commentary

Jul 17 2018

New FT Comm Out Today

New FT Comm v5.0.1.10

A new FT Comm update is out today. Click the “upgrade” button when you open FT Comm to download version 5.0.1.10. Check out the manual here: https://investorsfasttrack.com/ft-comm-manual/

Improved Backup Strategy

In this update, we’re rolling out a handful of improvements. The most notable is our improved file back up feature. In the new update the process is much simpler, has $0 additional cost, and now allows for reverting to any previously saved backup, not just your most recent. See the documentation here: https://investorsfasttrack.com/ft-comm-manual/#backup

Simplified Nightly Update

Additionally, we’ve simplified the nightly update process. In the new version 5.0.1.10, there’s now only one data update option: “Data update and integrity check.” (Previous versions included two distinct processes: “data update” and “integrity check.”)

Faster internet and server speeds have allowed us to combine the options for a single, quick and efficient update of all FastTrack data. The new option download updates your database files AND includes checks on all historical dividends and closing prices, as well as checks your FastTrack program files for updates.

Nightly Update Available Earlier

Also, while this update not only provides a better experience for you, the customer, the new update strategy simplifies things on FastTrack’s end. That means we’re expecting to get the nightly data out approximately 8-10 minutes earlier each night. We’re expecting the new, earlier update time to be realized at the end of August 2018.

FastTrack is continuing to move our products forward and enhance the service level. This is a very, very exciting release!

Any questions or comment, reach out to us at our phone number above or directly to daniel at fasttrack.net

Apr 24 2018

What’s in the FastTrack Stocks Database?

We’ve posted in the past about the decreasing number of investible stocks in the US (https://investorsfasttrack.com/is-passive-active/). Per the post, there’s about 3,000 investible companies listed in the US. But, FastTrack has approximately 4,500 stocks in the database. What makes up the difference?

First, FastTrack tries to include every stock listed on the NYSE and NASDAQ exchanges (including NYSE Arca and NYSE American). Those exchanges both have their own price, market cap, and volume requirements for listing/maintaining a listing. We update new listings/ discontinued issues as they IPO and/or approximately every month.

Adding all NASDAQ and NYSE tickers brings us to approximately 4000 tickers. Next, we take any liquid, large and mega cap over the counter ticker and add those in. Those names are typically international companies such as Tencent Holding, Royal Dutch Shell, Nestle SA, HSBC Holdings, Toyota Motor, etc. Typically there are 300-400 such tickers, rounding the database out to ~4,500.

There are thousands more OTC tickers out there, but the data quality and investability of those assets are low, so we can’t include them in the database.

Now, with all those tickers at hand, it’s very useful to sort and sift those securities with the the FT Cloud or FastTrack family sieve. In the screenshots below we’ll use the FT Cloud family sieve to analyze all liquid large securities.

Sign in to FT Cloud, click the “Spreadsheet/Chart” tab, then click the “Load Family” in the upper right corner.
Expand the Stocks >> Avg Volume Trees on the left of the new window
Select each of “Volume-Over 5 Mil” then click “Add” in the upper right
Select each of “Volume-1-5 Mil” then click “Add”
Select each of “Volume-500k-1Mil” then click “Add”
Click “Load” at the bottom right

Now, you should see the ~1,800 liquid securities on the spreadsheet

Mar 26 2018

Smart Beta and High Yield

We’re highlighting smart beta and actively managed ETFs again this week. While still a small portion of the overall market (see the attached article), increased market volatility and rising interest rates are bringing investor interest back to active.

For now, mostly in bond products, but re: the attached article, international and emerging market products are picking up, with $239 billion in fund flows last year vs $692 billion flowing into passively managed funds

Here’s how you would use FT Cloud to investigate the investment prospects of the active high yield funds highlighted in the article.

Load spreadsheet and click “Load Family” in upper right.
Expand the tree to “Funds & ETFs” >> “Fixed Income” >> High Yield. Double click high yield to load all high yield tickers into the grid on the right.
Next, expand “Funds & ETFs”>> “Company”>> “ETF.” Then single click “All-ETF” and the press the “And” button on the upper right. This remove any tickers that are not in both the “High Yield” and “All ETF” family. This will leave us with only the High Yield ETFs.
Next click load and start analyzing the ETFs in the spreadsheet. Rank by risk, return, correlation, and performance compared to the benchmark. See last weeks article on how to choose a benchmark (https://goo.gl/fCQgHd)

https://www.cnbc.com/2018/03/19/seeking-downside-protection-investors-check-actively-managed-etfs.html

Mar 19 2018

How to Choose an Benchmark – Market Indexes

We get lots of questions about indexes, specifically what are the appropriate indexes to use on the spreadsheet benchmark field. The short answer is… for US Equities use an US equity benchmark (SP-DA – S&P 500 div adjusted) and bonds use a bond benchmark (AGG-X – Barclays Aggregate Bond Ix) .

But, if you’re doing a more specific analysis, use a more specific index. For example:

High Yield: MLHY- Merrill Lynch US HY Master II H0A0 Index
Financial Equities: IYF-X ETFINDEX Financial Index
Preferreds: PFF-X ETFINDEX S&P US Preferred Stock Ix
Semiconductors: SCY-X ETFINDEX Semiconductor Index
BioTech – DJ-BT Indexfam DJ US Biotechnology Index
Global STocks – DJW-X Indexfam DJ Global Index
China – DJ-CB Indexfam DJ China Broad Market Index

FastTrack’s got an index family that lists all indexes in the database. Today we have over 400 and are adding more as they appear. Also, in FT Cloud you can click the “search” link at the top of every page to open the search window. There are you can ticker and key word search all indexes (as well as the rest of the database.)

While we’re on the topic of indexes, here’s an interesting article on the makeup of the popular AGG Aggregate bond index. Below is a great quote from the article. Like many traditional indexes, AGG is a market cap weighted index. While we all can understand this in equities (larger the value of combined equity the larger the weighting). For bonds though, it’s the larger the total outstanding debt, the larger the weighting. So… more debt (and sometimes leverage), the higher the weighting. Its not quite the same math.

“If you think about the construction of traditional indices, a market-cap weighting structure. It makes more sense in equities. On the bond side, it gets a lot harder. A market-cap weighting system where you give the highest weight to the most indebted issuers is not ideal,” ….

https://www.marketwatch.com/story/are-investors-getting-more-risk-with-passive-bond-funds-than-they-bargained-for-bis-asks-2018-03-14

Feb 12 2018

How are low volatility ETFs holding up?

Over the past 5+ years, a variety of low volatility equity ETFs have launched with rapid growth. In light of the recent market volatility, how are the funds holding up? The top three are listed below and have a combined AUM of $24 billion:

SPHD – PowerShares ETF S&P 500 High Div Low Vol
SPLV – PowerShares ETF S&P 500 Low Volatility
USVM – iShares ETF MSCI USA Minimum Volatility

The FT Cloud SpreadSheet below highlights that the dividend adjusted stand deviations are in fact lower than SPY. So, the funds are producing the described lower volatility.

But what do we think about recent max drawdown numbers and the trailing 12 month returns? The picture below highlights the trailing 12 months total returns and recent draw down. While the ETFs are producing only 80-90% of SPY’s monthly volatility, they’re producing 90%+ of the drawdowns and a mere 20-80% of the returns.

Over the longer term (3 year, 5 year, and common start date), the ETFs are showing consistent lower SD while maintaining comparable annualized returns. See the three year, 5 year, and common start date views below.

Are these worth holding in your portfolio? We’ve love to hear your thoughts.