Monday, July 27, 2009 Welcome to the ETF Hotline Report for Monday, July 27, 2009 The Sector Momentum Tracker ETF Portfolios — Sector and International Investing Using Relative Strength. Please see the table below for short- and long-term results.In this Issue: Please note: This is NOT our weekly Sector Momentum Tracker newsletter. If you are a subscriber to the Sector Momentum Tracker and need assistance following our newsletter devoted to ETF and mutual fund sector investing, do not hesitate to call us at (800) 548–3797. We hope that you continue to benefit from this email Hotline, which only provides insight to weekly sector activity but does not substitute for the trading system provided by our newsletter, which is published every Wednesday. Click Here to learn more. Weekly Outlook Ben Bernanke fended off a hostile Congress, and stocks advanced last week. Aside from Bernanke’s grilling, the semi-annual report to Congress contained the following sentence: “The FOMC anticipates that economic conditions are likely to warrant maintaining the federal funds rate at exceptionally low levels for an extended period.” That is what the market wanted to hear, and negative economic implications aside, the S&P 500 Index gained 4.13 percent. This morning, the Commerce Department reported that home sales increased 11 percent last month, the largest increase since 2001, although sales prices are down more than 10 percent. New home supply and inventory is declining, and homebuilder ETFs reacted positively to the news. iShares Dow Jones U.S. Home Construction (ITB) and SPDR S&P Homebuilders (XHB) outpaced the market this morning, and in the past two weeks, ITB gained 24.95 percent versus a 24.06 percent gain in XHB. An ongoing development in the ETF industry is the assault on leveraged ETFs. Last week, Edward Jones removed the products from their offerings, and today UBS joined them. UBS banned non-leveraged inverse funds as well, which have not performed poorly. Liquidity in these shares could become an issue as more and more brokers refuse to offer these products to clients. I suspect that many buy-and-hold investors have lost money on these funds, since both the double-long and double-short ETFs have, in many cases, both lost money. On Friday, the government will release advance GDP numbers for the second quarter, but the number itself is secondary to the market’s reaction. We are already one-third of the way into the third quarter and both bulls and bears are looking ahead, not behind. Fidelity Independent Adviser Sector Momentum Tracker Model Returns
*Sector Net returns have been reduced by Dion Money Management’s highest fee, currently 0.45% per quarter. Indexes do not include dividends. See Performance Disclosure below.
*International Net returns have been reduced by Dion Money Management’s highest fee, currently 0.45% per quarter. Indexes do not include dividends. See Performance Disclosure below. If you would like more information about the Sector Momentum Tracker, our newsletter devoted to sector and international investing, do not hesitate to call us at (800) 548-3797. Or Click Here to learn more. Momentum Gainers PBE gained 17.63 percent last week on the back of Human Genome Sciences (HGSI), which quadrupled after it announced a successful clinical trial for its lupus drug. IBB benefited from the halo effect but only gained 8.84 percent. It has only a very small allocation in HGSI. In terms of long-term momentum, both PBE and IBB are weaker than the S&P 500 Index because the sector underperforms during the rallies (last week being an exception). Whether the positive outcome for HGSI sparks a broader shift in sentiment for the sector remains to be seen. In the past month, PBE advanced 23.69 percent and IBB gained 11.04 percent. Momentum Losers Agriculture Markets are starting to trade with less correlation now, with some separation between commodities and equities. DBA has lost 6.05 percent in the past month compared to an 8.69 percent gain in the S&P 500 Index. Warmer temperatures in the crop growing regions have boosted harvest estimates, while deflation continues to eat away at prices. Do you have questions pertaining to the ETF Hotline or any of our ETF newsletters? Call us today at (800) 548-3797. Please take a moment and add this email address to your address book or “white list”: info@fidelityadviser.com And for more information about email delivery problems or to make sure that our emails are not being blocked, please click here. You can now update your Email preferences in our Email Preference Center. In the preference center, you can specify which hotlines you would like to receive. Once updated, you will only receive the content you specify. Fidelity Independent Adviser is completely independent of, and not affiliated with, Fidelity Investments or any of the Fidelity mutual funds listed above. Performance Disclosure.All models and tables presented in this publication are the product of Fidelity Independent Adviser Newsletter, LLC, an independent company operated by Donald R. Dion, Jr., President of Dion Money Management, LLC (DMM), a registered investment adviser that manages assets for individuals, families, trusts and non–profit organizations. The Fidelity Independent Adviser is completely independent of and not affiliated with Fidelity Investments. The model performance returns are compiled by Fidelity Independent Adviser from historical returns of a determined mix of selected mutual funds or exchange–traded funds based upon investment strategies. These results include the reinvestment of all dividends and capital gains. Beginning 3/31/2007, portfolio returns are net of Dion Money Management’s highest fee, 0.4375% per quarter. The model results do not represent actual recommendations or trading. Model results do not reflect the impact of material economic and market factors that impact DMM’s decision–making if DMM were actually managing clients’ money. Because DMM manages its actual client portfolios according to each client’s specific investment needs and circumstances, model results may in some cases differ significantly from the results our clients achieve, due in part to timing of the recommendations by DMM, market conditions, client money market balances, and timing of client deposits and withdrawals. In addition, client portfolios may contain less or more funds and may contain different funds in order to meet client needs. Model performance results may have inherent limitations. No representation is made that any account will or is likely to achieve profits or losses similar to those shown, and there are frequently significant differences between hypothetical performance results subsequently achieved by following a particular strategy. Model trading does not involve financial risk, and no model trading record can completely account for the impact of financial risk associated with actual trading. Other factors related to the markets in general or the implementation of any specific trading strategy that can adversely affect actual trading results cannot be fully accounted for in the preparation of model performance results. The volatility of the S&P 500, Wilshire 5000, Russell 2000, Dow Jones and Nasdaq indices may be materially different from that of the client’s account, the securities holdings of which may differ significantly from those of the indices. The indices’ results shown reflect reinvestment of dividends unless otherwise noted. These indices have not been selected to represent appropriate benchmarks to compare the clients’ performance, but rather are disclosed to allow for comparison of the client’s performance to that of well–known, widely recognized indices. This material has been prepared solely for informational purposes. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. All investments involve risk including loss of principal. |
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Interview with Paul Frank
For this interview, Don Dion met with Paul Frank, portfolio manager of the ETF Market Opportunity Fund (ETFOX), formerly the Navigator Fund (NAVFX), to get an inside look at one of the top–rated ETF–comprised mutual funds available today. In the rapidly growing ETF industry, ETFOX will hit the five–year mark in spring 2009, and it recently garnered a five–star rating from Morningstar and the distinction of Lipper Leader for Preservation of Assets from Lipper Fund Services. |
Your Guide to Financial Independence Starts Here; Call Today (800) 432–7447 or Visit Us Online at www.dionmm.com |
The Sector Momentum Tracker |
The Sector Momentum Tracker newsletter had an annualized return of 26.6% in 2007 according to the Hulbert Financial Digest and was a 2007 top–ten performer according to Peter Brimelow of MartketWatch! The Fidelity Independent Adviser Sector Momentum Tracker is a weekly strategy that entails investing in high–quality, top–performing exchange–traded funds. Each week we give you advice on how to allocate your portfolio in the appropriate funds based on tested buy–and–sell signals. Our approach to ETF investing is quantitative and focused exclusively on achieving exceptional long–term results. The Sector Momentum Tracker follows a real–time trading strategy that monitors and evaluates 78 sector and international iShares ETFs at all times and then determines which ETFs you should invest in based on recent momentum. That removes the guesswork, because our proprietary system tells you exactly what to do and when to do it. CLICK HERE for details or visit www.fidelityadviser.com. |
