coleman etf fund sector & regional captain presentations
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Coleman ETF Fund
Sector & Regional Captain Presentations
Domestic Sectors
COLEMAN:DOMESTIC ETFS
Consumer Staples
&
Water Utilities
Bob Goslin
Mike Cavanaugh
CONSUMER STAPLES
Powershares Dynamic
Consumer Staples – PSLMorningstar Rating:
• Net Assets: $39 million
• Morningstar Risk Rating: Average
• Morningstar Return Rating: Average
iShares Dow Jones U.S.
Consumer Services – IYCMorningstar Rating:
• Net Assets: $ 160 million
• Morningstar Risk Rating:Low
• Morningstar Return Rating:Average
Consumer Staples
Top 10 Holdings:
Walgreen Co.Coca-Cola Co.General Mills, Inc.Proctor & Gamble Co.Philip Morris Int’l Inc.Kellogg CompanyColgate-Palmolive Co.PepsiCo. Inc.Archer Daniels
MidlandKimberly-Clark Corp.
% YTD Return % Net Assets
57.29 2.7020.06 2.6610.01 2.65-2.46 2.6413.79 2.6119.82 2.5715.66 2.5412.08 2.5112.14 2.4820.97 2.39
Powershares Dynamic Consumer Staples – Ticker: PSL
Top 10 Holdings:
Wal-Mart Stores, Inc.
McDonald’s Corp.CVS Caremark Corp.Walt Disney Co.Home Depot, Inc.Amazon.comWalgreen’s Co.Time Warner, Inc.TargetComcast, Inc.
% YTD Return % Net Assets
-8.67 8.85-0.64 5.1926.84 4.1323.53 3.8311.36 3.47128.35 3.0461.50 2.9837.31 2.8644.11 2.67-15.14 2.44
iShares Dow Jones U.S. Consumer Services – Ticker: IYC
Performance Comparison:Consumer Staples
Powershares: PSL iShares: IYL
Trailing Total Returns
Market Return %
NAVReturn%
Market Return %
NAVReturn%
YTD 15.39 15.98 23.08 23.19
1 Month 1.08 1.35 1.77 1.53
3 Month 3.66 3.30 6.87 6.70
6 Month 12.98 15.28 13.88 16.80
12 Month 7.47 9.06 16.87 19.48
3 Year Annualized 0.17 0.21 -6.02 -6.11
Other Key Figures: Consumer StaplesPowerShares iShares
Fund Inception Date October 2006 June 2000
Expected Returns 11.76% 13.66%
Market Price 23.89 51.50
Fair Value Estimate 25.04 56.57
Price/Fair Value 0.95 0.91
Beta (S & P 500) 0.72 0.96
Alpha 3.80 -0.28
Volatility (Std. Dev. 3 years) 15.57 20.28
WATER UTILITES
Powershares Water Resources – PHOMorningstar Rating:
• Net Assets: $1,328 Million
• Morningstar Risk Rating:
Above Average
• Morningstar Return Rating:
Above Average
Water Utilities
Top 10 Holdings:
AECOM Technology Corp.
Tetra Tech, Inc.
Valmont Industries, Inc.
URS Corporation
Veolia Environment ADR
Itron Inc.
Danaher Corporation
Roper Industries, Inc.
Flowserve Corporation
Ameron International, Inc.
% YTD Return % Net Assets
-18.29 5.178.03 5.1521.27 5.14-3.04 5.147.69 5.06-3.92 4.6022.01 4.5617.29 4.1694.29 4.12-1.65 3.93
Powershares Water Resources
Performance – PHO
Trailing Total Returns Market Return % NAV Return %
YTD 11.44 10.66
1 Month 0.51 0.95
3 Month -0.54 1.25
6 Month 9.58 13.78
12 Month 14.80 14.70
3 Year Annualized -2.74 -2.59
Other Key Figures: Water UtilitiesPowershares Water Resources PHO
2008 Market Return % 32.43
2008 NAV Return % 32.17
2007 Market Return % 16.73
2007 NAV Return % 17.22
Beta (S & P 500) 1.24
Alpha 7.31
Volatility (Std. Dev. 3 years) 26.96
DOMESTIC ETF’S
November 5, 2009
Pavala Kane: Information Technology
Olivia Pietrunti: Personal Products
Sumedha Verma: Household Products
Ebele Nwaoduah: Food Products
Kevin Hylinski: Household Durables
•Corporate efficiency
• After layoffs
•Small IT budgets
•Positive growth in most areas of outsourcing
• Risk: US unemployment
•Health Care industry
• Obama
• Evolution
Decision:YES
Information Technology
Vanguard Information Technology ETF - VGT
•Price: $49.77•Key Holdings:
• Microsoft (9.43%)• IBM (7.93%)• Hewlett- Packard (5.23%)• Accenture (1.07%)• Automatic Data Processing (0.94%)
•Includes software, hardware, internet, and other tech related stocks•Mostly large-cap > long-term competitive advantage•0.25% expense ratio
•Pantry and Medicine Cabinet “de-stocking”
•Emphasis on value products
• Margins
•Much restructuring within the sub-industries - costs
•Weak consumer spending
•Weakening dollar
• International business
•A few strong picks
Decision: NO
Personal and Household Products
•Agricultural products and packaged foods
•Cooking rather than dining out
•Inexpensive brands, reduced purchase volume, coupons
•Consolidation among retailers - overhead
•Hyper Markets & Super Centers
•Defer spending on others goods
•Commodity prices - wheat, corn, and cattle
Decision: YES
Food Products
Vanguard Consumer Staples ETF - VDC
•Price: $65.31•Key Holdings:
• Wal-Mart Stores (9.35%)• Coca-Cola Company (8.09%)• Kraft Foods (3.81%)• Costco Wholesale (1.99%)• General Mills (1.81%)• Kroger Company (1.24%)
•Brings in strong personal products (PG and CL) •Mature and stable cash flows
•Appliances and Furniture
• Highly correlated to real estate and consumer spending
• Unemployment and household debt hurt home improvement spending
•Absent replacement cycle
• major kitchen and laundry appliances
•Furniture has minimum pricing power and low net margins
Decision: NO
Household Durables
ENERGY EQUIPMENT & SERVICESCONSTRUCTION & ENGINEERINGSOFTWAREMETALS & MINING
• Credit crisis, global recession, price volatility• = pullback in capital spending by producers• Brunt of the pullback is in North America and
natural gas• ST: greater emphasis on development• LT: demand should recover as demand for oil
recovers– Increased efforts to boost supply– Companies searching for additional drilling opportunities
Energy Equipment & Services
• Positive outlook for industry as a whole– Economic recovery, expectations of increased oil
consumption– Thin spare capacity, high field depletion rates
• ETF:– 63.27% YTD / -14.48% 1 Yr / 1.65% 3 Yr– Holdings relatively equal– Schlumberger, Haliburton, FMC Tech, Baker
Hughes
SPDR S&P Oil & Gas Equipment Services ETF (XES)
• Negative• No significant growth expected within
investment horizon• Sector relies on big construction projects,
which are at a standstill due to economic environment
Construction & Engineering
• International• Current ST cut backs in technology spending• Companies implementing new technologies to
save time and resources• Positive trends:
– Consolidation– Rapid growth of the internet and network computing– Demand for systems software and applications that
take advantage of new tech
Software Industry
• Tracks US-traded software related stocks• 36.82% YTD / -0.41% 1 YR / 0.21% 3
YR / 4.82% 5 YR• Microsoft, Adobe, Symantec, Oracle
iShares S&P North American Technology-Software Index Fund (IGV)
• Highly sensitive to business cycle• High gold / silver / copper prices + weak
dollar = good returns• Coal producers should perform well due to
electricity, steel demand• Global in scale• Con: if economy doesn’t recover, then not a
good sector
Metals & Mining
• Tracks S&P select industry• 65.35% YTD / -1.84% 1 YR / 4.20% 3
YR• Freeport-Mcmoran, Newmont Mining,
Alcoa, Nucor, Consol Energy
SPDR S&P Metals and Mining ETF(XME)
Regional ETFs
EURO ZONE REGION
Eurozone Region
• Recommended for investment– Germany
• Not recommended for investment– Austria– Belgium– France– Italy– Netherlands– Spain
Germany
• Pros– Manufacturing stabilizing and
improving– Exports stabilizing and improving– Stable government
• Cons– Slow growth– Consumer demand– Business investment
Germany ETF
• Name: iShares MSCI Germany Index Fund• Ticker: EWG• Sector Weights:
ASIAN REGION
• Pros- Net Assets- $8.860 Million• 8.7% GDP growth expected • Pipeline from Russia• Gradual decrease in deficit
• Cons- Domestic Politics!!• Hu vs. Xi• Ethnic Minorities• Trade Tensions• 50% Financials
CHINA FTSE/Xinhua China 25 Index Fund (FXI)
• Cons- Domestic Politics!!• Former
Pres. Typhoon• Infrastructure• High Speed
Rail• 15.68% Financials
• Pros- Bilateral Trade Agreement
with China• 58.5% IT• Top Holding are
strong• Expect Rate
Cuts Mid 2010
Taiwan MSCI Taiwan Index Fund (EWT)
(EWY)
Cons- -North Korea-Volatile Currency
Pros- -Diversity-Top Holdings-Ties to Superpowers-Business Friendly-Lower Fiscal Spending
South KoreaMSCI South Korea Index Fund
SWEDEN & TURKEY
TURKEY
Pros:• 2002-2007 solid GDP growth of around 7%
per year• Privatization a key to economic growth• Young and urbanizing population• Reduction in Debt/GDP ratio• Monetary policy focused on lowering inflation
• EIU’s overall business rating got upgraded from 5 to 6 in 2004
• Macroeconomic stability rating went up from 6 to a 7 in 2007
• Bright spot in Europe• Contributes towards geographical
diversification
Cons: • Several short comings in country’s infrastructure still
persist• Prone to severe economic and financial crises (e.g.
2001)• 2009 real GDP was -5.7% • Terrorist attacks can be an economic threat
TUR (MSCI Turkey Investable market Index)
• Fund Inception date: 3/26/2008• Tracks the IMI index (0.99 correlation)
Inception: 1994• ETF has been performing very well
YTD: up 89%
1 year: up 16.83%
• Recommendation: YES
SWEDEN
Pros• The Swedish economy appears to bottom in
fourth quarter 2008• Second quarter 2009 economic results were
better than expected• EIU’s Overall business environment rating is at 8• Government has committed itself to Skr38bn
($US4.5bn) of additional spending through 2011• Trade and service surplus are expected to narrow
but remain positive through the end of 2010
Cons• GDP projected to be under 2% for the next two
years• Macroeconomic rating has dropped from 10 to
8 in recent times.• The Krona has been weakening since
September 2008• Slump in global demand has hurt Sweden
exports tremendously • Recovering credit markets
EWD (MSCI Sweden Index)
• Good returns in recent times:
YTD up around 60%
1 year around 19%
• Since inception up 8.65 %
Recommendation: YES