Top Index Funds Based on IPO Stocks – FPX and CSD


 Initial Public Offering 
 as the Lifeblood of 
 Zesty Funds 


The vitality of an initial public offering (IPO) is a compelling approach to growth for an exchange traded fund (ETF). As a rule, a newborn listing in the stock market has a way of outpacing the market averages, especially during the first year of its debut on the bourse. In the combined approach, the robustness and longevity of an ETF can be fortified by the vigor and potential of an IPO.

In the popular image, an IPO refers to the sale of equity to the general public upon the initial launch of a bantam venture on a stock exchange. In the financial community, however, the terminology is also used to denote any type of fresh listing on the bourse.

An example of the latter is a stricken firm whose equity was delisted in the throes of bankruptcy proceedings. If an overhaul of the struggling firm turns out to be successful, then the return of the outfit to the equity market is regarded as the IPO of a reborn stock.

From a different angle, an exchange traded fund is a handy way to participate in diverse markets ranging from equities and bonds to commodities and currencies. In terms of scope, an ETF may cover a broad swath such as a whole industry or even the entire economy. An example of the latter is an index fund based on the flagship benchmark of the stock market; namely, the Standard & Poor’s index of 500 giants on the bourse.

From the converse stance, a communal pool could focus on a compact niche. Examples in this vein range from computer hardware and real estate to precious metals and foreign currencies.

Whatever the choice of market, though, an initial public offering can perk up the return on a portfolio. Since the autumn of the 20th century, a raft of studies have shown that an IPO is apt to outpace the bourse as a whole during the couple of years of its debut.

On the downside, though, the basic equities of operating companies are in general inapt as the primary vehicles for investment by the mass of participants in the stock market. The reason lies in the endless hail of sideswipes and smashups in every industry ranging from mining and shipping to software and banking. The bugbear stems from a fact of life which is ignored by the simplistic models of orthodox finance. In the real world, companies of all stripes break down and go bust all of a sudden, or fade out and die off in slow motion.

By contrast, an index fund is much more likely to lead a long and productive life. The longevity of the vehicle springs from the continual process of renewal as the aging champs within the underlying index are replaced by rising stars in the marketplace. Given this background, the best course of action for the mass of investors is to funnel most or all of their savings into communal pools based on market benchmarks.

On the downside, though, a market index is wont to track the established firms within its field of interest. For this reason, the corresponding pool will contain little or nothing in the way of fledgling ventures.

As we noted earlier, newborn stocks tend to outpace their older peers; and likewise outrun the bourse as a whole. In that case, the canny investor can ratchet up the return on investment by fleshing out a primary position in an ETF in any domain with a secondary stake in one or more budding stocks within the same niche.

An alternative ploy is invest in an index fund that consists entirely of new-sprung stocks. A pioneer on this front lies in a tracking vehicle called the First Trust US IPO Index Fund; the ETF trades under the ticker symbol of FPX. Another spearhead is found in the Guggenheim Spin-Off Fund, which goes by the call sign of CSD.

To place the performance of the vanguards in context, the index funds can be matched against a couple of renowned benchmarks of the stock market. In the larger scheme of things, the Standard & Poor’s index of 500 heavyweights stands out as the leading proxy for the bourse as a whole. Meanwhile the S&P 400 Midcap Index is arguably the standard bearer within the vale of midsize stocks.

Each of the foregoing yardsticks has spawned an index fund of its own. The offsprings carry the ticker symbols of SPY and MDY respectively.

During a window of evaluation stretching from 2006 to 2013, the index funds based on infant stocks – namely, FPX and CSD – beat the prime benchmarks of the stock market by a hefty margin. For instance, CSD trumped MDY by a solid lead despite a modicum of turbulence along the way. Moreover, the overall gain for the live wire was more than twice the payoff of 37% for SPY.

The story was similar for FPX only better. On a negative note, the dynamo was a tad more volatile than SPY as well as MDY. On the upside, though, the cumulative gain for FPX over the entire stretch was about 29% higher than the copious bounty bagged by CSD.


NOTE: The full briefing is a document in PDF form. The report, titled “IPO as a Growth Mode for an Exchange Traded Fund”, may be downloaded from the Library at MintKit Core.

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Midcap ETF Review for CSD, RPV and RYJ


 Performance of 
 Top Index Funds 


Given the attractions of an exchange traded fund, a midcap ETF review for the stock market paves the way for investing in lusty firms of moderate size. For this purpose, the first order of business is to select a timespan for sizing up the returns on investment.

On one hand, a lengthy window of observation provides a heap of data for a thorough analysis of performance. On the other hand, the broad-based approach has its drawbacks as well. One stumper springs from the dynamism within the financial forum. Due to the explosive growth of index funds in the millennium, a prolonged timespan has the side effect of brushing aside numerous entrants that have stepped into the arena only in the recent past.

For this reason, the wily investor has to strike a balance between the conflicting factors in order to pick an apt window of evaluation. In striking a compromise, a time frame of three years seems like a fitting choice in general.

From a different stance, the financial crisis of 2008 was a watershed in the global economy. In recognition of the landmark, a duration of five years ending in spring 2013 has the advantage of spanning the epic blowup and its aftermath. For this reason, the longer window of half a decade can provide a host of pointers on the true nature of motley markets.

In addition to grasping the price action in the arena, the wise investor takes into account a number of additional factors relating to the short run as well as the long range. A case in point is a modicum of liquidity needed for the artful player to enter and exit a given market in a timely fashion.

A second hallmark of the savvy investor lies in an aversion for levered vehicles. The reason stems from the constant threat of sudden death and/or gradual demise that dogs any type of rickety scheme based on high gearing. Due to the specter of certain doom, only a heedless speculator lusts after shaky contraptions pumped up by the gimmicks of leverage. In other words, the wise investor relies only on sturdy rigs that move with the target market in a direct and forthright way.

In sifting through a database of index funds focused on midsize firms, a straightforward approach is to begin with a muster of the front-runners in the field. Then the other factors such as liquidity and risk can be brought to bear on the appraisal.

In line with this thrust, we begin with a tally of raw performance over the course of three years ending in the autumn of 2013. The resulting list of candidates can then be whittled down further by a couple of secondary screens. As we noted above, the first filter deals with the liquidity of the ETF in the marketplace. Meanwhile the second criterion concerns the directness of the setup; that is, the absence of leverage.

Based on this regimen, the top 3 index funds turned out to be CSD, RPV and RYJ. The purpose of these pools is to keep pace with their respective benchmarks: the Beacon Spin-off Index, the S&P Pure Value Total Return Index, and the Raymond James SB-1 Equity Index.

Among these pacers, CSD turned out to be the clear winner. Moreover the return on investment for the spearhead displayed a series of higher peaks as well as rising troughs over the span of half a decade.

Of the pair of runners-up, the average payoff for RPV over the past three years was comparable to that for RYJ. On the other hand, the former pool broke down more severely than the latter during the financial flap of 2008. After the smashup, though, RPV for the most part kept up with its rival and managed to eke out a slightly better performance in recent years.

To place the turnout of the high flyers in context, the eagles were compared against a couple of renowned benchmarks of the stock market. Looking at the big picture, the Standard & Poor’s index of 500 giants stands out as a popular proxy for the bourse as a whole. Meanwhile the S&P 400 Midcap Index is arguably the leading beacon within the vale of midsize stocks.

Each of the foregoing yardsticks has spawned an index fund of its own. The offsprings carry the ticker symbols of SPY and MDY respectively. On the upside, the trio of winning funds for midcap stocks – namely, CSD, RPV and RYJ – trumped the popular benchmarks of the bourse by a solid margin.


NOTE:  The full report is a document in PDF form. The publication, listed under the title of “Midcap ETF Review for Investing in Top Markets”, may be downloaded from the Library at MintKit Core.

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ETF Review of Top 3 Picks for Consumer Cyclical Stocks – XRT, PEJ and XHB


 Comparison of Fund Performance 
 for XRT, PEJ and XHB 


A review of the top performers is a springboard for sound investing in consumer cyclical stocks by way of an exchange tradedf fund (ETF). To pick out the best choice of index fund, the first step is to round up the front-runners. In sizing up the firebrands, the key gauges include the speed of capital gains and the extent of price volatility

To this end, a basic criterion involves the rate of return over the past few years. On the other hand, a lot of index funds are relative newcomers to the field. For this reason, a prober who insists on a lengthy history will exclude a raft of candidates. At this early stage in the upgrowth of exchange traded funds, a fitting compromise between the length of the track record and the size of the candidate pool is a life span of 3 years.

For our purpose here, the period of evaluation straddled three years ending in the summer of 2013. During this stretch, the best performance was turned in by an exchange traded fund based on the S&P Retail Select Industry Index. The communal pool, which sports the ticker symbol of XRT, chalked up a gain of 30.92 percent a year on average.

The runner-up in the sweepstakes was a vehicle tied to the S&P Homebuilders Select Industry Index. The dynamo, which flies under the banner of XHB, managed to snag an average return of 29.73% per year.

Meanwhile the bronze metal in the race went to the PowerShares Dynamic Leisure & Entertainment fund. The hustler, branded as PEJ, snapped up a yearly gain of 28.46%.

In order to obtain a better sense of the performance figures, we need to put the results into a larger context. For this purpose, the benchmark of choice among professional investors lies in the Standard & Poor’s index of 500 titans listed on the stock market.

The latter yardstick is tracked with remarkable accuracy by an exchange traded fund that runs under the banner of SPY. The tracking vehicle turned in a bounty of 18.87% a year on average over the course of three years.

To sum up, the third place in the rankings was claimed by PEJ which surpassed the chief benchmark of the market by nearly 10% a year. By contrast, the outcome for XHB turned out to be a mite better by about 1%. Finally, the payoff for XRT was higher still by another percent or so.


NOTE: The full report is a document in PDF form. The resource, listed under the title of “Top ETF Review for Consumer Cyclical Stocks”, may be downloaded from the Library at MintKit Core.


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Smallcap ETF Review – Top 3 Index Funds for Healthcare, Energy and Growth Stocks


 Index Fund Performance 
 for PSCH, PSCE and IJT 


Given the drawcards of an exchange traded fund, a smallcap ETF review for the stock market lays the groundwork for investing with finesse in bantam firms. To this end, the first order of business is to select a suitable timespan for sizing up the candidates.

On one hand, a lengthy window of observation provides a heap of data for a thorough analysis of performance. On the other hand, the broad-based approach has its drawbacks as well. One stumper springs from the dynamism within the financial forum. Due to the explosive growth of index funds in the millennium, a prolonged timespan has the side effect of casting aside numerous entrants that have stepped into the arena only in the recent past.

For this reason, the wily investor has to strike a balance between the conflicting factors in order to pick an apt window of evaluation. In striking a compromise, a time frame of three years seems like a fitting choice in most cases.

From a different stance, the financial crisis of 2008 was a watershed in the global economy. In recognition of the landmark, a duration of five years ending in spring 2013 has the advantage of spanning the epic fiasco and its aftermath. For this reason, the longer window of half a decade can provide a host of pointers on the true nature of motley markets.

In addition to grokking the price action in the arena, the deft investor takes into account a number of additional factors relating to the short run as well as the long range. A case in point is a minimal level of liquidity needed for the artful player to enter and exit a given market in a timely fashion.

A second hallmark of the savvy investor is an aversion for levered vehicles. The reason lies in the constant threat of sudden death and/or gradual demise that besets any type of rickety scheme based on high gearing. Due to the specter of certain doom, only a heedless speculator lusts after shaky contraptions pumped up by the gimmicks of leverage. In other words, the sober investor relies only on sturdy rigs that move with the target market in a direct and forthright way.

In sifting through a database of index funds focused on smallish firms, a straightforward approach is to begin with a muster of the front-runners in the field. Then the other factors such as liquidity and risk can be brought to bear on the appraisal.

In line with this thrust, our search begins with a tally of raw performance over the course of three years ending in spring 2013. The resulting list of candidates is then whittled down by the duo of secondary screens. As we noted above, the first filter deals with the liquidity of the asset in the marketplace. Meanwhile the second criterion concerns the directness of the setup; that is, the absence of leverage.

Based on this routine, the top 3 index funds turned out to be PSCH, PSCE and IJT. These pools focus respectively on the healthcare sector, energy market, and growth stocks.

Within the ranks of acceptable funds based on bantam stocks, PSCH turned out to be the clear winner. The return on investment for the spearhead displayed a series of higher peaks as well as rising troughs over the span of three years following its debut in the stock market in spring 2010.

Of the pair of runners-up, the average payoff for PSCE was comparable to the turnout for IJT. On the other hand, the latter vehicle was a lot less volatile compared to the former. For this reason, IJT was the better choice for the genuine investor.

To place the performance of the high flyers in context, the eagles were compared against a couple of renowned benchmarks of the bourse. Looking at the big picture, the Standard & Poor’s index of 500 giants stands out as a popular proxy for the stock market as a whole. Meanwhile the Russell 2000 Index is arguably the leading beacon within the vale of bantam stocks.

Each of the foregoing yardsticks has spawned an index fund of its own. The offshoot vehicles carry the ticker symbols of SPY and IWM respectively. On the bright side, the trio of winning funds for smallcap stocks – namely, PSCH, PSCE and IJT – trounced the standard benchmarks of the bourse by a comfortable margin.


NOTE: The full briefing is a document in PDF form, available for online viewing or offline download. The publication, listed under the title of “Smallcap ETF Review for Investing in Top Markets”, resides at the Library at MintKit Core.


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Thailand ETF Review Featuring a Top Stock Market in Asia



 Index Fund Performance for THD 
 Versus Benchmarks for 
 Mature and Emerging Markets 



In picking an index fund bound for growth, a review of the exchange traded fund (ETF) for Thailand sets the stage for investing in a top stock market in Asia. For this purpose, the vehicle of choice is an ETF that trades in the U.S. under the ticker symbol of THD.

As with budding markets in general, the bourse in Thailand is wont to thrash around a lot more than those of the mature regions. For this reason, the volatility of the market is as important as the return on investment in sizing up the corresponding fund.

On the upside, THD has turned in a rousing performance over the past few years in spite of the stormy weather kicked up by the financial crisis of 2008 and its aftershock. On one hand, the index fund crumbled more than the broad benchmarks of the emerging markets as a whole. Despite the smackdown, however, THD regained its vigor in short order and continued to trudge higher in the years to follow.

From a larger stance, the benchmarks of the emerging regions have been unable to recover fully from the pounding they received during the financial flap. As a result, the tracking funds for the sprouting markets have lagged behind the foremost benchmark of the bourse used by professional investors.

Despite the poor showing of the emerging regions in general, Thailand has managed to outshine its peers. Granted, the stock market did encounter a number of setbacks along the way. A case in point was the takedown prompted by the crash of the American bourse in the autumn of 2011.

By contrast to their usual behavior, the emerging regions as a group have fared worse than the U.S. market in recent years. Even so, Thailand has turned out to be one of the bright spots on the global stage.

In short, the exchange traded fund for Thailand has turned in a sparkling performance since the financial crisis and its fallout. On one hand, THD has been somewhat more volatile than the broad-based vehicles for the emerging regions; in particular, the index funds sporting the labels of EEM and VWO. In line with their usual behavior, the latter vehicles were in turn more flighty than the flagship pool for the mature markets; namely, the tracking vehicle known as SPY.

On the bright side, though, the exchange traded fund for Thailand has outpaced SPY by a hefty margin over the span of half a decade, and likewise for the past few years. Given this backdrop, many an investor would have done well to trade off a modicum of turbulence in return for the windfall turned in by THD.



NOTE: The full briefing is a document in PDF form, available for online reading or offline download. The report, listed under the title of “Thailand ETF Review for a Top Stock Market in Asia”, resides at the Library at MintKit Core.


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Forecast of Top Index Funds for Equities in 2013


 ETF Review and Outlook  
 for DIA, SPY and QQQ 



A review of the top index funds sets the stage for an orderly approach to forecasting and investing in the stock market. For this purpose, the prime vehicles lie in the exchange traded funds for the leading benchmarks in the form of the Dow Jones Industrial Average of 30 giants, the S&P index of 500 heavyweights, and the Nasdaq index of 100 stalwarts. The tracking vehicles for these yardsticks are found in DIA, SPY and QQQ respectively.

By contrast to popular perception, the real and financial markets are intertwined not only in the future but also the present which in turn springs from the past. Given this backdrop, the adroit planner surveys the landmarks in the backward direction as well as the conditions in the current environment.

Moreover the outlook over the months to come depends not only on the winds in motion at this stage but also the waves taking shape for the following year. For this reason the forecast at hand draws partly on, and sketches out, the prospects for 2013 and further beyond.

From a practical stance, the companies listed in the stock market earn their living within the economy at large. That much is true even in the case of virtual outfits such as online retailers and brokerage firms. As a result, the aggregate level of economic output plays a vital role in the turnout of profits and thus the status of the equities listed on the bourse.

In terms of recent trends, the conditions in the marketplace have not changed a great deal over the past few years. On the downside, the politicians of the West have gone out of their way to solidify the distortions in the housing sector in the wake of the financial crisis of 2008.

Another boondoggle involved the prop-up of some of the biggest and most unproductive firms in the economy. For this purpose, trillions of dollars were wasted in the form of bailouts for a gaggle of pulped banks.

To make matters worse, the struts put in place have prevented the property market from shedding the mountain of blubber it accumulated during the manic bubble in real estate prior to the financial blowup. For this reason, the growth rate for the entire economy is destined to be measly well into the 2020s.

On a positive note, however, the slowdown in China appears to have run its course for now. As a result, the Middle Kingdom will contribute more to the progress of the world economy in 2013 than it did last year.

In line with earlier remarks, though, the prospects for the industrial nations are tepid at best. In that case, the emerging countries of the world will have to plod along amid the general weakness in the global marketplace.

In short, the outlook for the real economy has improved a tad since the same time last year. In particular, we can expect the rich nations of the world to putter along and make way by about 2 percent after adjusting for inflation based on official figures published by government agencies.

In gauging the standard of living, however, the upturn in economic output ought to take account of the growth of the population due to net immigration into the wealthy countries. To this end, a representative figure is an increase in head count of 1 percent a year for the U.S. as well as a raft of other countries. In that case, the gain in real output per person comes out to a mere 1 percent or so.

By contrast, feisty countries such as China and India should fare much better. For the spearheads, a ballpark figure involves an advance of 8 percent or so over the course of 2013.

Thanks to the patchy but improving conditions in the global economy, the stock market is poised to climb higher as well. The cheery outlook shows up in the upward slant of the top index funds over the course of the year.

Looking downrange, the next milestone for DIA (also known as the Diamonds) lies at a price of $140.71 per share. The latter landmark is likely to be reached by the middle of the year.

After that stage, DIA will fall back toward its previous peak at the $135 level. Then the index fund is slated to touch the subsequent milepost of $145 by the end of this year.

At the close of 2012, the Diamonds wound up at a price of $130.58. By comparison, the first checkpoint going forward – at $140.71 – lies some 7.8% higher than the year-end value.

Meanwhile the second peak at $145 stands 11.0% beyond the terminal price for 2012. After that stage, the index fund is apt to fall back toward its previous summit.

A wrinkle in the forecast stems from the behavior of SPY (alias Spyders). If the latter vehicle breaks out into virgin terrain, then the Diamonds will naturally follow suit. In this way, the next big move for DIA depends in part on the turnout for SPY.

On one hand, the Spyders are bound to spin their wheels at a historical boundary marked by a chain of prior peaks stretching back to the turn of the millennium. Even so, the index fund will pull free of the quagmire at some point. When the Spyders move beyond the watershed in a decisive fashion, the Diamonds will celebrate the event with a similar thrust.

Over the near range, the first peak for SPY will occur at a price of $155. The latter landmark stands 8.8% beyond the closing level for 2012. The upcoming threshold could well be reached by the summer this year.

After touching this barrier, the index fund will stall and stumble back toward the $147 zone. There it will likely flounder for a few months at least.

The outpost in the $155 zone poses a major block to further progress. As noted earlier, the reason lies in a series of historical peaks at that level. As an example, the Spyders hit a price of $155.53 in July 2007 followed by $157.52 just three months later. The story is similar for a crest at $155.75 in March 2000, followed by an echo of $153.59 half a year onward.

In general, it takes about 3 attempts for a financial vehicle to surmount a newfound peak. As it happens, SPY is now approaching the hulking barrier for the fifth time. On the surface, then, the market is long due for a breakthrough based on its habitual behavior.

On the glum side, though, the highs in 2000 were scaled in the midst of a humongous bubble in the stock market. Although the uproar pumped up the Nasdaq market the most, the frenzy infected every patch of the financial forum as well as the real economy. In a comparable way, the zenith reached by SPY in 2007 arose at the height of the greatest bubble in real estate in modern history.

Given this background, the peaks attained during the sprees of excess since the turn of the century were extreme as well as premature. In other words, we are now approaching the lofty heights at $155 in a sober way for only the first time.

For this reason, the path forward is likely to be rocky as well as slippery. More precisely, SPY is bound to advance and retreat several times before leaving the $155 threshold for good. In this way, the market will thrash around for many months – or more likely a few years – after its next entry into the recurrent zone.

At this stage, we should note that the setup is comparable for the Diamonds. More precisely, DIA will go nowhere fast while SPY flails around at the $155 roadblock.

When the barricade is breached, the next milepost for the Spyders lies in the neighborhood of $170. The latter landmark towers 19.4% beyond the closing value of $142.41 at the end of 2012.

On a negative note, though, the Spyders will be hard-pressed to reach the soaring target this year. Instead, the index fund might have to wait another year or so before attaining the objective.

By contrast to the labored progress of the Spyders and Diamonds, the outlook differs somewhat for QQQ (a.k.a. the Qubes). The Nasdaq fund has a long way to go before it regains its prior peak at the height of the Internet craze.

At the end of 2013, the index fund wrapped up the year at a price of $65.13. The latter figure is a far cry from the apex of $232.88 touched in March 2000.

On one hand, the latter landmark was attained in the throes of the Internet craze. At the time, the deluge of hype and hysteria in the stock market bore scant resemblance to the actual prospects in the real world by way of digital technology and its applications.

Even so, the mad dash to airy heights during the cyber spree has left a lasting imprint. Despite the unhealthy nature of the ascent, the prior spurt has smoothed the way for a fresh stab at scaling the alps.

For this reason, the Qubes will likely trudge ahead even as the Spyders and Diamonds flop around near their respective thresholds over the next couple of years. In other words, QQQ should clamber upward in fits and starts throughout the slippy period when SPY and DIA keep sliding back toward their historical peaks.

The first milestone for the Qubes lies at a price of $73. This target, which stands 12.1% above the closing value for 2012, could be grasped by the summer this year.

The next milepost for the index fund crops up at the $78 level. The objective hovers 19.8% beyond the terminal value for 2012. On a negative note, though, the landmark might not be reached until the turn of the year.

In these ways, the trinity of index funds for the U.S. bourse will tramp onward and upward through a series of zigzags as usual. The story will unfold in a similar fashion for the other stock markets round the world. On the whole, we can expect the bourses of the budding regions to advance roughly twice as much as the Diamonds or Spyders. An an example, a gain of 11% for DIA should produce an uplift of 22% or so for the emerging markets.


NOTE: The full report is a document in PDF form. The publication, listed under the title of “Forecast of Top Index Funds for Investing in the Stock Market”, may be downloaded from the Library at MintKit Core.


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