FMD Capital Management

Posts Tagged: alternative

2 New Alternative ETFs Seek Absolute Returns In Any Market

Written by David Fabian, April 11th, 2017

The premise of positive returns in any market is an alluring proposition for risk adverse investors.  These types of alternative strategies were once the realm of sophisticated hedge funds and institutional portfolios.  However, they are now starting to make their way into the accounts of mainstream investors via exchange-traded funds (ETFs).

Alternative strategies are generally given more flexibility than a traditional passive index tracking a basket of stocks or bonds.  They may have the capability to own futures contracts, short positions, currency pairs, or even volatility-linked products. Put simply, these “go anywhere, do anything” investment styles have the freedom to select virtually asset classes they feel are most appropriate for the current market environment.

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A Dividend Growth ETF Like You Have Never Seen Before

Written by David Fabian, December 13th, 2016

Dividend growth is a theme with a committed following among income investors.  Companies that have consistently raised their dividend on a year-over-year basis have generally done so because of solid business growth and a pledge to uphold shareholder returns.  These stocks are also easy to screen and transform into a passively managed index for the benefit of diversified exchange-traded funds.

For example, the Vanguard Dividend Appreciation ETF (VIG) has $21.8 billion dedicated to a group of 185 large-cap stocks with a historical penchant for annual dividend increases.  This type of investment vehicle can provide broad-based exposure to a certain segment of publicly-traded companies that all exhibit similar dividend characteristics.

But what if you want to participate in the trend of dividend growth in a broad basket of companies without actually owning the stocks themselves?

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Don’t Buy What You Don’t Understand

Written by David Fabian, July 28th, 2016

Risk management is a core tenet of our firm and one that we feel is often misunderstood when entering a new position.  Many investors feel that the minimization of significant draw down starts after you already own something.  A common method for this practice is setting a stop loss.

A static or trailing stop loss can help you define the amount of money you are willing to lose on any given trade.  However, it doesn’t help you understand why you bought the position to begin with or what went wrong with your thesis if it is triggered.  It’s simply a fail safe mechanism to stop the bleeding.  Read more

4 Steps To Picking The Right Commodity ETF

Written by David Fabian, June 21st, 2016

Picking the right exchange-traded fund for your investment portfolio can be an arduous task that is often compounded by the sheer number of available offerings.  In some sections of the ETF marketplace, there can be 10, 15, or even 20 competing funds that offer just slightly different variations on the same theme.

This is especially true in the commodity space through its wide variety of single-sector and diversified indexes.  Many investors will default to the ETF with the longest history, lowest expenses, or largest assets under management.  However, that strategy doesn’t always result in the best overall returns and can often lead to surprises in tax treatment or other unforeseen risks.

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Mortgage REIT ETFs Explode To The Upside

Written by David Fabian, May 17th, 2016

The allure of high yields is something that income investors are always tempted to chase.  When you couple an outsized dividend payout with an explosion of momentum, the attraction can become even further exacerbated.  This is exactly what happened earlier this month when Jeffrey Gundlach offered a recommendation for investors to purchase the iShares Mortgage Real Estate Capped ETF (REM) and simultaneously short the Utility Select Sector SPDR (XLU).

Since that call, REM has only experienced a single minimal down day among nine trading sessions and daily volume has exploded in kind.  The chart below shows how much Gundlach’s recommendations carry weight throughout the income-focused investment community.

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