Written by David Fabian, January 17th, 2017
Investors who have held onto their U.S.-focused dividend ETFs have been rewarded in both income and capital appreciation during the breadth of this bull market. The combination of relative momentum, low volatility, and steady accumulation of quarterly distributions have been the hallmarks of this steady trade.
Yet, those who study market history know that price performance that outstrips company fundamentals comes at a cost. Namely higher statistical valuation measures, alongside slowly decreasing yield for new investors. As a result, dividend stocks that looked attractive several years ago are now starting to rise into the expensive zone relative to other global opportunities.
Written by David Fabian, January 10th, 2017
The impact of currency fluctuations is a dynamic that more and more investors have taken an interest in over the last several years. A decade ago, it was difficult to trade the currency markets without a dedicated forex account and sophisticated knowledge of the landscape. This was the realm of institutional investors and macro hedge funds. Fast forward to 2017 and there is a myriad of mainstream options to take advantage of these markets in a normal brokerage account.
At present, there are 32 exchange-traded products dedicated to currency trading pairs or indexes. There are also countless other ETFs and mutual funds with embedded currency strategies coupled with stock or bond holdings. These “local currency” or “currency hedged” indexes allow ETF investors the ability to mitigate certain risks of owning foreign investments or take advantage of a specific currency trend.
Written by David Fabian, January 04th, 2017
When looking over the last decade of sector returns on a year-by-year basis, it’s rare to see health care fall to the bottom of the stack. Yet that unusual event is exactly what occurred in calendar year 2016.
Over the last twelve month, the Health Care Select Sector SPDR (XLV) posted a total return of -2.76%. That final performance includes dividends and carries the stigma of being the only major S&P sector to finish the year in negative territory. To put things in perspective, energy stocks gained 28% in total return over the same time frame.
Written by David Fabian, December 26th, 2016
Some would say (read: my wife) that I’m a creature of habit. However, I think that having consistency with your investment routine creates a culture of success. It allows you to continually act on what works and avoid straying from a predesigned plan of attack.
One of my habits is to write an annual review of the lessons I learned over the preceding twelve months. The purpose is to impart both successes and missteps in a way that bolsters your own investment endeavors. Many of these lessons are ones that I continue to re-learn or emphasize every single week. Read more
Written by David Fabian, December 20th, 2016
The market for exchange-traded funds (ETFs) continues to be a thriving business for fund sponsors and investors who covet these low-cost vehicles. The first fund to debut in this format, the SPDR S&P 500 ETF (SPY), now has over $220 billion in total assets and is nearing its 24th birthday. The industry itself has never been more robust in terms of overall fund selection, asset flows, and innovative use of these investment products.
As I do every year, it’s time to look back on some of the newest funds to debut in 2016 and how the industry has welcomed them into the fold. This exercise can help identify burgeoning trends and areas of concentration for ETF providers.