Why the Chinese Market Will Keep Rising

Look at the Fire-Breathing China Dragon!

Stocks in China are hot, and I mean smoking hot, with HUGE gains during the past month.

The table below shows just how powerful the upside has been in exchange-traded funds (ETFs) pegged to the various segments of the Chinese equity market. From small caps to financials to technology to A-shares, the bull market is in full effect in China. Here’s a list of the top funds by Month-to-Date (MTD%) percentage gains (funds over $50 million in assets).

As you can see, funds like the Guggenheim China Small Cap (HAO), with a 22.19% gain, and the Global X China Consumer ETF (CHIQ), up 15.5%, are lighting up the performance charts.

Now, there are many reasons for the latest move higher in Chinese stocks, including the government’s recent announcement of plans to build additional ports, railways and roads.

Then there’s the question of valuation.

Despite their recent run higher, Chinese stocks actually are cheap. At a current price-to-earnings ratio (P/E) of 10, stocks in China are cheap compared to the S&P 500, which currently trades at a P/E of about 17. This tells us there’s more value in Chinese stocks, and that’s another reason why money will likely keep flowing to China.

Yet perhaps the big driver here is the People’s Bank of China, which has tipped its hat on plans (or at least the willingness) to lower interest rates if the economy doesn’t meet the 7% gross domestic product (GDP) growth target.

For Chinese policymakers, this benchmark is crucial, and they know it. And given the demonstrated link between accommodative central bank policy and higher nominal stock values, it’s no wonder why Chinese stocks are spitting bullish fire.

Right now, subscribers to my Successful ETF Investing newsletter are profiting from several ETFs pegged to China and the Chinese economy. If you’d like to know how to get in and ride the Chinese dragon higher, then I invite you to check out Successful ETF Investing today.

ETF Talk: Mid-Cap Fund Could be a Portfolio Centerpiece

Many investors place huge bets on the biggest stocks and the exchange-traded funds (ETFs) that track them. Those investors may reason that large companies are successful because they are well managed, strong and stable. Other investors seek high returns by betting on smaller companies that have the potential to grow much faster in relatively short time frames. However, it is possible to strike a balance and choose companies that are not as risky as the smaller ones and still have plenty of room to grow their businesses by gaining market share or expanding internationally through a fund such as iShares S&P Core Mid-Cap ETF (IJH).

The word “core” in the name of this ETF is intended to suggest that mid-cap stocks form the core of an investment portfolio and should be held for long periods of time to secure profits from their slower but often strong growth. Some investors will have heard of certain mid-cap companies, though many are far from household names. The mid-cap businesses are established enough to have less risk of big share-price drops than small stocks do.

In the past 12 months, this fund has increased its value by 12.25% to beat the S&P 500, which rose 11.7%. IJH continues to grow this year, rising more than 5% so far in 2015 while U.S. markets as a whole have been practically flat. IJH, which manages $25.9 billion, also features a dividend yield of 1.31% and has an expense ratio of 0.12%.

IJH’s assets are invested most heavily in financial services, 23.39%; technology, 17.23%; and industrials, 15.96%. In addition, 6.17% of its holdings are invested in its 10 largest positions. These include Church and Dwight Inc. (CHD), 0.68%; Signet Jewelers Ltd. (SIG), 0.67%; Advance Auto Parts Inc. (AAP), 0.66%; Quorvo Inc. (QRVO), 0.66%; and Resmed Inc. (RMD), 0.62%.

Mid-cap stocks are appealing to many investors, whether as a core position or even as a smaller and more speculative holding in a predominantly large-cap portfolio. If you think mid-cap stocks have the right idea, consider iShares S&P Core Mid-Cap ETF (IJH).

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

Introducing the ETFU.com Database

The recent rollout of the ETF University website, or ETFU.com, has been a big success. If you have visited our newest education-oriented site devoted to exchange-traded funds, then I just want to say — thanks!

If you haven’t yet had a chance to visit ETFU.com, then now you have even more reason to give a look, as we have just upgraded the content at the site to feature our new, comprehensive ETFU.com Database.

This database is designed to give you all the information you need — and then some — about any ETF. What kind of information am I talking about? Well, to start with, you get all of the key vital statistics on any fund you select. These statistics include a basic description of the fund and which index it’s based on, along with the fund’s primary objective.

Then you get basic vitals such as current price, percentage change from the prior day’s close, trading volume, assets under management, expense ratio and the average daily trading volume during the past 100 days. You also get historical performance data (in percentage terms) for one week, one month, 100 days, year to date and one year.

Yet perhaps the best features, and certainly my personal favorites, when it comes to the content on the new ETFU.com Database are the Portfolio Stats, Technicals and, of course, the large price chart. In just a glance at these sections, I can get near-instant data on key metrics such as yield, P/E ratio, percentage the current price is from its 50- and 200-day moving averages and where the fund stands in relation to its 52-week high.

I know that from now on, when I research ETFs, the first place I’m going to start is the ETFU.com Database — and I invite you to do the same.

End of Q1, So What Should You Do?

The first quarter of 2015 is in the books, and that means it’s time to do something that you should be doing every quarter at the very least. That something is taking a critical look at your portfolio to make sure it’s serving your goals.

Are you generating enough income from your existing assets to fund your retirement? Are you producing the kind of growth you want so that you can build up that nest egg for when you need it years down the road? Are you overweight in one market sector while not having enough exposure — and enough diversification — to weather inevitable market storms?

These are the kinds of questions that you need to ask yourself at least every quarter and, preferably, on a monthly basis. In this market, knowing what to do is a must, as are circumstances such as when the next Fed rate hike actually will happen; what global growth metrics will tell us; and how the strong U.S. dollar and weak oil prices may determine the fate of your money during the second quarter.

So, what should you do now that Q1 is over?

Here are a few tips on what every investor needs to do right now:

1. Act like a professional. All of the pros review asset allocation, positions and cash holdings at the end of every quarter. Follow that example with your money.
2. Take inventory of your accounts. Know where your money is and where your accounts are, and think about how you can consolidate things to make it easier.
3. Look at each position and how it performed. It may sound simple, but knowing how each holding performed in Q1 is the first step to making sure your money is in the right place for Q2.
4. Think ETFs. Ask yourself, “How can I transfer my mutual fund or equity holdings into a better investment vehicle using exchange-traded funds (ETFs)?”
5. Research new ideas. Always be on the lookout for new ideas, new market sectors and new areas to put money to work.

One good way to begin your research on new ideas is to take a look at our Q1 ETF Scorecard at ETFU.com. This is where you’ll find the Top 10 list for a number of market sectors, including equity, fixed income, international, commodity and many other segments.

71% of Annuity Owners Are Doing It Wrong!

Every year, I urge readers of this e-letter, my newsletter Successful ETF Investing and also listeners of my podcast to review their annuities. An annuity can be a valuable income tool, but it also can be an underperforming asset in your portfolio.

If you currently own an annuity, I urge you to consider it carefully. It could mean hundreds of thousands of dollars to you over the next couple of years.

According to industry sources, 71% of annuity holders are not using that investment’s single-biggest retirement benefit. And I’m not talking about tax deferral… but something much more powerful.

It is the ability to use your annuity to create a never-ending income stream… one that funds your retirement and lasts for as long as you live.

The funny thing is that this benefit is no big secret. Every annuity contract has this potential to pay out income.

So why haven’t 71% of annuity owners taken advantage of this opportunity? Here are the most common reasons:

• They didn’t need an income stream at the time and simply forgot about the benefit…
• They bought the annuity 20-30 years ago and can’t get in touch with the seller…
• They’ve heard so much misinformation about annuities, they’re afraid to make a move…
• They simply don’t know about the income benefits available…

Even so, it’s still astounding to me that 71% of annuity holders aren’t taking advantage of the chance to receive hundreds of thousands — if not millions — of dollars in income over the course of their lives.

I’d like to show you how to do exactly that: Transform your annuity into a never-ending income stream…

And I’d like to do it FREE OF CHARGE!

At Fabian Wealth Strategies, we currently are offering a FREE annuity check-up designed to make sure you are getting the most out of your annuity. During this process, we will analyze your annuity and compare it with dozens of other annuities available in the market to make sure your investment is still aligned with your retirement goals and objectives.

To take advantage of this special offer, simply call us at Fabian Wealth Strategies toll free at (800) 391.1118 or CLICK HERE. When you call, we’ll schedule you for a FREE annuity consultation as soon as possible.

Don’t wait a minute longer. Contact us today so that we can help make sure you aren’t one of the 71% of annuity holders missing out on big money.

NOTE: Fabian Wealth Strategies is a Securities and Exchange Commission-registered investment adviser, and is not affiliated with Eagle Financial Publications.

It’s Not the Fish

“Many men go fishing all of their lives without knowing that it’s not the fish they are after.”

— Henry David Thoreau

When it comes to purpose in life, it’s essential that we all make sure we know what really matters. Or, to put it poetically, whenever you go fishing, remember that it’s not the fish you’re after.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Weekly ETF Report readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.

In case you missed it, I encourage you to read my e-letter column from last week on Eagle Daily Investor about the best-performing ETFs of Q1 2015. I also invite you to comment in the space provided below my Eagle Daily Investor commentary.

All the best,

Doug Fabian

Upcoming Appearance

I invite you to join me at the MoneyShow Las Vegas, May 12-14, 2015. With stock picking taking on renewed importance as the market shows signs of volatility, this event offers an opportunity to hear from a number of experts, including my Eagle Financial Publications colleagues Mark Skousen, Chris Versace and Bryan Perry.

Be a guest of Eagle Financial Publications and register for FREE by using priority code 038656 and calling 800-970-4355 (toll free in the United States and Canada) or signing up online.