK, PXLC, FWDD, RWG, FNDX, PXLV, ALTL, GVT, PXLG, IELG
Dec. 26, 2013, 9:35 AM
- Bulls in the AAII Investor Sentiment Index rose 7.6 points to 55.1% in the week ended yesterday, the highest level since early January 2011. The long-term bullish average is 39%.
- Bearish sentiment slumped 6.5 points to 18.5%. The long-term average is 30.5%.
- Broad market ETFs: PRF, VUG, VTV, SDOG, VV, SCHX, MGK, DEF, SCHG, SCHV, PWV, FLAG, MGV, DOD, JKD, FEX, EQL, IWY, EZY, JKE, PWB, IWX, FTC, EEH, JKF, SPXH, TRSK, SFK, PXLC, FWDD, PXLV, ALTL, GVT, RWG, FNDX, PXLG, IELG
Dec. 11, 2013, 12:08 PM
- "2014 is the year to squeeze more juice out of risk assets. But investors should be ready to discard the fruit when it starts running dry," says BlackRock's Ewen Cameron Watt in the firm's 2014 Investment Outlook. "Beware of traffic jams: easy to get into, hard to get out of."
- Behind the view is the idea central banks (U.S., U.K, Canada, China, to name a few) are poised to begin tightening monetary policy.
- BlackRock doesn't believe stocks are yet in a bubble, but its "risk indicator" - measuring enterprise value against earnings adjusted for volatility - is nearly as high as just before the dotcom bust. "The ratio of the two is the key. High valuations combined with low volatility can make for a lethal mix. This market gauge sounded the alarm well before the Great Financial Crisis."
- Broad large-cap ETFs: PRF, VUG, VTV, SDOG, VV, SCHX, MGK, DEF, SCHG, SCHV, PWV, FLAG, MGV, DOD, JKD, FEX, EQL, IWY, EZY, JKE, PWB, IWX, FTC, JKF, EEH, SPXH, TRSK, SFK, FWDD, PXLC, ALTL, PXLV, GVT, RWG, FNDX, PXLG, IELG
Dec. 6, 2013, 1:13 PM
- "The great peril is not that the Fed finally tightens monetary policy and US stock prices suddenly tumble from what are very obviously overpriced levels," writes Hugh Hendry in his December letter, explaining his new-found bullishness. "The greater peril is that the current backdrop will turn out to mark a rapid acceleration in the ongoing move to the upside."
- In a highly entertaining essay drawing inspiration from the classic Bob Ryan character who popped up on HBO's Entourage for a couple of episodes, Hendry notes the eerie comparison to the markets of 1928, 1982, and 1998 - all ended badly, yes, but participants made plenty of money during the boom phase.
- "Just be long. Pretty much anything."
- Broad large-cap ETFs: PRF, PKW, VUG, VTV, SDOG, VV, SCHX, MGK, DEF, SCHG, SCHV, PWV, FLAG, MGV, DOD, JKD, FEX, EQL, IWY, EZY, JKE, PWB, IWX, FTC, JKF, EEH, SPXH, TRSK, SFK, PXLC, FWDD, PXLV, ALTL, GVT, RWG, FNDX, PXLG, IELG
Oct. 17, 2013, 2:46 PM
- These new additions to Charles Schwab's (SCHW) commission free resource platform brings the total funds offered up to 121 and expands the range of available asset categories to include global multi-asset income, long-term corporate bonds, fundamentally weighted indexes, and asset allocation ETFs.
- Vice President of ETF platform management, Beth Flynn, stated “we’re pleased to be adding to the range of funds and asset categories that we can offer commission-free, and continue to believe that this is just the beginning.”
- New additions to the OneSource Lineup: HGI, BSJJ, BSJK, BSCL, BSCM, CBND, RLY, GAL, INKM, WDIV, FNDB, FNDX, FNDA, FNDF, FNDC, FNDE
- Schwab's competition in the deep discount sector: E*TRADE Financial Corp. (ETFC), TD Ameritrade Holdings Corp. (AMTD), and Interactive Brokers Group (IBKR)
Aug. 8, 2013, 1:17 PM
- Six new Schwab (SCHW) Fundamental Index ETFs are set to begin trading next week, adding to the broker's 15 existing proprietary ETFs. Like the other 15, the new funds will be available to Schwab customers commission-free.
- The U.S. Broad Market Index ETF (FNDB) will track the Russell Fundamental U.S. Index with expense ratio of 0.32%.
- The U.S. Large Company Index ETF (FNDX) will track the Russell Fundamental U.S. Large Company Index with expense ratio of 0.32%.
- The U.S. Small Company Index ETF (FNDA) will track the Russell Fundamental U.S. Small Company Index with expense ratio of 0.32%.
- The International Large Company Index ETF (FNDF) will track the Russell Fundamental Developed ex-U.S. Large Company Index with expense ratio of 0.32%.
- The International Small Company Index ETF (FNDC) will track the Russell Fundamental Developed ex-U.S. Small Company Index with expense ratio of 0.46%.
- the Emerging Markets Large Company Index ETF (FNDE) will track the Russell Fundamental Emerging Markets Large Company Index with expense ratio of 0.46%.
FNDX vs. ETF Alternatives
The fund provides exposure to large U.S. companies using fundamental index methodology, developed by Rob Arnott and his firm, Research Affiliates, LLC. The Russell Fundamental Index Series® utilizes three fundamental measures of company size: retained operating cash flow, adjusted sales, and dividends plus buybacks. It seeks investment results that track the performance, before fees and expense, of the Russell Fundamental U.S. Large Company Index.
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