(New York)

There is a big development happening in fund management. That is change is that fundamental and quantitative approaches are merging. Often, funds are no longer purely fundamental or quantitative, but instead merge the two, creating a whole new category which is starting to be referred to as “quantamental”. In its most simple form, quantamental often looks like a multi-factor ETF that also includes some continuous “human” intervention, such as reducing statistical quirks. However, more sophisticated approaches truly blend the two, using human skill to analyze stocks which are sending promising technical signals.


FINSUM: We are pretty fond of the principles which underpin quantamental approaches as they seem to take the best aspects of both philosophies. Time will tell if the approach is a winner in a broad sense.

Published in Eq: Total Market
Friday, 22 February 2019 11:41

The Best Quant ETFs

(New York)

Quantitative ETFs are growing in popularity. Using rules-based approaches to stock-picking is cost effective and has proven successful in many cases, making quantitative methods a good fit for ETFs. With that in mind, here are seven of the best quantitative ETFs: QuantX Dynamic Beta US Equity ETF (XUSA, 0.59% fee), Hull Tactical US ETF (HTUS, 0.92% fee), Cambria Global Momentum ETF (GMOM, 1.03% fee), U.S. Quantitative Value ETF (QVAL, 0.49% fee), IQ Chaikin U.S. Small Cap ETF (CSML, 0.35% fee), Vesper US Large Cap Short-Term Reversal Strategy ETF (UTRN, 0.75%), and the SPDR MFS Systematic Growth Equity ETF (SYG, 0.61% fee).


FINSUM: CSML was the most interesting of the group for us, as we think there is more alpha to be had in small caps with these sorts of approaches. We also ran this story in case anyone has clients who have been asking for more quant funds.

Published in Eq: Large Cap
Monday, 18 February 2019 09:45

The Best ETF for Reliable Dividends

(New York)

As our readers will know, we spent the better part of last week at the Inside ETFs conference. As part of our time there, we are planning to feature a couple of ETFs which we think might be interesting to advisors. The first one we want to feature is a special fund from Legg Mason, the fund is called the Legg Mason Low Volatility High Dividend ETF (LVHD). We were lucky enough to meet with one of the fund’s specialists, Josh Greco, at the conference, and his passion for the fund’s approach really shined through. The fund’s own words describe it best, it seeks to track “the investment results of an underlying index composed of equity securities of U.S. companies with relatively high yield and low price and earnings volatility … LVHD may benefit investors who want income but are concerned about the volatility that can come from traditional equity income investments”. Basically, the idea is to get yield and upside, without so much of the volatility that is traditionally associated with equities. Mr. Greco contextualized the utility of the approach succinctly and convincingly, explaining that as clients’ lives elongate they are going to need to stay in equities longer to get capital appreciation. Accordingly, this fund seeks to de-risk some of that necessary exposure while still giving significant upside and yield. The fund has about $600m in AUM, is widely available, has an expense ratio of 0.27%, and a dividend yield of 3.48%.


FINSUM: In our mind, this fund does an excellent job of fusing some of the best elements of fixed income (yields and less volatility) with the best part of stocks (capital appreciation). It may be a great fit for older clients that need to keep a significant allocation to equities. It is also quite affordable at 0.27%.

Published in Eq: Dividends
Tuesday, 05 February 2019 13:11

The Best Dividend ETFs

(New York)

Dividend stocks have not been looking as appealing lately because of the rise in rates. Yields on even short-term assets now look much more attractive than the near zero coupons that were being offered a few years ago. That said, dividend stocks have a special niche within a portfolio, and it is not hard to find some very solid stocks with good yields. One of the best ways to buy dividend stocks is through an ETF that can select a large and balanced group. With that in mind, here are three ETFs to do just that: ProShares Dividend Aristocrat ETF (NOBL), the SPDR S&P Dividend ETF (SDY), and the Vanguard Dividend Appreciation ETF (VIG).


FINSUM: With the Fed showing dovishness on rates, the outlook for dividend stocks has suddenly brightened.

Published in Eq: Dividends
Friday, 16 November 2018 11:38

How to Get Safe 5% Yields

(New York)

This is a tricky environment for income investing. On the one hand, rising rates generally mean better yields, but at the same time, the chance of rate-driven losses is high. What if investors wanted to get safe 5% yields? Doing so is a little bit tricky and requires a blend of riskier credit and a mix of durations. However, investors can get pretty close with some individual ETFs. For instance, BlackRock’s iBoxx $ Investment Grade Bond ETF yields 4.39% and has shorter dated maturities with comparable credit quality to other funds.


FINSUM: This seems like a good choice, but there are also a number of rate hedged ETFs that have similar yields and almost no interest rate risk.

Published in Bonds: IG
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