High Hopes, Big Gains

by on December 3, 2011 | ETFs Mentioned:

Equity indexes finished the week in bright green territory thanks to a spectacular rally on Wednesday. Euphoria swept over equity markets all over the world last week after major central banks, including the Fed and the European Central Bank, collaborated to lower the cost of dollar funding in an effort to improve liquidity and restore confidence back in the markets. Investors saw the collective bank agreement as a key positive development, as lawmakers from around the globe demonstrated their commitment to maintain stability across financial markets. On the home front, U.S employment data surpassed analyst expectations, with the unemployment rate coming in at 8.6% versus the expected 9%. Gold ended the week higher alongside stocks, settling near $1,750 an ounce on Friday.

Actionable ETF Trade Ideas

Last Week’s Actionable ETF Ideas
Ticker Position Performance
XLV

Long


+5.4%
TUR

Long

+5.2%
PLW

Long

+0.3%

Our picks from Monday’s Insider performed quite well this past week thanks to improving confidence in the global economic recovery. Below, we highlight how our trade ideas fared during the week [sign up for a free trial of ETFdb Pro to get actionable ETF ideas every Monday, as well as access to more than 30 all-ETF model portfolios].

Trade #1 Long XLV: Up 5.4%

This recommendation got off to a strong start on Monday morning as XLV opened above Friday’s close, setting the scene for further gains. XLV managed to inch higher on Tuesday as well, demonstrating its resilience as many equities drifted sideways for the day. The real action was all on Wednesday as stocks all over the globe staged an impressive rally backed by relatively high volume trading. Bullish momentum on Wall Street propelled this ETF higher, and we stuck to our rules and took profits at $34 a share on Thursday, locking in a respectable 5.4% gain for the week.

Trade #2 Long TUR: Up 5.2%

TUR got off to a robust start on Monday morning as the ETF opened and held its ground above the $42 level, suggesting that last week’s low of $40.57 a share may have very well been a bottom. This ETF held its “gap” on Tuesday, managing to sustain itself above $42 a share, despite mounting selling pressures. Much like every other security on Wednesday, TUR posted a strong gain amidst the broad-based euphoria, rising and closing above the $45 level, putting our $46 price target in sight. TUR lost a bit of steam in the days following, just barely missing our price target on Friday. Regardless, this long trade turned in a very solid performance, posting a 5.2% gain for the week.

Trade #3 Long PLW: Up 0.3%

This was our fundamentally defensive pick for the week and surprisingly PLW managed to turn in a minimal gain alongside soaring stock markets. U.S. Treasuries were remarkably resilient all week, managing to hold their ground and even inch up a few points while investors piled into equity markets by the busload. PLW sank as low as $31.62 a share on Thursday, missing our stop-loss at the $31.50 level by just a few cents. This Treasury ETF surged higher on Friday as many investors took profits in equities, reminding everyone that a cloud of uncertainty still looms over the global economic recovery.

ETFdb Portfolios

Retirement ETFdb Portfolios

Positive economic data on the home front coupled with encouraging developments in the Euro zone paved the way higher for equities. Likewise, our equity-heavy retirement portfolios posted some strong gains, while our “safer” portfolios, including the Low Volatility and Ready To Retire, lagged behind in terms of performance.

ETFdb Portfolio Weekly Return
30 Years Til Retirement 7.06%
Aggressive 6.82%
20 Years Til Retirement 6.38%
10 Years Til Retirement 5.19%
Cheapskate 4.92%
Moderate 4.61%
5 Years Til Retirement 4.04%
Low Volatility 3.38%
Ready To Retire 2.60%

Regional ETFdb Portfolios

Our regional portfolios climbed higher as investors re-allocated capital back to foreign equity markets in hopes of capturing juicy returns. Tensions in the debt burdened currency bloc remain high as investors await for a resolution, although our Euro Free Europe portfolio was able to post a stunning performance, proving that tangential exposure to the region may be appealing for “cautious” bulls. Emerging markets as a whole lagged behind their developed counterparts, showcasing that investors still prefer “safer” equity exposure.

ETFdb Portfolio Weekly Return
Euro Free Europe 8.29%
Africa-Centric 8.00%
Ex- U.S. 6.54%
Easy-As-ABC 6.34%
LatAm-Centric 5.65%
Asia-Centric 5.59%
Global Titans 5.36%
Emerging & Frontier Markets 5.34%
Ex-Europe 4.60%

Themed ETFdb Portfolios

Our themed portfolios appreciated across the board, with RAFI taking the lead, although this ETFdb portfolio remains in double-digit negative territory from a year-to-date perspective [see All Portfolio Returns]. It’s not much of a surprise to see our defensive-themed portfolios, including Simple (But Effective) Safe Haven, Better-Than-AGG Total Bond Market, and The Sky Is Falling all at the bottom of the barrel in terms of performance.

ETFdb Portfolio Weekly Return
RAFI 8.49%
Futures Free Commodity 6.49%
AlphaDEX 5.64%
High Tech 5.19%
Small Cap 5.11%
Black Swan Hyperinflation 5.09%
Equal Weight 4.91%
Actively-Managed 4.89%
High Yield 4.89%
Alpha Seeker 2.0 4.65%
Commodity Guru 4.44%
Kitchen Sink 4.44%
High-Tax Bracket 4.30%
Simple (But Effective) Safe Haven 4.17%
Ben Graham 50/50 2.69%
Better-Than-AGG Total Bond Market 0.52%
The Sky Is Falling 0.45%

New ETF Highlights

The exchange-traded universe continues to expand as several issuers rolled out first-to-market products over the past week. Check out our ETF Launch Center for complete updates on all new ETFs.

ETF Launches

ETRACS Fisher-Gartman Risk On ETN (ONN)

UBS launched their new ETRACS Fisher-Gartman Risk On ETN, ONN, which tracks the Fisher Gartman Risk Index. This index consists of long positions in various risky asset classes such as stocks and commodities and short positions in traditional safe haven investments. With the combination of long position in risky assets and short positions in safe assets, ONN is designed to perform well when risk aversion drops.

ETRACS Fisher-Gartman Risk Off ETN (OFF)

UBS introduced another new exchange-traded note, the ETRACS Fisher-Gartman Risk Off ETN, which tracks the Fisher Gartman Risk Index (-100%). OFF offers investors a simplified way to implement a risk off strategy by shorting riskier asset classes such as stocks and commodities and going long in safe haven investments such as U.S. Treasuries and the Swiss Franc.

SPDR Barclays Capital Investment Grade Floating Rate ETF (FLRN)

  • Launch: December 1st
  • ETFdb Category: Total Bond Market
  • Structure: ETF
  • Expense Ratio: 0.15%

State Street launched their new SPDR Barclays Capital Investment Grade Floating Rate ETF, FLRN, which tracks an index that is designed to measure the performance of U.S. dollar-denominated, investment grade floating rate notes. This ETF offers cheap, liquid exposure to the high quality floating rate bond category.

Disclosure: No positions at time of writing.