Did You Own Any Of The Worst ETF's of 2017

Matt Thalman - INO.com Contributor - ETFs


2017 was a good year for investors as the S&P 500 increased 19.42%, but unfortunately, not all investors saw their investments grow in value during the year. Investors who had purchased some different Exchange Traded Funds saw their investments nearly disappear during what will be referred to as an “up” year for investors and the stock market.

What is not surprising though is that seven of the nine most prominent ETF losers of 2017 had something to do with investing in the Volatility Index. The worst performer was the ProShares Ultra VIX Short-Term Futures ETF (UVXY), falling 93.96%. This fund provides 2X exposure to short-term, first and second month, VIX futures. The UVXY is a fund essentially will offer investors a way to make money if the VIX itself increases. Furthermore, because this fund is leveraged 2X, if the VIX increases by 10%, UVXY investors will make 20%. But, due to the fund's exposure, it has high carrying costs, meaning investors who hold the fund for more than one day will lose money due to those roll costs.

Therefore, the UVXY needs both the market to be volatile regularly for investors to make any money, even over a small period of time. In 2018 its unlikely UVXY will lose as much as it did in 2017 because the end of 2016 was highly volatile following the election of President Trump. Continue reading "Did You Own Any Of The Worst ETF's of 2017"

2017's Best Performing Non-Leveraged ETFs

Matt Thalman - INO.com Contributor - ETFs


The stock market had an amazing year in 2017, with the S&P 500 increasing more than 19.9%, but some Exchange Traded Funds performed substantially better. Most investors wouldn’t expect a large fund to outperform the S&P 500, unless they were using leverage, taking on outsized risk through trading in volatility, or investing entirely in international/developing markets.

But, surprisingly there were a few ETF’s that not only outperformed the S&P 500 but crushed it while just being mildly risky. Below is a list of a few of them and then an explanation as to why they performed well and whether or not their hot streak can continue in 2018.

Best Performing ETFs of 2017

While this list was intended to help investors find ETF’s which offered lower risk than one would find with leveraged ETF’s, the best performer still had a little more risk than most investors should be comfortable with. The outsized risk with ARK WEB x.0 ETF (ARKW) is that its largest holding is in the Bitcoin Investment Trust (GBTC), which makes up 6.71% of the fund. The next largest is Amazon.com (AMZN) making up 6.08% of the fund. Twitter (TWTR), Athenahealth (ATHN), 2U (TWOU), Tesla (TSLA), Netflix (:NFLX), NVIDIA (NVDA), Alphabet (GOOG)(GOOGL), and JD.com (JD) round out the fund top ten holdings. GBTC’s performance in 2017 was primarily the reason ARKW crushed the overall market, but moving forward investors shouldn’t bet on that continuing to happen.

Ever since the Bitcoin futures began trading on the CBOE and CME, the price of Bitcoin has stabilized. If you are considering buying ARKW, just know that you are taking on more risk than a typical ETF due to its exposure to Bitcoin, but maybe that is why you want to own ARKW. Personally, though if I were thinking about investing in Bitcoin, I would just invest directly into the crypto-currency, not muddy the waters with GBTC due to its pricing. Continue reading "2017's Best Performing Non-Leveraged ETFs"

New Tax Laws Could Mean a Boom for Stock Buy-Back ETF’s

Matt Thalman - INO.com Contributor - ETFs


Now that the Senate has passed a tax bill and President Trump has signed off on it, investors should get ready for a few significant changes that are likely to begin happening. While the bill has been touted as a way to boost the economy and help the middle class, some economists disagree; mainly on the idea that if corporations have a lower tax bill, they will higher more workers and pay their current employee’s more money.

History has shown that when repatriated money comes back to US soil, it is largely used for share buybacks. In 2004 there was a one-time tax holiday when repatriation of foreign earnings was brought back home and taxed at a rate of 5.25%, not the usual 35%.

In 2004 fifteen companies brought back $155 billion, of the total $312 billion. Those 15 companies increased their share repurchases by 38% between 2005 and 2006. There was a clear correlation between share buybacks increasing the repatriation of overseas cash. Continue reading "New Tax Laws Could Mean a Boom for Stock Buy-Back ETF’s"

Hot Investment Opportunity Related To Housing Market

Matt Thalman - INO.com Contributor - ETFs


US Housing data from October came in at their highest levels in ten years. High demand and limited supply are pushing housing prices higher this year. In August, housing prices in Denver, Miami, Houston and the Washington D.C. metro area hit levels that most consider being overvalued.

Furthermore, now reports indicate that home prices on the lower end of the spectrum are rising faster than those in the middle and high end. Acute shortages of housing, especially in the low end of the market is causing prices in that tier to increase much faster than those in the middle or high-end tier.

Many believe home prices are increasing because millennials are finally entering the housing market, which would certainly make sense when you consider the low end of the market, or starter homes, currently have the most demand.

Prices will increase until either supply, as in the number of homes available for purchase, catches up with demand or prices hit a point that reduces demand.

It is more likely the latter will occur first, due to the time required to build more homes and especially when we consider what is likely to continue happening with interest rates. The Federal Reserve has made it clear they plan to continue increasing interest rates for the next few years, and as rates rise, the cost of homeownership follows.

So, what does this all mean? Continue reading "Hot Investment Opportunity Related To Housing Market"

Short-Term ETF Investment Capitalizing On This Time Of Year

Matt Thalman - INO.com Contributor - ETFs


The Holiday Season is now upon us, and in just a matter of days, millions of dollars will be spent buying presents. On Thanksgiving Thursday, Black Friday, Small Business Saturday, and Cyber Monday we will see millions of shoppers spending billions of dollars on gifts for the holidays.

But since we have a 'holiday' shopping season every year the more important thing from an investors perspective is whether holiday sales will be higher or lower than last year. Luckily this year the National Retail Federation expects annual holiday spending will increase by 3.6% to 4% this holiday season over last year.

Soon after the weekend, sales figures will start rolling in, and investors will either start selling or buying shares of the companies winning the retail holiday war. This makes it hard for investors to accurately predict ahead of time which companies will be the winners and which will be the losers, and therefore Exchange Traded Funds are the best way to make this investment.

With ETF's you can easily purchase a small or large basket of retail stocks right before the holiday shopping season, benefit from the winners while not getting crushed by the losers, and then get out of investing in retail before the end of the year.

So, if this sounds like the kind of purchase you want to make this holiday season, let's look at a few different ETF's you can buy now. Continue reading "Short-Term ETF Investment Capitalizing On This Time Of Year"