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10 ETF University: 2019 Learn all about ETFs in ETF Report’s crash course in which we cover such topics as:

• What Is An ETF?• What Is An ETN?• What Are Authorized Participants?• What Is the Creation/Redemption Mechanism?• Understanding ETF Liquidity

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VOLUME 19 | NO. 01 Contents

PUBLISHER, GLOBAL HEAD OF SALESNoel d’Ablemont Smith

[email protected]

MANAGING DIRECTOR Dave Nadig

[email protected]

REPRINT [email protected]

EDITOR Drew Voros

[email protected]

MANAGING EDITOR Heather Bell

COPY EDITOR Lisa Barr

HEAD OF DESIGN Patrick Hamaker

GRAPHIC DESIGNER Bernarda Vásquez

ETF.com17 State Street, 32nd Floor

New York, NY 10004www.ETF.com

DEPARTMENTS

FEATURE

4 ETF Launches: PAWZ ProShares rolls out first-ever pet care ETF

5 ETF Explainer: MILN A look at an ETF tracking millennial consumer habits

6 Data At A Glance Diverse funds saw the top inflows in November

8 Institutional Insight Leighton Shantz of Employees Retirement System of Texas on risk budgets

28 Commodities In Review Commodities had a rough time during November

30 Sectors In Review November was mostly positive for sector ETFs

32 Countries In Review Country ETFs had a mixed month in November

34 ETF Data Our monthly databank breaks down ETF returns for every market segment

44 The Last Word Education is an ongoing activity

10 ETF University: 2019 Learn all about ETFs in ETF Report’s crash course in which we cover such topics as:

• What Is An ETF?• What Is An ETN?• What Are Authorized Participants?• What Is the Creation/Redemption Mechanism?• Understanding ETF Liquidity


NEW FUNDS By Heather Bell

ETF FILING ACTIVITY

LAUNCHES

U.S. EQUITY

PGIM QMA Strategic Alpha Small-Cap Growth

PGIM QMA Strategic Alpha Small-Cap Value

Reality Shares Fundstrat DQM Long

ETRACS Mo. 2xLev US SC HiDiv ETN Ser B

Invesco S&P 500 Equal Weight Comm Svcs

U.S. FIXED INCOME

First Trust Short Duration Managed Muni

First Trust Ultra Short Duration Municipal

iShares iBonds Dec 2025 Term Muni Bond

INT’L EQUITY

Global X E-commerce

AAM S&P Dev Mkts High Dividend Value

Gadsden Dynamic Growth

TigerShares China-US Internet Titans

ProShares Pet Care

First Trust Dow Jones Intl Internet

INT’L FIXED INCOME

iShares Global Green Bond

ASSET ALLOCATION

Amplify BlackSwan Growth/Treasury Core

Gadsden Dynamic Multi-Asset

LEVERAGED

Direxion Daily Consumer Staples Bull 3X

Direxion Daily Consumer Discr Bull 3X

INVERSE

Direxion Daily Consumer Discr Bear 3X

Direxion Daily Consumer Staples Bear 3X

SELECTED CLOSURESQuantX Risk Managed Real Return

QuantX Risk Managed Multi-Asset Income

Virtus Enhanced Short US Equity

3% ALTERNATIVES

ProShares Pet Care ETF (PAWZ)First ETF to target pet care products and services debuts

Associated Press. Overall, ProShares cites data that the pet care industry has grown twice as much as the GDP since 2007.

The fund’s underlying index primar-ily selects its components from eight dif-ferent FactSet Revere Business Industry Classification System subindustries: pet food manufacturing, pet supplies man-ufacturing, pet and pet supply stores, veterinary pharmaceuticals, veterinary diagnostics, veterinary product distribu-tors, veterinary services, and internet pet and supply retail. The methodology also has the flexibility to include companies such as those that provide pet insurance, despite the fact they don’t have their own subindustry.

The index includes at least 21 compo-nents and weights them using a modified market-capitalization approach.

Source: ETF.com. Data and information as of 11/30/2018. ETF Filings sidebar covers launches and filings for the month of November 2018.

ETFLaunches

FEATURED ETF

ProShares rolled out a first-of-its-kind ETF in early November. The ProShares Pet Care ETF (PAWZ) tracks a global index of companies primarily involved in provid-ing pet-care-related products and services.

PAWZ comes with an expense ratio of 0.50%.

In its materials for the ETF, ProShares notes that seven in 10 U.S. house-holds include a pet, more than currently

include a child. That’s up from 56% 30 years ago. Perhaps most intriguing, pet care remained a haven during the Great Recession and continued to expand, with most pet owners refusing to cut back on their pet spending, based on polls from the

9% COMMODITIES

13%US FIXED INCOME

31% INT’L EQUITY

29% US EQUITY

8% INT’L FIXED INCOME

2% LEVERAGED

2% INVERSE 3%

ASSET ALLOCATION

PAWZ Quick View

ISSUER ProShares

SEGMENT Equity: Global - Total Market

EXPENSE RATIO 0.50%

STRUCTURE Open-Ended Fund

DATE LAUNCHED 11/06/2018

GO

For the latest ETF listings,

visit ETF.com/ETFWatch

ONLINE

ETFs249YEAR-TO-DATE

JANUARY 2019 5

IN DETAIL By Heather Bell

Global X Millennials Thematic ETF

Each month, we look at an ETF selected by ETF.com based on its performance and importance to investors. This month, we consider the performance of the $31.82 million Global X Millennials Thematic ETF (MILN), which tracks the consumer habits of the largest age cohort since the baby boomers. All the companies mentioned below are holdings in MILN unless otherwise noted.

Source: Bloomberg. Data for 11/30/2017 to 11/30/2018.

ETF Explainer: MILN

IN DETAIL By Heather Bell

DEC Costco beats first-quarter analyst expectations for profit and revenue as its online commerce ventures begin to pay off. Online sales rise 42% quarter-over-quarter.

15JUN J.P. Morgan raises its price estimate for Twitter on increasing

confidence in the company’s ability to attract advertisers, partly due to double-digit growth in its daily average users.

12

FEB PayPal’s stock price plunges after beating fourth-quarter sales and profit expectations when eBay announces it will no longer use the firm as its primary checkout partner.

1OCT A steep decline across the technology sector sends

shares of Intuit plummeting during a tumultuous month for the market.

11

APR Amazon announces it has more than 100 million subscribers to its Amazon Prime service, beating the number of Costco’s members and subscribers.

18NOV After reporting record revenues at the start of the month,

Starbucks reveals its plan for expansion in Japan, including hundreds of new stores.

8

DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV

2018

MILN Quick View

ISSUER Global X

SEGMENT Equity: U.S. - Total Market

EXPENSE RATIO 0.50%

AUM $31.82 Million

COMPETING FUNDS GENY, QUAL, DGRO, MOAT, PKW, FNDB

DEC15

FEB1

APR18

JUN12

OCT11

NOV8

30

25

20

15

10

5

0

-5

% RETURN

14.26%


MONTHLY FLOWS

Below are the ETFs that experienced the top and bottom flows for the month of November, as well as the net flows for major asset classes during the month.

TOP GAINERS

TICKER FUND ISSUER NET FLOWS ($M) AUM ($M)

SPY SPDR S&P 500 ETF Trust SSGA 5,813.93 267,022.09

IEMG iShares Core MSCI Emerging Markets ETF BlackRock 3,258.88 50,105.54

SHY iShares 1-3 Year Treasury Bond ETF BlackRock 2,449.62 17,169.73

USMV iShares Edge MSCI Min Vol U.S.A. ETF BlackRock 1,900.20 19,188.26

BIL SPDR Bloomberg Barclays 1-3 Month T-Bill ETF SSGA 1,738.71 7,042.24

SHV iShares Short Treasury Bond ETF BlackRock 1,721.70 17,315.55

IWD iShares Russell 1000 Value ETF BlackRock 1,556.23 38,825.86

VEA Vanguard FTSE Developed Markets ETF Vanguard 1,154.38 67,596.61

JPST JPMorgan Ultra-Short Income ETF JPMorgan 1,053.72 4,370.78

VGSH Vanguard Short-Term Treasury Index ETF Vanguard 1,048.67 4,643.40

BIGGEST LOSERS

TICKER FUND ISSUER NET FLOWS ($M) AUM ($M)

QQQ Invesco QQQ Trust Invesco -1,616.58 65,430.12

LQD iShares iBoxx USD Investment Grade Corp Bond BlackRock -1,074.50 29,917.15

FXR First Trust Industrials/Producer Durables AlphaDEX First Trust -1,062.60 459.31

SDY SPDR S&P Dividend ETF SSGA -825.72 16,305.28

XLC Communication Services Select Sector SPDR Fund SSGA -546.54 3,110.31

TIP iShares TIPS Bond ETF BlackRock -477.23 21,799.72

VGK Vanguard FTSE Europe ETF Vanguard -468.9 14,321.61

KRE SPDR S&P Regional Banking ETF SSGA -438.96 3,918.42

VGT Vanguard Information Technology ETF Vanguard -418.16 19,560.89

BKLN Invesco Senior Loan ETF Invesco -417.44 6,124.23

ASSET CLASSES

NET FLOWS ($M) AUM ($M) % OF AUM

U.S. Equity 22,267.47 2,064,920.15 1.08%

International Equity 11,061.33 762,533.10 1.45%

U.S. Fixed Income 13,848.19 572,756.82 2.42%

Int’l Fixed Income 1,343.14 66,632.60 2.02%

Commodities 59.88 59,919.68 0.10%

Currency 26.45 1,138.62 2.32%

Leveraged 756.87 35,794.37 2.11%

Inverse -25.08 12,481.45 -0.20%

Asset Allocation 182.84 9,079.62 2.01%

Alternatives 104.51 4,809.71 2.17%

TOP PERFORMERS | LEADING INFLOWS

The below graphs show the 12-month charts for the five ETFs with the top inflows for November.

SPDR S&P 500 ETF Trust (SPY)

RETURN 15%

12

9

6

3

0

-3N D J F M A M J J A S O

2018

iShares Core MSCI Emerging Markets ETF (IEMG)

RETURN 15%10

50

-5-10-15-20

N D J F M A M J J A S O2018

iShares 1-3 Year Treasury Bond ETF (SHY)

RETURN 0.8%0.60.40.20.0

-0.2-0.4-0.6

N D J F M A M J J A S 02018

iShares Edge MSCI Min Vol U.S.A. ETF (USMV)

RETURN 12%10

86420

-2-4-6

N D J F M A M J J A S O2018

SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL)

RETURN 2.0%

1.5

1.0

0.5

0.0N D J F M A M J J A S O

2018

Sources: FactSet and Bloomberg, as of 11/30/2018

DATA AT A GLANCE By Heather Bell

JANUARY 2019 7

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the overall risk they’re supposed to take. A risk budget quantifies pretty clearly for everybody involved, “This is what we expect to happen.”

Now, [a risk budget] doesn’t always work, because in market sell-offs, vola-tilities go up. Your risk budget is based on the volatility and correlations of all these underlying assets, but in a sell-off, volatili-ties spike and correlations drive to 1.

It fails exactly when you need it most. So what do you do to prevent disaster when a crisis hits?Well, there are three separate correla-tion matrices—three different states for the underlying correlations between dif-ferent asset classes. There’s the normal state, which is maybe 80% of the time, where interest rates are negatively cor-

Institutional investors often approach their portfolios in terms of risk and risk management. But what does this mean in practical terms? Most institutional boards have an asset allocation framework that says, for example, “We’re 60% equities, 40% fixed income.” From there, [portfolio managers can invest in] almost anything.

They overlay what’s called a risk bud-get. A risk budget says, “You have to have a maximum tracking error,” where track-ing error is nothing more than the stan-dard deviation of the excess return. For instance, if you’re to be [invested] 15% in credit, then you might have a tracking error limit of 300 basis points (3%), with a target of 200 basis points (2%).

That gives the portfolio manager pretty clear insight as to the magnitude of

BUILDING A RISK BUDGETAnd making a move into ETFs at one of the country’s largest retirement plans

LEIGHTON SHANTZDirector of Fixed Income

Employees Retirement System of Texas

INSTITUTIONAL INSIGHT

FOR INSTITUTIONAL AND INDIVIDUAL INVESTORS ALIKE, it isn’t enough anymore to allo-cate your entire fixed-income portfolio to the AGG (Bloomberg Barclays U.S. Aggregate Bond Index) and call it a day. So says Leighton Shantz, director of fixed income for the $28 billion Employees Retirement System of Texas (ERS).

When Shantz came on board in 2012, he transformed the plan’s fixed-income allocation, shifting away from its traditional core-plus mandate and into discrete “Rates” and “Credit” portfolios. He’d implemented a similar successful move at his previous position as managing director for the Lockheed Martin Investment Management Co. The shift in strategy, which also required the use of ETFs, helped ERS win ETF.com’s Best Institutional ETF User award in 2015.

By Lara Crigger

JANUARY 2019 9

related with U.S. stocks. Then there’s a deflationary market, where both growth and inflation are falling. And there’s the stagflationary correlation matrix, where growth is falling but inflation is rising.

Each has a distinctly different [asset] correlation matrix, but I don’t know which environment we’re going to have; I have to bet appropriately. So I invest the portfolio to the assumption that 80% of the time it will be a normalized correlation matrix. But I’m not going to go up to my targeted risk limit, because if a volatility spike hap-pens, then I’ll be over my limit.

What does this mean in real-world terms?We run high yield credit—we just call it “credit,” but it’s all below investment grade. We’re told to target a 200 basis point (2%) tracking error. But the way we run the internal portfolio, which is roughly 80% of the money, is that it runs best at about 100 basis points (1%) of tracking error. We don’t reach for the really risky stuff, because we don’t have the time and man-power to take a deeper dive.

For the 20% of the portfolio that’s external, I ballpark about 500 basis points (5%) of tracking error. This is our more satellite strategy; it’s higher risk, higher octane stuff. That comes to 20% of the book at a 5% tracking error—another 100 basis points (1%).

Together, those two are about 200 basis points (2%). They’re not perfectly cor-related, though, which means it doesn’t actually show up as 200 basis points, even if I’m right on with those numbers.

What changes did you make to ERS’ risk budget when you came on board, and what motivated you to make the changes you did?When I got here, the [chief investment officer] said, “We know it’s not working

right, but we don’t know why.” What I told them was: It’s because you’re doing the wrong thing. You’re investing in things that you have no expertise in. Or you have them in your benchmark, but you don’t actually have the ability to do them. And that adds tracking error right there.

Every asset class should have a rea-son. Their reason for having fixed income was to provide liquidity in sell-offs, because we’re what’s called a “mature” plan, which is a very polite way of saying “shrinking.”

In a normalized growth environment, that doesn’t really matter. But in a gen-eralized sell-off, when risk assets are mis-priced, you should be buying them, not forcing yourself to sell them to make ben-efit payments. Because then, you’re never going to recover, right?

So, instead of doing this core stuff, which is really just rates, where Treasur-ies drive everything—we split it up: Have a Treasury portfolio and have a high-yield portfolio. The Treasury portfolio can pre-serve value, and you can sell those to make benefit payments or to rebalance. The high-yield portfolio can generate your needed returns. Those pay down whether you sell them or not; they have maturity dates.

That must have meant selling off hundreds of thousands of individual securities.There was the effort, right? What do you do with all these investment-grade corporates?

Well, we wanted to get rid of them, but in 2013, street liquidity was horrible, and I was terrified of the idea of showing up every day with a bid wanted in comp. [A “Bid Wanted In Competition” is where an institutional investor submits a list of bonds to several dealers, who can then

INSTITUTIONAL INSIGHT

make bids. The highest bidder wins the contract.]

The street will figure that out very quickly. You just don’t get good execution. There are those things that no one puts a bid on, so you end up with this portfolio of all these odd ducks.

I had started researching ETFs, for high yield, actually. And I went into it thinking I was going to find a way to make money from the ETFs; that they were fun-damentally broken instruments and that there was a way to arbitrage and profit from them.

But I walked away thinking, yes, these are probably pretty useful tools. We approached an ETF sponsor, saying, “Here’s our list of bonds. Tell us how we can get those in ETFs, and we’ll use the ETFs to sell.”

What changed your mind about ETFs?When I got here, there was no internal capability to do high yield, so I had just started the effort of finding people and building up that capability.

In that due diligence process, we met with at least a dozen high-yield manag-ers, looking for ideas. Every single one of them was openly critical of the ETF—which makes sense from their business model; it’s a direct competitor hurting their margins.

But they were so hostile to them that I just decided, well, obviously there’s money to be made from them; if ETFs are this dumb, let’s figure out how we’re going to do that.

But through that due diligence, even-tually I flipped. I was wrong; they aren’t dumb. They’re not perfect, but they’re actually pretty well-thought-out and con-structed tools, at least in most cases.


E T F U N I V E R S I T Y By ETF.com Staff

What Is an ETF?

Offering low-cost access to virtually every corner of the market, ETFs allow investors big and small to build institutional-caliber portfolios with lower costs and better transparency than ever before.

But what exactly is an ETF? And how does it provide these benefits?

AN ETF …

… IS STRUCTURED AS A MUTUAL FUND

… CAN BE LISTED AND TRADED ON AN EXCHANGE, LIKE A STOCK

… CAN BE TRADED INTRADAY, SHORTED AND BOUGHT ON MARGIN

… GENERALLY INVOLVES LOWER COSTS AND BETTER TAX EFFICIENCY

BUT WHAT ABOUT ETFs? All that’s great, but you’re not reading this to learn about mutual funds. You want to learn about ETFs.

So what is an ETF? Well, it’s a mutual fund too. It’s a pooled investment vehicle that offers diversified exposure to a particular area of the market. It can invest in stocks, bonds, commodities, currencies, options or a blend of assets. Inves-tors buy shares, which represent a proportional interest in the pooled assets.

It’s a mutual fund in every aspect … except one.And that’s a big one, which is hinted at in its very name:

exchange-traded funds.

BEING EXCHANGE-TRADED You buy shares in an ETF directly from any brokerage account. Just like you buy shares in a stock, you can enter a buy order in your Schwab or Fidelity account and buy any ETF you want.

You can also do it whenever you want. Whereas orders to buy or sell a traditional mutual fund can be processed only once per day (after the close of trading), ETF trades can take place any time the market is open. You can buy shares in the morning and sell them in the afternoon. You can buy them at 10 a.m., sell them at 11 a.m. and buy them again after lunch if you want.

You can also perform all sorts of stocklike strategies with ETFs that you never could with mutual funds: selling short, placing stop-loss or limit orders, even buying on margin.

And that’s just the beginning: The fact that ETFs are “exchange-traded” creates a series of other benefits that, according to many market observers, make them a better overall choice than traditional mutual funds for many rea-sons: lower costs, better tax efficiency and more. Of course, in other situations, they can be worse: commissions, trading spreads and other risks.

In sum, an ETF is a tool that allows investors to access different corners of the market—everything from U.K. equi-ties to Chinese tech stocks to high-yield bonds, spot gold bul-lion and more—at low costs, from the comfort of a traditional brokerage account.

It’s like a mutual fund 2.0.

WANT TO KNOW HOW ETFs WORK? FIRST UNDERSTAND HOW MUTUAL FUNDS WORK To understand how ETFs work, the best place to start is with something familiar, like a traditional mutual fund.

Imagine half a dozen investors, sitting at home, each try-ing to figure out the best way to invest in the stock market. They could each go out and buy a few stocks on their own, but who has the time or resources to manage a portfolio of 50 or 100 stocks?

Instead, they decide to band together. They pool all of their money and hire a professional investment manager to invest it for them.

To keep track of who invested what, each investor receives “shares,” representing their stake in the total investment.

Because it’s your money, you want to know how much your investment is worth … every day. So every day, the mutual fund tallies up the value of everything it owns, and divides it by the number of shares that exist. Whammo-presto: You know exactly what each share is worth.

If you want to buy more shares, you know the amount of cash to send the mutual fund for each share. If you want to sell shares, you know exactly how much cash to expect in return.

It’s an elegant system, and mutual funds have existed for close to 100 years. They currently provide exposure to stocks, bonds, commodities and other assets.

What Is an ETN?

Investors typically use the term “ETF” to mean a lot of things that aren’t technically “exchange-traded funds”: commodity pools, grantor trusts and debt securities.

10 LARGEST ETNs

TICKER FUND ISSUER ER AUM

AMJ J.P. Morgan Alerian MLP Index ETN JPMORGAN 0.85% $2.95B

FLGE Credit Suisse FI Large Cap Growth Enhanced ETN CREDIT SUISSE 1.52% $1.94B

FIHD UBS AG FI Enhanced Global High Yield ETN UBS 1.65% $1.54B

FIYY Barclays ETN+ FI Enhanced Global High Yield ETN Series B BARCLAYS BANK PLC 0.93% $1.54B

FBGX UBS AG FI Enhanced Large Cap Growth ETN UBS 1.29% $1.47B

MLPI ETRACS Alerian MLP Infrastructure Index ETN UBS 0.85% $1.39B

VXX iPath S&P 500 VIX Short-Term Futures ETN BARCLAYS BANK PLC 0.89% $892.41M

DJP iPath Bloomberg Commodity Index Total Return ETN BARCLAYS BANK PLC 0.70% $819.79M

UGAZ VelocityShares 3X Long Natural Gas ETN CREDIT SUISSE 1.65% $780.30M

FFEU Barclays ETN+ FI Enhanced Europe 50 ETN Series C BARCLAYS BANK PLC 1.05% $674.37M

10

JANUARY 2019 11

E T F U N I V E R S I T Y By ETF.com Staff

What Is an ETF?

Offering low-cost access to virtually every corner of the market, ETFs allow investors big and small to build institutional-caliber portfolios with lower costs and better transparency than ever before.

But what exactly is an ETF? And how does it provide these benefits?

AN ETF …

… IS STRUCTURED AS A MUTUAL FUND

… CAN BE LISTED AND TRADED ON AN EXCHANGE, LIKE A STOCK

… CAN BE TRADED INTRADAY, SHORTED AND BOUGHT ON MARGIN

… GENERALLY INVOLVES LOWER COSTS AND BETTER TAX EFFICIENCY

What Is an ETN?

Investors typically use the term “ETF” to mean a lot of things that aren’t technically “exchange-traded funds”: commodity pools, grantor trusts and debt securities.

10 LARGEST ETNs

TICKER FUND ISSUER ER AUM

AMJ J.P. Morgan Alerian MLP Index ETN JPMORGAN 0.85% $2.95B

FLGE Credit Suisse FI Large Cap Growth Enhanced ETN CREDIT SUISSE 1.52% $1.94B

FIHD UBS AG FI Enhanced Global High Yield ETN UBS 1.65% $1.54B

FIYY Barclays ETN+ FI Enhanced Global High Yield ETN Series B BARCLAYS BANK PLC 0.93% $1.54B

FBGX UBS AG FI Enhanced Large Cap Growth ETN UBS 1.29% $1.47B

MLPI ETRACS Alerian MLP Infrastructure Index ETN UBS 0.85% $1.39B

VXX iPath S&P 500 VIX Short-Term Futures ETN BARCLAYS BANK PLC 0.89% $892.41M

DJP iPath Bloomberg Commodity Index Total Return ETN BARCLAYS BANK PLC 0.70% $819.79M

UGAZ VelocityShares 3X Long Natural Gas ETN CREDIT SUISSE 1.65% $780.30M

FFEU Barclays ETN+ FI Enhanced Europe 50 ETN Series C BARCLAYS BANK PLC 1.05% $674.37M

We’re guilty of this too: After all, this is ETFR, but we cover all types of products. It’s the term of art, so we’ll roll with it.

The most important of these structures to understand is the exchange-traded note (ETN).

ETNs are debt notes issued by a bank. When you buy an ETN, the bank promises to pay you a certain pattern of return. If you buy an ETN linked to the price of gold, for instance, the value of that ETN will increase if the

gold price goes up.The beauty of the ETN structure is

that it can be linked to anything. There are ETNs that track commodities, and ETNs that track hard-to-reach corners of the equity market. They sometimes combine stock or bond positions with options overlays, or use other sophis-ticated strategies that would be diffi-cult to package into a traditional ETF. In the commodity space, the ETN also offers significant long-term tax advan-tages compared with most ETFs.

The downside of an ETN is that if the underlying bank goes bankrupt, you lose essentially all of your money. There were, for instance, a few ETNs backed by Lehman Brothers. While most investors in Lehman’s ETNs fled before the firm shut down, anyone who held to the bitter end probably still has a bad taste in their mouth.

The good news is that this credit risk in most situations is minor. Insti-tutional investors can “redeem” (get their money back) from the under-writer of ETN daily. While anything can happen, you usually see major bank defaults coming more than a day or two ahead.

The even-better news is credit risk is easily monitored. ETF.com monitors and reports on the credit risk of every ETN daily. It does that by watching the cost of credit default swaps (CDS) on the underwriting banks each day. CDS are like insurance—investors buy them to protect themselves against a com-pany’s default—so they are the best possible view of the likelihood a bank will go down.

How do you check? Just pull up the Efficiency Tab on any ETN (e.g., www.etf.com/AMJ) and check out the ETN Counterparty Risk measure. If it says “Low,” you’re OK. If it says “High,” run for the hills.

11

Source: FactSet, ETF.com as of 12/5/2018


What Is the Creation/ Redemption Mechanism?

The key to understanding how ETFs work is the “creation/redemption” mechanism. It’s how ETFs gain exposure to the market, and is the “secret sauce” that allows ETFs to be less expensive, more transparent and more tax efficient than traditional mutual funds.

It’s a bit complicated, but worth understanding.

E T F U N I V E R S I T Y

What Are Authorized

Participants?Authorized participants (APs) are one of the major parties at the center of the ETF creation/redemption mechanism, and as such, they play a critical role in ETF liquidity. In essence, APs are ETF liquidity providers that have the exclusive right to change the supply of ETF shares on the market.

AUTHORIZED PARTICIPANTS …

… are designated by the ETF issuer

… have the exclusive right to change the supply of ETF shares on the market

… create shares when a premium develops by providing baskets of holdings to the issuers

… redeem shares when a discount develops by buying them from the issuer to sell the individual holdings on the market

ROLE OF AUTHORIZED PARTICIPANTS When an ETF company wants to create new shares of its fund, whether to launch a new product or meet increasing market demand, it turns to an AP, which may be a market maker, a specialist or any other large financial institution. Essentially, it’s someone with a lot of buying power.

It is the AP’s job to acquire the securities that the ETF wants to hold. For instance, if an ETF is designed to track the S&P 500 Index, the AP will buy shares in all the S&P 500 constituents in the exact same weights as the index, then deliver those shares to the ETF provider. In exchange, the provider gives the AP a block of equally valued ETF shares, called a creation unit. These units are usually formed in blocks of 50,000 shares.

The exchange takes place on a one-for-one, fair-value basis. The AP delivers a certain amount of underlying securities and receives the exact same value in ETF shares, priced based on their net asset value (NAV), not the market value at which the ETF happens to be trading.

Both parties benefit from the transaction: The ETF provider gets the stocks it needs to track the index, and the AP gets plenty of ETF shares to resell for profit.

The process can also work in reverse. APs can remove ETF shares from the market by purchasing enough of those shares to form a creation unit and then delivering those shares to the ETF issuer. In exchange, APs receive the same value in the underlying securities of the fund.

HOW DO APs GAIN THE RIGHT TO CHANGE THE SUPPLY OF ETP SHARES? ETP issuers decide. Prior to launch, the issuer will designate one or more AP to the fund. More can sign up over time. The most popular ETFs will have dozens of APs.

HOW DO APs IMPACT LIQUIDITY? An AP’s ability to create and redeem shares helps keep ETFs priced at fair value.

For example, if demand for an ETF increases and a premium develops, APs step in to create more shares and push the ETF’s price back in line with its actual value. If there’s a rush to sell and a discount develops, APs buy ETF shares on the open market and redeem them with the ETF issuers to reduce supply.

Generally, the greater the number of APs for a particular ETF, the bet-ter: The force of competition is more likely to keep the ETF trading close to its fair value.

The task set forth for an AP is not necessarily an easy one: Sometimes the underlying market that they must access to change the supply of ETF shares is illiquid, or just difficult to access. An exchange-traded product tracking the S&P 500 will be easy to access and easily hedge-able for most APs, while one tracking Nigeria equi-ties will be tough.

Mostly, APs are invisible to indi-vidual investors and advisors. Still, it’s good to know they’re there.

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JANUARY 2019 13

What Is the Creation/ Redemption Mechanism?

The key to understanding how ETFs work is the “creation/redemption” mechanism. It’s how ETFs gain exposure to the market, and is the “secret sauce” that allows ETFs to be less expensive, more transparent and more tax efficient than traditional mutual funds.

It’s a bit complicated, but worth understanding.

WHY IT’S IMPORTANT The creation/redemption process is important for ETFs in a number of ways. For one, it’s what keeps ETF share prices trading in line with the fund’s underlying NAV.

Because an ETF trades like a stock, its price will fluctuate during the trading day, due to simple supply and demand. If many investors want to buy an ETF, for instance, the ETF’s share price might rise above the value of its underlying securities.

When this happens, the autho-rized participant can jump in to inter-vene. Recognizing the “overpriced” ETF, the AP might buy up the underly-ing shares that compose the ETF and then sell ETF shares on the open mar-ket. This should help drive the ETF’s share price back toward fair value, while the AP earns a basically risk-free arbitrage profit.

Likewise, if the ETF starts trad-ing at a discount to the securities it holds, the AP can snap up 50,000

shares of that ETF on the cheap and redeem them for the underlying secu-rities, which can be resold. By buying up the undervalued ETF shares, the AP drives the price of the ETF back toward fair value while once again making a nice profit.

This arbitrage process helps to keep an ETF’s price in line with the value of its underlying portfolio. With multiple APs watching most ETFs, ETF prices typically stay in line with the value of their underlying securities.

This is one of the critical ways in which ETFs differ from closed-end funds. With closed-end funds, no one can create or redeem shares. That’s why you often see closed-end funds trading at massive premiums or discounts to their NAV: There’s no arbitrage mechanism available to keep supply and demand pressures in check.

The ETF arbitrage process doesn’t work perfectly, and it pays to make sure your ETF is trading at fair value. But most of the time, the process works well.

AN EFFICIENT WAY TO ACCESS THE MARKET The other key benefit of the creation/redemption mechanism is that it’s an extraordinarily efficient and fair way for funds to acquire new securities.

As discussed, when investors pour new money into mutual funds, the fund company must take that money and go into the market to buy securities. Along the way, they pay

trading spreads and commissions, which ultimately harm returns of the fund. The same thing happens when investors remove money from the fund.

With ETFs, APs do most of the buying and selling. The AP pays all the trading costs and fees, and even pays an additional fee to the ETF provider to cover the paperwork involved in processing all the creation/redemp-tion activity.

The beauty of the system is that the fund is shielded from these costs. Funds may still pay trading fees if they have portfolio turnover due to index changes or rebalances, but the fee for putting new money to work (or redeeming money from the fund) is typically paid by the AP. (Ulti-mately, investors entering or exiting the ETF pay these costs through the bid/ask spread.)

The system is inherently more fair than the way mutual funds operate. In mutual funds, existing shareholders pay the price when new investors put money to work in a fund or departing investors sell their shares, because the fund bears the trading expense. In ETFs, those costs are borne by the AP (and later by the individual investor looking to enter or exit the fund).


What Are Authorized

Participants?Authorized participants (APs) are one of the major parties at the center of the ETF creation/redemption mechanism, and as such, they play a critical role in ETF liquidity. In essence, APs are ETF liquidity providers that have the exclusive right to change the supply of ETF shares on the market.

AUTHORIZED PARTICIPANTS …

… are designated by the ETF issuer

… have the exclusive right to change the supply of ETF shares on the market

… create shares when a premium develops by providing baskets of holdings to the issuers

… redeem shares when a discount develops by buying them from the issuer to sell the individual holdings on the market

13


Understanding Net Asset Value

When selling a car, people don’t accept the first price a used-car salesman quotes as its actual value. Instead, most attempt to arrive at a more independent assessment of actual value.


Understanding ETF Liquidity

For individual stocks, liquidity is about trading volume and its regularity—more is better. For ETFs, there’s more to consider.

KEY TAKEAWAYS

• There are two levels of ETF market liquidity

• Primary market liquidity is dependent on authorized participants

• Secondary market liquidity is dependent on investors and market makers

of the value of ETF shares traded; in the primary market, liquidity is more a function of the value of the underlying shares that back the ETF.

When placing a large trade—on the scale of tens of thousands of shares—investors are sometimes able to circumvent an illiquid second-ary market by using an AP to reach through to the primary market to “create” new ETF shares.

Unfortunately, most of us aren’t trading tens of thousands of shares at a time, so we’re stuck trading in the secondary market. Remember that, to assess secondary market liquidity, you should be looking at statistics such as average spreads, average trading volume, and premiums or dis-counts (does the ETF trade close to its net asset value?).

It’s really only if you’ll be trad-ing close to 50,000 shares or more at a time that these statistics are no longer the most relevant in assess-ing liquidity. For those big trades, the liquidity of the ETF’s underlying secu-rities is the most important factor.

After all, to “create” 50,000 shares, the AP must first submit a pre-specified basket of the ETF’s underly-ing securities—a creation basket—to the ETF. There is a direct relationship between the underlying liquidity of an ETF and its primary market liquid-ity, because in order to create primary market liquidity, the AP must trade in the underlying market—the easier an AP can access the underlying market, the more efficiently she can create and redeem ETF shares.

If you trade this size regularly, a good first step is to contact the ETF issuer itself and request the capital markets desk. One of the main goals of the issuer’s capital markets desk is to ensure that investors enter and exit funds at fair prices. They can also be a great help in providing market impact estimations, underlying liquidity analysis and connecting investors to liquidity providers.

AN ETF ISN’T A STOCKETFs are often lauded for their liquidity and single-stock trading characteristics. Truth is, they’re similar.

If an ETF doesn’t trade a certain number of shares per day (e.g., 50,000), the fund is illiquid and should be avoided, right? Wrong. It’s a plausible assumption from a single-stock perspective, but with ETFs, we need to go to a level deeper. The key is to understand the difference between the primary and secondary liquidity of an ETF.

PRIMARY VS. SECONDARY MARKETMost noninstitutional investors transact in the secondary market—which means investors are trading the ETF shares that currently exist. Secondary liquidity is the “on screen” liquidity you see from your brokerage (e.g., volume and spreads), and it’s determined primarily by the volume of ETF shares traded.

However, one of the key features of ETPs is that the supply of shares is flex-ible—shares can be “created” or “redeemed” to offset changes in demand. Pri-mary liquidity is concerned with how efficient it is to create or redeem shares. Liquidity in one market—primary or secondary—is not indicative of liquidity in the other market.

Another way to make the distinction between the primary market and the sec-ondary market is to understand the participants in each. In the secondary market, investors bargain with each other or with a market maker to trade the existing supply of ETP shares. In contrast, investors in the primary market use an “autho-rized participant” (AP) to change the supply of ETP shares available—either to offload a large basket of shares (“redeem” shares) or to acquire a large basket of shares (“create” shares).

The determinants of primary market liquidity are different than the determinants of secondary market liquidity. In the secondary market, liquidity is generally a function

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JANUARY 2019 15

Understanding Net Asset Value

When selling a car, people don’t accept the first price a used-car salesman quotes as its actual value. Instead, most attempt to arrive at a more independent assessment of actual value.


Understanding ETF Liquidity

For individual stocks, liquidity is about trading volume and its regularity—more is better. For ETFs, there’s more to consider.

KEY TAKEAWAYS

• There are two levels of ETF market liquidity

• Primary market liquidity is dependent on authorized participants

• Secondary market liquidity is dependent on investors and market makers

That can be tough with a used car. Fortunately, it’s very easy with ETFs—it’s calculated and dissemi-nated to the public daily. This “value” is termed net asset value (NAV), and it’s one of the most important data points for ETFs and mutual funds.

A fund’s NAV is the sum of all its assets (the value of its holdings in cash, shares, bonds, financial deriva-tives and other securities) less any liabilities, all divided by the number of shares outstanding.

It’s basically an indication of the fair value of a single share of the fund. It provides investors a reference point around which they can gauge any offers to buy or sell shares of the fund. Because of the creation/redemption mechanism, ETFs tend to trade very close to their NAV.

At this point, it’s clear that NAV is an important and useful metric for investors, but like most things in life, there are exceptions to its utility. So, when is NAV inadequate? How does NAV become “stale”?

To answer these questions, we need a brief overview of how NAV is calculated.

HOW IS NAV CALCULATED?To establish a daily NAV, the fund chooses a time, every day, at which to value its assets. For a traditional equity ETF, the NAV is calculated (or “struck”) once all the markets being tracked by the ETF’s index have closed.

For an ETF tracking U.S. equities, for example, the NAV can be calcu-lated soon after the U.S. market’s 4:00 p.m. ET close. At that time, the closing price of each of the fund’s assets is recorded as an indication of its current value. All these prices are then aggregated to arrive at the value of the fund’s entire portfolio.

NAV’S SHORTCOMINGSChallenges arise when an ETF holds securities trading in a different time zone, because NAV is based on the last price when the exchange closes. A lot can happen in the hours when an ETF is trading but its securities aren’t. In such cases, NAV will remain sta-tionary because the foreign exchange is closed, and only the ETF will reflect any changes in value over that time.

If the value has changed, but

NAV has not, as a result, NAV is “stale,” and differences between the ETF’s trading price and its NAV can appear.

Using closing exchange prices is all well and good for equity securities, but what about bonds?

For bond ETFs, bid prices (the price at which the ETF could sell its bonds) are often used, meaning that the NAV may seem lower than a valuation based on midpoint or offer prices.

iNAVDistinct from an ETF’s official, once-a-day NAV is the intraday or indicative NAV (often called “iNAV”). This is a measure of an ETF’s intraday value, with the prices used in the NAV cal-culation updated for real-time market movements, and published several times a minute.

iNAVs are often calculated by third-party commercial data ven-dors. Many stockbrokers offer their clients access to real-time iNAVs on ETFs, which can then be compared with ETF prices.

iNAVs can be a useful mea-sure of value when you’re looking to trade an ETF, although they’re not foolproof, and similar to NAVs, may not reflect true value if prices become stale.

15



The Different Types Of Trades

Whether you trade a single ETF share at a time or thousands, how you order trades matters. Three main order types exist: market order, limit order and stop order. Here are the pros and cons of each.

now an investment advisor and finan-cial planner at Ritholtz Wealth Man-agement. “You want to make sure the order you’re putting in isn’t going to move the price.”

STOP ORDER A stop order is a market order that only activates if the ETF in question reaches a particular price (the “stop price”).

A sell-stop order for $5/share, for example, only activates if the ETF’s share price hits $5, after which your shares then sell for whatever the best available market price may be.

A sell-stop order is sometimes referred to as a “stop loss” order, because using one ostensibly pro-tects your profits from further losses. (However, there’s nothing about a stop-loss order that saves you from losing money due to bad execution.)

Like limit orders, stop orders establish boundaries regarding what prices you are and aren’t willing to accept. That’s helpful if you can’t or don’t want to track the market min-ute by minute, but you still need pro-tection from sudden swings.

Keep in mind that your stop price isn’t your trading price. The stop price is just a trigger—once the trade activates, it then becomes a market order.

Furthermore, if an ETF grows volatile, your stop order might trigger before you want it to. This is espe-cially true for illiquid markets, where ETF prices can sometimes drift from net asset value for hours at a time before ultimately correcting.

STOP-LIMIT ORDER A stop-limit order combines stop and limit orders in an automated process. Once an ETF’s share price hits the stop price, the trade activates and is executed as a limit order (meaning, it doesn’t fill until it reaches the limit price or better).

For example, for a sell-stop-limit order with a stop price of $5 and a limit price of $4.50, your order acti-vates as soon as the ETF’s price falls to $5. But your shares are only sold if they’re above $4.50.

That means everything is fine if the price is moving by small incre-ments, like a penny or two.

If the price drops to $4.49 from $5.00, your order will have been activated by the fall to $5.00 (the stop part), but it won’t fill (the limit part). And if the price is in full-on free fall and it gaps down to, say, $3.00 or even $1.00, your order will not have gone through, and you’ll be left holding shares you probably don’t want.

However, as with a limit order, you may not find someone willing to pay your limit price. Further, ETFs don’t always move incrementally. If the price spikes or plunges, your stop price might be triggered but the limit order might never be filled.

If, in our above example, the ETF price gapped down to $3, the stop-limit order will still activate, but the limit order can’t execute until the ETF’s price rises back above $4.50. Thus, the trade won’t execute—and never will, so long as the ETF stays below $4.50.

Market orders are usually safe if you’re mostly trading large, liquid ETFs. If you want to protect against potential downside risk, however, a limit order is usually safer. And stop orders should always be used with care lest you get caught in an arbi-trary pricing movement.

MARKET ORDER A market order is an order to buy or sell an ETF right now. The order exe-cutes immediately, at whatever the best available price may be.

With a market order, speed out-ranks price. That’s fine for highly liq-uid, high-volume ETFs, but it can be a recipe for disaster for volatile or less liquid funds.

LIMIT ORDER A limit order establishes a maximum or minimum price at which you’re willing to trade an ETF. The order only executes if the ETF’s share price meets that tar-get (or better). A buy limit order for $5/share, for example, means you’ll only buy if the ETF hits $5 or below.

With limit orders, you can set boundaries over trades to ensure you don’t pay more or receive less for shares than you want. But they aren’t guaran-teed to execute. If, per our example, the ETF’s price never falls to $5, then your limit order would never execute and you’d never get your shares.

Still, “a limit order is a good idea any time you’re trading a particularly large size, whether in shares or in market value,” said Blair duQuesnay,

÷

Understanding Spreads &

VolumeETFs trade like stocks. ETFs trade nothing at all like stocks. Both of these statements are true. But to trade ETFs, you should know why this is so.

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JANUARY 2019 17

÷

Understanding Spreads &

VolumeETFs trade like stocks. ETFs trade nothing at all like stocks. Both of these statements are true. But to trade ETFs, you should know why this is so.

The wider the spread, the more it will cost you to trade MSFT.

Bid/ask spreads are so important to ETP trading because, unlike a mutual fund—which you buy and sell at net asset value—all ETFs trade like single stocks, so ETFs trade with bid/ask spreads. That’s the price of the “exchange-traded” in the name.

Spreads widen and narrow for various reasons. If the ETF is popular and trades with robust volume, then bid/ask spreads tend to be narrower. But if the ETF is thinly traded, or if the underlying securities of the fund are highly illiquid, that can also lead to wider spreads.

Overall, the narrower the bid/ask spread, the lower the cost to trade.

VOLUME & MARKET IMPACTHowever, when trading stocks or ETFs, you also have to look at volume and so-called market impact.

Volume is the number of shares that trade on any given day. The higher the volume, the better. For example, if MSFT trades, on average, 10 million shares per day, it’ll be easier to trade than something that trades 100 shares per day. Note, however, that spreads could be tight on both, which could mislead unwitting investors to conclude that both securities are equally liquid.

Typically, the number of shares offered on the “bid” or the “ask” will be small—sometimes 100 shares, sometimes more, but rarely a huge amount. If you try to buy 10,000 shares of something that only trades 100 shares per day, you could have trouble.

To go back to our MSFT example, someone might be will-ing to sell you 100 shares of MSFT at $50.10, but if you want to buy 10,000 shares, you might have to pay $50.25 or more. The amount that you drive up the price of something you are trying to buy is called the “market impact.”

HOW DOES THAT IMPACT ETF TRADING, & HOW ARE ETFs DIFFERENT?Because ETFs trade on exchanges like stocks, they have bid/ask spreads, volumes and potential market impact, too. All else equal, you’ll do better trading something that has high volume and a tight bid/ask spread. In this way, trading ETFs is just like trading a stock.

But ETFs have a critical difference that dramatically alters the playing field for investors.

With single stocks, there’s no way to create new shares. But institutional investors called authorized participants (APs) are allowed to create new shares of an ETF to meet demand. So if you want to buy a lot of an ETF … say, 50,000 shares … an AP might create those shares to fill your order.

THE BID/ASK SPREADThe place to start with understanding how ETFs trade is to understand how individual stocks trade.

At any given time, there are two prices for any com-mon stock: the price at which someone is willing to buy that stock (the “bid”) and the price at which someone is willing to sell (the “ask”). The difference between these two prices is called the “spread.”

The reason spreads exist is because, in any open market, folks try to negotiate the best prices they can get. If you’re looking to buy, you’ll naturally want to see if someone is will-ing to sell for less than the last traded price.

Conversely, if you’re selling, you’ll naturally hope that someone will be willing to buy it for more than the last quoted price. Spreads are simply the result of buyers and sellers negotiating on prices.

For example, let’s imagine Microsoft’s stock is trading with the bid at $49.90 and the offer at $50.10. The spread is therefore $0.20. If someone asked you what a share of MSFT was “worth,” you’d probably choose the midpoint: $50.00, or maybe the last price at which you can see a trade actually happened.

But if you wanted to buy MSFT right now, you’d probably have to pay $50.10. If you wanted to sell right now, all you’d get is $49.90. Those are the prices you’d get if you enter a market order into your brokerage window.

17



ETF Costs Beyond the Expense Ratio

An ETF’s expense ratio is an easy-to-understand, flat annual fee that helps you weigh the relative expense of one fund versus another.

But expense ratios alone don’t tell you the full story about how much an ETF really costs. To own any given fund, you’ll pay much more than just an annual management fee, including ...

TRADING COMMISSIONS A commission is what your brokerage takes for making your trade. You pay this fee every time you buy and sell shares, no matter how big or small your trade (though sometimes a discounted rate is offered to more frequent traders).

Commissions depend on a variety of factors, including the brokerage you select, what kind of account you hold and whether you order in person, over the phone or online.

One thing’s certain, though: The more frequently you trade, the more you’ll pay in commissions, and that can erode your bottom line.

The good news is that many bro-kerages—such as Charles Schwab and TD Ameritrade—now offer com-mission-free ETF trading for certain funds. Still, exclusions sometimes apply, so make sure you read the fine print before investing.

BID/ASK SPREADS Technically, an ETF’s market price is not singular. Two prices actually mat-ter: the price at which you can find a buyer to take your shares, and the price at which a seller will give them to you. These are the “bid” and “ask” prices, respectively, and the differ-ence between them is known as a “bid/ask spread.”

The bid is usually lower than the ETF’s current share price, while the ask is usually higher. You’ll pay the full spread on every round-trip trade you make; meaning, the more fre-quently you trade shares, the more bid/ask spreads will cost you.

Several factors dictate the size of an ETF’s bid/ask spread, including the liquidity of the underlying securities, how expensive it is for fund managers and market makers to offset risk, and the total supply/demand of actual ETF shares.

But like commissions, bid/ask spreads are unavoidable. You pay the current bid when you enter a fund and the current ask when you exit it.

PREMIUMS/DISCOUNTS An ETF trades at a premium when its market price exceeds the sum total of all the prices of its underlying holdings. An ETF trades at a discount when the reverse is true, and the ETF’s price falls below that of its underlying holdings.

By themselves, premiums and discounts don’t cost you anything. If you buy and sell your shares at the

same 0.50%, then the net effect on your returns is zero.

Premiums and discounts only cost you if they change between the time you buy and the time you sell. If that 0.50% premium instead becomes a 0.50% discount, then you’ll lose 1% total on the round trip (assuming no price change).

ETF critics like to sound the alarm over premiums and discounts, but they’re actually normal. Most ETFs regularly carry small premiums or discounts, which arise organically from the supply/demand pressures that govern all marketplaces. (They can also emerge in other situations, such as when an ETF’s trading hours don’t match those of its underlying securities, as with some international funds.)

Plus, should premiums and dis-counts ever grow too large, ETFs have a built-in mechanism to realign prices with value through the creation/redemption process and the autho-rized participants that drive it.

TALLYING COSTS What cost affects you most depends on which kind of investor you are. Expense ratios impact buy-and-hold investors far more than active trad-ers, who in turn are more impacted by commissions and bid/ask spreads. Premiums/discounts, though, are a wild card that can either help or hin-der, depending on their value at trad-ing time.

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JANUARY 2019 19


ETF Costs Beyond the Expense Ratio

An ETF’s expense ratio is an easy-to-understand, flat annual fee that helps you weigh the relative expense of one fund versus another.

But expense ratios alone don’t tell you the full story about how much an ETF really costs. To own any given fund, you’ll pay much more than just an annual management fee, including ...

Understanding Securities

LendingSecurities lending is a fairly simple process that can generate extra returns for ETF investors, but it also introduces extra risk—however minimal.

The logic behind securities lending is this: An equity ETF will typically hold thousands of shares of various stocks. If there is a short-seller out there who wants to borrow those stocks—and agrees to post collateral and pay the ETF a fee for doing so—why not lend them out and make a little extra dough?

Generally speaking, securities-lending activities are positives for sharehold-ers and contribute to tighter index tracking and better overall returns. They’re not without some risks; while we believe they’re generally minor, they’re nonetheless worth considering.

RISKS OF SECURITIES LENDINGYou’d think the biggest risk in securities lending is that the short-seller you lent shares to goes bankrupt. Fortunately, industry practice is for borrowers to provide collateral exceeding the value of the loaned securities by a set margin. So while a busted counterparty is a pain, it’s not immediately costly.

The costs come in if the borrower is a short-seller (it usually is) and the secu-rity that they shorted rallies strongly in a single day, the borrower defaults and the provided collateral is insufficient to cover the cost of reacquiring the security. Remember, collateral balances are only settled (at best) daily.

Even that is small-fry, however.The real risk with securities lending is that when ETF issuers receive cash col-

lateral, they don’t just sit on it—they put it into money market securities to earn some small amount of interest on the cash. Where firms get into trouble is when these collateral investments go bankrupt, such as when Lehman Brothers went under. It’s unlikely, but it has happened.

HOW PROFITABLE IS SECURITIES LENDING?It depends. Just as prices in the rest of the economy are subject to the forces of supply and demand, so too are securities-lending premiums.

Securities that are in high demand in the loan market command higher premi-ums. ETFs that hold these in-demand securities can earn a significant premium lending out portfolio holdings. Premiums tend to fluctuate as certain sectors, mar-kets or countries fall in and out of favor with short-sellers.

When these factors align perfectly, ETFs can earn huge premiums for lend-ing securities. Historically, some ETFs (those in solar in 2017, for instance) have

paid dividends amounting to a yield as high as 5-7%, despite the fact that none of their underlying holdings paid dividends. In these cases, the ETF gen-erated sufficient revenues from secu-rities lending alone to enable a hefty dividend for its investors.

Let’s keep things in perspective though; most ETFs don’t earn such lofty premiums for lending their secu-rities. While they certainly provide a tail wind for ETFs, the effect of secu-rities-lending revenue is usually rela-tively muted and generally serves to offset expenses rather than generate significant outperformance.

It’s worth noting that, rather than distributing securities-lending rev-enue as dividends, the usual course of business is for ETFs to invest the extra revenue in its portfolio holdings. In this case, investors reap the rewards via fund performance rather than divi-dend payments.

The takeaway is that securities lending introduces some risk to ETF portfolios—much of which has been mitigated by issuer policies. Mean-while, the benefits of securities lend-ing range from negligible to highly significant.

RISKS OF SECURITIES LENDING

• Borrower defaults

• Insufficient collateral

• Collateral investment bankruptcy

3

19



Legal Structures, Regulations & Taxes

How Transparent Are ETFs?

KEY TAKEAWAYS

• Mutual funds publicly disclose holdings quarterly; ETFs typically do so every day but don’t have to

• Active ETFs must publicly disclose holdings daily

• All ETFs must disclose holdings daily to APs

Investors spend hours research-ing funds for expense ratios and spreads, trying to save a few basis points here and there. But often, not enough time is spent researching a fund’s structure and the associated tax implications, which can translate into hundreds or even thousands of basis points.

An ETF’s taxation is ultimately driven by its underlying holdings. Since funds are structured differently according to how they gain exposure to the underlying asset, an ETF’s tax treatment inherently depends on both the asset class it covers and its particular structure.

A fund’s asset class can be clas-sified in one of five categories: equi-ties; fixed income; commodities; cur-rencies; and alternatives.

For tax purposes, exchange-traded products come in one of five structures: open-end funds; unit investment trusts (UITs); grantor trusts; limited partnerships (LPs); and exchange-traded notes (ETNs).

Many commodity and currency funds that hold futures contracts are regulated by the Commodity Futures Trading Commission as commodity pools, but they’re classified as LPs for tax purposes by the IRS. There-fore, “limited partnership” is used to refer to the structure of these funds with regard to taxation.

This five-by-five matrix—five asset classes and five fund struc-tures—defines the potential tax treatments available in the ETF space.

EQUITY & FIXED-INCOME FUNDSEquity and fixed-income ETFs cur-rently operate in three different struc-tures: open-end funds, UITs or ETNs.

COMMODITY FUNDSCommodity ETFs come in one of four structures: open-end funds, grantor trusts, LPs or ETNs.

CURRENCY FUNDSCurrency ETFs come in one of four structures: open-end funds, grantor trusts, LPs or ETNs.

ALTERNATIVE FUNDSAlternative funds come in one of three structures: open-end funds, LPs or ETNs. (Alternative funds seek to provide diversification by combining asset classes or investing in nontradi-tional assets.)

TAXATION OF DISTRIBUTIONSBesides taxes on capital gains incurred from selling shares of ETFs, investors are also subject to paying taxes on periodic distributions, which can be dividends paid out from the underlying stock holdings, interest from bond hold-ings, return of capital (ROC) or capital gains—which come in two forms: long-term gains and short-term gains.

Dividend payments from ETFs are usually paid out monthly, quarterly, semiannually or annually. There are two kinds of dividends that investors should be aware of: qualified dividends, and nonqualified dividends.

Qualified dividends are dividends paid out from a U.S. company whose shares have been held for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. Importantly, this refers to the shares held by the ETF itself, and not the

MAXIMUM CAP GAINS TAX RATE

STRUCTURE LONG TERM SHORT TERM

Open End (40 Act) 20% 39.60%

UIT (40 Act) 20% 39.60%

Grantor Trust (33 Act) N/A N/A

Limited Partnership (33 Act) N/A N/A

ETN (33 Act) 20% 39.60%

20



Open End (40 Act) N/A N/A

UIT (40 Act) N/A N/A

Grantor Trust (33 Act) 28% 39.60%

Limited Partnership (33 Act)* 27.84%** 27.84%**

ETN (33 Act) 20% 39.60%

*Distributes K-1**Max rate of blended 60% LT/40% ST



Open End (40 Act) N/A N/A


Grantor Trust (33 Act) 28% 39.60%


ETN (33 Act) 20% 39.60%




Open End (40 Act) 20% 39.60%


Grantor Trust (33 Act) N/A N/A


ETN (33 Act)*** 20% 39.60%


***Exception is ticker “ICI”

JANUARY 2019 21


Legal Structures, Regulations & Taxes

How Transparent Are ETFs?

KEY TAKEAWAYS

• Mutual funds publicly disclose holdings quarterly; ETFs typically do so every day but don’t have to

• Active ETFs must publicly disclose holdings daily

• All ETFs must disclose holdings daily to APs

One of the key benefits of ETFs is that they offer better transparency into their holdings than competing mutual funds. The ability to verify your positions on a daily basis (in most cases) is a big plus.

By law and by custom, mutual funds are only required to disclose their portfolios on a quarterly basis—and then only with a 30-day lag. In between reporting peri-ods, investors have no idea if the mutual fund is invested according to its prospectus, or if the manager has taken on unwanted risks. Mutual funds can and do stray from their described targets—a phenomenon known as “style drift”—which can negatively impact an investor’s asset allocation plan.

ETFs are far more transparent. By custom, most ETFs disclose their full portfolios on public, free web-sites every single day of the year. You can see regularly updated ETF portfolios at ETF.com, too.

There’s no law requiring that ETFs disclose their full portfolios every day. But even for those that disclose less frequently, there is a catch.

ETF issuers each day publish the lists of what securi-ties an authorized participant must deliver to the ETF to create new shares (“creation baskets”), as well as what shares they’ll get if they redeem shares from the ETF (“redemption baskets”). This—combined with the abil-ity to see the full holdings of the index an ETF is aiming to track—provides an extremely high level of disclosure even for those few ETFs that fall short of the daily-dis-closure ideal.

Of note: All “actively managed” ETFs must, by law, disclose their full portfolios every day. They are actually the most transparent of all ETFs.

holding period of investors in the ETF.Investors should keep in mind that

while monthly distributions from bond ETFs are often called “dividends,” inter-est from the underlying bond holdings aren’t considered qualified dividends, and are taxed as ordinary income.

Funds can also pay out distributions in excess of the fund’s earnings and profits (ROC). ROC is generally non-taxable and reduces the investor’s cost basis by the amount of the distribution.

MEDICARE SURCHARGE TAXEffective Jan. 1, 2013, singles with an adjusted gross income (AGI) of more than $200,000, and those married filing jointly with an AGI of more than $250,000, are now subject to an addi-tional 3.8% Medicare surcharge tax on investment income, which includes all capital gains, interest and dividends.

This tax is levied on the lesser of net investment income or modi-fied AGI in excess of $200,000 sin-gle/$250,000 joint. Therefore, for investors in the highest tax brackets, their “true” tax rates on long-term capital gains and qualified dividends can reach 23.8% (20% capital gains plus 3.8% Medicare tax).

Disclaimer: We are not professional tax advisors. This article is for informa-tional purposes only and not intended to be tax advice. Tax rules can change. Individuals should always consult with a professional tax advisor for details about the tax implications of investment prod-ucts and their personal taxes. Pending or future legislation could materially affect the information in this article.

21



Managing & Avoiding ETF

ClosuresLike any business, even low-cost ETFs need to generate rev-enue to cover their costs.

Plenty of ETFs fail to garner the assets necessary to cover these costs and, consequently, ETF closures happen regularly. In fact, a significant percentage of ETFs are always at risk of closure. There’s no need to panic though: Broadly speaking, ETF investors don’t lose their investment when an ETF closes. A closure can, however, be inconvenient and costly.

The good news is that for each high-closure-risk ETF out there, there is almost always a larger, more viable product available to suit your investment needs.

WHAT HAPPENS WHEN AN ETF CLOSES?Once the decision to delist or liquidate an ETF has been made, a prospectus supplement will state the ETF’s last trad-ing date and its liquidation date (if it has one).

At this point, or soon after, “business as usual” ceases, and the fund halts creations as it prepares to convert to cash. This causes ETF performance to diverge from the perfor-mance of its underlying index.

During this period, the ETF issuer will continue to publish indicative net asset value (iNAV) throughout the day, and it should still be referenced when buying or, more likely, selling the ETF. It’s generally advisable to sell any remaining shares you may be holding before the last day of trading.

DELISTING VS. LIQUIDATIONWhen an ETF liquidates, investors generally receive cash distributions equal to NAV, so even if you fall asleep at the wheel, you’ll receive the fair value of your shares. Over the years, there’ve been a few instances where the process wasn’t smooth, but exceptions aside, liquidation is likely to be a less costly and cumbersome affair than delisting.

When an ETF delists without liquidating its portfolio, investors who fail to sell their shares before the last trading date will be forced to trade over the counter—generally more complicated and costly.

DOWNSIDE OF CLOSURESEven if the delisting and closure goes smoothly, it can still be hugely inconvenient, for a few reasons.

Reputation Risk: From the perspective of advisors, avoiding funds at high risk of closure can help avoid egg-on-your-face phone calls to clients after recommending a fund that’s now closing: “Remember that great ETF I told you about? About that, ... “

Reinvestment Risk: When an ETF delists or liquidates, it creates reinvestment risk for its investors—not to mention the extra and unnecessary burden associated with reinvesting. Once you receive your cash-equivalent NAV, you’ve got to find somewhere else to put it, which could mean repeating the entire process that landed you in the ETF to begin with.

Tax Burden: Since investors must either sell their shares or receive cash equivalents of NAV, they’re forced to realize any capital gains. Realizing capital gains earlier than planned can create an unanticipated tax burden.

CLOSURE RISK FACTORSIt’s relatively easy to predict likely candidates for closing, and a little homework can be good insurance.

Low Assets Under Management: Low AUM is one of the best indicators of closure risk. Funds with hundreds of millions of dollars are too profitable to close.

The only problem with using AUM as an indicator of fund-closure risk is that you’re ruling out far too many ETFs. There are hundreds of ETFs with low AUM that don’t close each year—and some of them are great products.

Still, as a general rule of thumb, once a fund surpasses the $50 million mark in AUM, it’s far less likely to close.

Issuer Strength: Surprisingly, even more important than AUM in predicting fund closure is the strength of its issuer. Indeed, most ETF closures historically are the result of entire companies getting out of the ETF business, not big issuers simply closing ETFs that are slow out of the gate.

Consequently, when evaluating whether a low-AUM fund is at risk of closure, consider the strength of its issuer as well as the issuer’s history and general culture surrounding closures.

Fund Rank In Segment: If a particular ETF is the least popular (by AUM) among 10 ETFs that offer similar exposure, it’s more likely to close than a similarly unpopular ETF that’s the only ETF offering exposure to a particular sector/country/strategy. Essentially, unpopular funds in oversaturated markets are at greater closure risk than unpopular funds offering unique exposure.

SUMMARYUltimately, don’t let media headlines about ETF closures invoke fear because, first and foremost, ETF investors usu-ally don’t stand to lose when an ETF closes. Secondly, funds at risk of closure are largely easy to identify, which is to say that it should be easy for you to avoid the high-risk funds.

Fixed-Income ETFs During

a PanicETFs typically trade at something close to “fair value.” That is, if you calculated the intraday value of all the securities an ETF holds, that would roughly align with the price of the ETF.

The process that keeps ETFs trading at “fair value” is the creation/redemption mechanism (explained on page 13). If, at any time, the price of the ETF deviates from the price of the underlying portfolio, institutional investors can swoop in and arbitrage the difference.

22

JANUARY 2019 23


Managing & Avoiding ETF

ClosuresFixed-Income

ETFs During a Panic

ETFs typically trade at something close to “fair value.” That is, if you calculated the intraday value of all the securities an ETF holds, that would roughly align with the price of the ETF.

The process that keeps ETFs trading at “fair value” is the creation/redemption mechanism (explained on page 13). If, at any time, the price of the ETF deviates from the price of the underlying portfolio, institutional investors can swoop in and arbitrage the difference.

There are various ways and places that this near-perfect relationship gets upset. The most high-profile—and important—is in fixed income. Fixed-income ETFs—particularly in times of stress—can trade to mas-sive premiums or discounts to their net asset values (NAVs).

The question this article aims to answer is: Is this a problem with the ETF or a problem with the underly-ing bond market?

BOND MARKET IS DIFFERENTCompared with stocks—like those in the S&P 500, which trade throughout the day on the NYSE and Nasdaq—bonds are relatively illiquid, and their true price is harder to know with certainty. For example, shares of Apple are fungible, so the last price at which a share was traded is a very good representation of the current value of every Apple share. The bond market is different.

First, bonds trade much less frequently than stocks—so the last

traded price might not be current at all. Second, they don’t trade on an exchange: Most bond trades are individual “over the counter” agree-ments between two parties. Third, bonds come in much greater vari-ety than stocks; for example, Exxon has many bond issues, each with different maturities and coupons, and each requiring its own price.

Fourth, ETF issuers generally rely on bond pricing services for “fair” value estimations of their holdings; these estimations are based on the current selling price the fund might receive were it to start selling its bonds immediately. That fire-sale price will always be less than what

you could pay to buy the bond, so there’s a “natural” depression in the reported NAV of all bond ETFs.

For all of these reasons, it’s not uncommon that a highly liquid bond ETF can serve as price discovery for the true fair value of the basket of bonds it holds. In other words, the market price of the bond ETF can be a better approximation of the aggre-gate value of the ETF’s underlying basket bonds than its own NAV. Therefore, large premiums and dis-counts do not necessarily signal any mispricing in the ETF.

PRICE DISCOVERY & THE ETF WRAPPERThe idea of price discovery—where the ETF’s market price is actually “ahead” of its NAV and is the best representation of fair value—shows up in other corners of the ETF world. For example, imagine a Japanese equity fund. The underlying stocks trade in Tokyo during their day, but the ETF trades throughout the U.S. trading day. Negative Japan news occurring in the morning here in the U.S. after the Tokyo market closes will depress the ETF share price, but its NAV will be unchanged, produc-ing a large discount on that day.

To be clear, large premiums and discounts can’t be safely ignored in all cases, and ETF share prices aren’t always in the right when they don’t match NAV. Sometimes large premiums and discounts signal that the ETF itself trades poorly and is therefore a lousy price-discovery vehicle. Still, the relative illiquid-ity of the bond market means that bond ETF premiums and discounts can’t be relied upon blindly.

One general rule: A bond ETF is likely to be an efficient price-discov-ery vehicle—and therefore indicate that any large premiums and dis-counts aren’t a sign of trouble—if the ETF’s shares trade with great frequency and high volume.

The market price of the bond ETF can be a better approximation of the aggregate value of the ETF’s underlying basket bonds than its own NAV

23



Bonds vs. Bond ETFs

Understanding VIX ETFs

Bonds are great. They offer safe, steady and predictable returns that have low correlations to stocks, making them an excellent way to balance higher-risk equities in a portfolio. But for the average investor, investing in individual bonds is next to impossible.

DOWNSIDES OF BUYING BONDSInvesting in single bonds is difficult for many investors, due to:

• Poor market transparency. Bonds trade over-the-counter (OTC), meaning there’s no single exchange on which they trade and no official agreed-upon price. The market is difficult to navigate, and investors may find they receive widely different prices from different brokers for the same bond.

• High markups. Broker markups on bond prices can be substantial, espe-cially for smaller investors; one U.S. government study found that markups on municipal bonds can soar as high as 2.5%. Between these markups, bid/ask spreads and the price of the bonds themselves, the cost to invest in indi-vidual bonds can add up—fast.

• Poor liquidity. Bonds vary widely in their liquidity. Some bonds trade daily, while others only trade weekly, or even monthly—and that’s when markets work perfectly. In times of market distress, some bonds may stop trading altogether.

WHAT ARE BOND ETFs?A bond ETF is a bond investment in a

stocklike wrapper. A bond ETF tracks an index of bonds and tries to replicate its returns. Though these instruments hold bonds and only bonds, they trade on an exchange like stocks, giving them some attractive equitylike properties.

DIFFERENCES BETWEEN BONDS & BOND ETFsBonds and bond ETFs may comprise the same basic investments, but exchange trading changes the behavior of bond ETFs in several important ways:

• Bond ETFs do not mature. Individual bonds have a fixed, unchanging date at which they mature and investors get their money back; each day invested is one day closer to that result. Bond ETFs, however, maintain a constant maturity, which is the weighted aver-age of the maturities of all the bonds in its portfolio. At any given time, some of these bonds may be expiring or exiting the age range that a bond ETF is targeting (e.g., a one- to three-year Treasury bond ETF kicks out all bonds with less than 12 months to maturity). As a result, additional bonds are con-tinually being bought and sold to keep the portfolio’s maturity constant.

• Bond ETFs are liquid even in illiquid markets. The tradability of single bonds varies widely. Some issues trade daily, while others can trade as little as once a month. In times of stress, they may not trade at all. In contrast, bond ETFs trade on an exchange, meaning they can be bought and sold at any time during mar-ket hours, even if the underlying bonds themselves are not trading at the time.

This has very real effects. For example, one source found that, on average, high-yield corporate bonds trade fewer than half the days each month; meanwhile, the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) trades millions of shares each day.

• Bond ETFs pay out monthly income. One of bonds’ biggest benefits is that they pay out interest to investors on a regular schedule. Usually, these coupon payments happen every six months. But bond ETFs hold many different issues at once, and at any given time, some bonds in the portfolio may be paying their cou-pon. As a result, bond ETFs usually pay interest monthly, rather than semiannu-ally; the value of this payment can vary from month to month.

BOND ETF ADVANTAGESBond ETFs offer many advantages over single bonds:

• Diversification. With an ETF, you can own hundreds, even thousands, of bonds in an index at a purchase price significantly less than what it would be to invest in each issue individually. It’s institutional-style diversification at retail prices.

• Ease of trading. No more wading through the opaque OTC markets to haggle over prices. You can buy and sell bond ETFs from your regular brokerage account with the click of a button.

• Liquidity. Bond ETFs can be bought and sold at any time during the trad-ing day, even in overseas or smaller markets where individual issues might trade much less frequently.

• Price transparency. With a bond ETF, there’s no more uncertainty over what your investment is worth: ETF prices are published publicly on the exchange and updated every 15 seconds during the trading day.

• More frequent income. Instead of cou-pon payments every six months, bond ETFs usually pay interest monthly.

24

JANUARY 2019 25


Bonds vs. Bond ETFs

Understanding VIX ETFs

Bonds are great. They offer safe, steady and predictable returns that have low correlations to stocks, making them an excellent way to balance higher-risk equities in a portfolio. But for the average investor, investing in individual bonds is next to impossible.

The Cboe Volatility Index (VIX) attracts traders and inves-tors because it often spikes way up when U.S. equity mar-kets plunge. Known as the fear gauge, the VIX index reflects the market’s short-term outlook for stock price volatility as derived from options prices on the S&P 500.

The challenge is that investors just can’t access the VIX index. Period.

VIX ETFs exist, but they actually track VIX futures indexes, which creates two massive challenges:

1. VIX ETFs Don’t Reflect The VIX IndexBy any measure, VIX futures indexes—and therefore VIX ETFs—do a lousy job emulating the VIX index. The VIX index is truly uninvestable, and over periods of a month or a year, the return pattern of VIX ETFs will differ radically from that of the VIX index.

2. VIX ETFs Tend To Lose Money— Lots Of It—In The Long RunVIX ETFs are at the mercy of the VIX futures curve, which they rely upon for their exposure. Because the typical state of the curve is upsloping (in contango), VIX ETFs see their posi-tions decay over time. Decay in their exposure leaves them with less money to roll into the next futures contract when the current one expires. The process then repeats itself, lead-ing to massive double-digit losses over the course of a typi-cal year. These funds almost always lose money long term.

IN IT FOR A MINUTEIn the real world, traders stay in VIX ETFs for one day, not one year. VIX ETFs are emphatically short-term tacti-cal tools used by traders. Products like VXX are incredibly liquid, turning over their entire large AUM in one or two days of trading. Traders speculate with VIX ETFs because they offer the best (or least-worst) means to get at the VIX index in the very short run. So-called “short-term” VIX ETFs offer better one-day sensitivity to the VIX index then do “midterm” VIX ETFs.

Cboe Global Markets owns the VIX and is the parent company of ETF.com and ETF Report.

Though the value may vary from month to month, monthly payments give bond ETF investors a more regular income stream to use or reinvest.

BOND ETF DRAWBACKSThere are two main downsides to bond ETFs.

• You aren’t guaranteed to get your money back. Because bond ETFs never mature, they never offer the same protection for your initial investment the way that individual bonds can. In other words, you aren’t guaranteed to get your money back at some point in the future.

However, some ETF providers have begun issuing ETFs with specific matu-rity dates, which hold each bond until they expire and distribute the proceeds once all bonds have matured. Invesco, for example, offers more than 20 invest-ment-grade and high-yield corporate bond target-maturity-date ETFs under its BulletShares brand, with maturi-ties at different years (2019, 2020 and so on); iShares similarly offers its own target-maturity-date bond ETFs.

• You can lose money if interest rates rise. Interest rates change over time. When they do, the value of bonds may fall, and selling those bonds can lead to losing money on your initial invest-ment. With individual bonds, you mitigate the risk by just holding onto a bond until maturity, when you’ll be paid its full face value. Bond ETFs don’t mature, however, so there’s little you can do to avoid the sting of rising rates.

BONDS OR BOND ETFs?For most investors, buying individual bonds is out of the question. Even if it weren’t, bond ETFs offer diversity, liquidity and price transparency that single bonds can’t match, with the added benefits of intraday tradability and more frequent income payments. Bond ETFs do carry some additional risks, but all in all, they’re probably a better and more accessible option for the average investor.

25



The Problem With Inverse/ Leveraged ETFs

ETFs let investors express a vast number of view-points—including if an investor expects prices to fall, or wants to magnify a return.

leads to a larger nominal decline, the investor loses money.Conversely, in a double-leverage short using the same

index, the investor’s ETF would fall to 8, but only rise to 9.46, because the rise is off a smaller number.

Even in range-bound markets, leveraged and inverse ETFs eat away at long-term returns because the moves are asym-metrical. Because the moves are magnified, the declines from higher levels are compounded, and the rebounds don’t get investors back to par because it takes more of a rally to make up the losses. So when prices drift around in range-bound markets investors usually don’t break even.

“With leveraged and inverse ETFs, when you make trades and how long you hold them is extremely important,” said Rosenbluth.

“Through November we had a slightly positive equity market but it was not a flat year. We had significant rallies and significant falls in the broader market, and particularly in the fourth quarter we’ve seen more volatility. If you’ve timed it well and have gotten out before the trend reversed itself, it’s likely it’s been a better year than the low single-digit returns of the S&P 500 indicated. But if you’ve stayed with these products as they’ve whipsawed back and forth, your returns are likely going to be different,” he added.

MARKET DIRECTIONS CHANGE QUICKLY Some investors like to use leveraged/inverse ETFs when they see a market that has a strong directional trend, such as the drop in the oil market in late 2014 and early 2015. But that can be dangerous.

“You may have a thesis, but you have to be an expert in understanding price moves, and these are geared to a retail investor who doesn’t have a lot of time to formulate those ideas. If they get lucky, it’s like winning the lottery. But if you don’t get out in time, you can quickly lose gains,” Manning said.

Rosenbluth and Manning say these ETFs are really designed more for frequent trading, or to try and time the market.

“They can serve a purpose, but they can also be some-thing that causes investors to lose money faster than they anticipated,” Rosenbluth said.

Leveraged ETFs allow investors to take a chance to enhance the risk they’re taking on a daily basis, says Todd Rosenbluth, senior director of ETF and mutual fund research for CFRA. These funds often are designed to have returns two or three times their benchmark on a daily basis. Mean-while, inverse ETFs allow investors to easily short an index if they believe the price will fall.

But the vehicles used to place these trades—leveraged and inverse ETFs—often have poor returns.

“They’re intended to move more aggressively than the broader market that they’re representing. If the trend flips, you can get hurt very quickly. You can make money very quickly, and it’s usually the getting hurt very quickly that investors tend to not see coming,” Rosenbluth said.

DAILY RESETS ERODE RETURNS The problem investors run into with these funds occurs when people hold them for more than a day or two, say Rosenbluth and Brett Manning, senior market analyst at Briefing.com.

Because they reset daily, arithmetic works against buy-and-hold investors, Manning says.

Manning used a hypothetical example to explain the long-term drag for leveraged performance. If an index on Monday is at 10, on Tuesday rises to 11 and on Wednesday falls back to 10, a double-leverage long ETF would rise to 12, but then fall to 9.82. It rose 20% on Tuesday, but fell 20% on Wednesday. Because a 20% drop from the higher number

EXPOSUREEXPOSURE

BEFOREEXPOSURE

AFTER

LEVEL RESET RESET

DAY

1 INDEX 100

-2X ETF 100 -200 -200

DAY

2 INDEX UP 10% INDEX 110

ETF LOSES 20% -2X ETF 80 -220 -160

DAY

3 INDEX DOWN 10% INDEX 99

ETF GAINS 16% -2X ETF 96 -144 -192

26

JANUARY 2019 27


The Problem With Inverse/ Leveraged ETFs

ETFs let investors express a vast number of view-points—including if an investor expects prices to fall, or wants to magnify a return.

Cboe Is Proud to List Aptus ETFs

FTVABEMODRSK

Aptus Fortified Value ETFAptus Behavioral Momentum ETF

Aptus Defined Risk ETF


BROAD-BASED AGS ENERGY INDUST. METALS PRECIOUS METALS

BROAD BROAD BROAD BROAD BROADUSCI DBA DBE DBB GLTR

-6.75% -0.69% -17.63% 2.52% 0.69%

BROAD COFFEE GASOLINE COPPER GOLDDBC JO UGA JJC GLD

-9.85% -7.49% -19.27% 4.66% 0.34%

BROAD SUGAR NATURAL GAS NICKEL PLATINUMDJP SGG UHN BJJ PPLT

-0.91% -2.41% 39.78% -4.30% -5.02%

BROAD COCOA CRUDE OIL ALUMINUM SILVERFTGC NIB UNG JJU SLV

-3.87% -3.22% -22.19% -0.54% -0.67%

BROAD COTTON TIN PALLADIUMGCC BAL JJT PALL

-1.86% 0.97% -2.95% 8.83%

BROADGSG

-11.07%

BROADPDBC

-10.74%

commodity ETFs. Although very few funds had positive returns, the United States Natural Gas Fund LP (UNG) had a rather outsized month, rising nearly 40%. It was followed quite distantly by the Aberdeen Standard Physical Palladium Shares (PALL), which was up 8.83%, and the iPath Series B Bloomberg Copper Subindex Total Return ETN (JJC), up 4.66%. The worst performers were in the energy commodity sector, with the United States Oil Fund LP (USO) losing 22.19%, the United States Gasoline Fund LP (UGA) losing 19.27% and the Invesco DB Energy Fund (DBE) losing 17.63%. Flows were fairly muted, with USO pulling in the most, at $363.3 million, followed by the SPDR Gold Trust (GLD), which gained $307.3 million and the iShares S&P GSCI Commodity Indexed Trust (GSG), which gained $63 million. The Invesco DB Commodity Index Tracking Fund (DBC) lost $269 million, and the United States Natural Gas Fund LP (UNG) and the Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC) lost $149.3 million and $146.5 million, respectively.

November was a pretty dismal month forCommodity Performance NOVEMBER 2018

Source: Bloomberg. Data from 10/31/2018 to 11/30/2018. ETFs chosen to represent each sector based on the most liquid ETF in each segment of the ETF.com ETF Classification System.

≤-5

.0-3

.0 ≤

-4.9

-1.0

≤-2

.9-0

.1 ≤

-0.9 0

0.1

≤ 0

.91.

0 ≤

2.9

3.0

≤ 4

.9≥

5.0

KEY:

+-

Top Inflows |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||TICKER NET FLOWS ($M) AUM ($M)

United States Oil USO 363.3 1,550.6

SPDR Gold GLD 307.3 29,704.4

iShares S&P GSCI GSG 63.0 1,234.9

Invesco DB Agriculture DBA 28.0 575.6

Aberdeen Standard Phys Platinum PPLT 7.7 508.1

Top Outflows |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||TICKER NET FLOWS ($M) AUM ($M)

Invesco DB Commodity DBC -269.0 2,029.2

United States Natural Gas UNG -149.3 387.2

Invesco Opt Yld Divrsfd Commdty No K-1 PDBC -146.5 2,106.1

iShares Silver SLV -96.3 4,568.4

iPath Bloomberg Commodity ETN DJP -35.5 818.8

COMMODITIES IN REVIEW By Heather Bell

JANUARY 2019 29

A bright idea in alternativesSeeking private equity-like returns for every budget

An investor should consider the investment objectives, risks, charges and expenses of the Fund (or of the Investment Company) carefully before investing. To obtain a prospectus containing this and other information, please call 1-800-920-0259 or (if applicable) download the file from http://www.uscfinvestments.com/pro/buy or http://www.uscfinvestments.com/pro/buyn. Read the prospectus carefully before you invest.

Funds distributed by ALPS Distributors, Inc.Investing involves risk, including potential loss of principalThe Funds do not invest in private equity funds or private equity of companies.

C

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CM

MY

CY

CMY

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SECTORS IN REVIEW By Heather Bell

BASIC MATERIALS CONS. CYCL. CONS. NON-CYCL. ENERGY FINANCIAL HEALTH CARE INDUSTRIAL REAL ESTATE TECH TELECOM UTILITIES

BROAD BROAD BROAD BROAD BROAD BROAD BROAD BROAD BROAD BROAD BROADXLB XLY XLP XLE XLF XLV XLI IYR XLK IYZ XLU

3.90% 2.44% 2.43% -1.60% 2.78% 7.03% 3.82% 4.67% -1.88% 1.80% 3.55%

MINING HOMEBLD FOOD EQUIP. BANKS BIOTECH DEFENSE BROAD INTERNET BROAD BROADXME XHB PBJ IEZ KBWB IBB PPA VNQ FDN VOX VPU

-5.24% 4.61% 2.43% -11.36% 2.96% 4.73% 1.45% 4.73% 0.24% -0.66% 3.92%

MEDIA EXPLOR BANK&IN MED.DEV TRANSPO SEMISPBS XOP IAI IHI IYT XSD

-0.18% -9.26% 0.82% 5.44% 6.53% 5.14%

RETAIL SERVICES PHARMA. ENGINEER SOFTWAREXRT IYG IHE PKB IGV

-1.81% 2.19% 3.45% 3.03% 1.32%

LEISURE EQUIPMENTPEJ XHE

3.95% 1.07%

SERVICESIHF

4.96%

Top Inflows ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||TICKER NET FLOWS ($M) AUM ($M)

Cons Staples Select Sector SPDR XLP 901.4 10,190.4 U.S. Consr. Non-cyclicals

Health Care Select Sector SPDR XLV 607.4 19,398.7 Health Care

Industrial Select Sector SPDR XLI 402.5 11,627.6 Industrials

Vanguard Utilities VPU 2,411.0 3,287.4 Utilities

SPDR S&P Oil & Gas Expl & Prod XOP 189.9 2,761.0 Energy

Top Outflows |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||TICKER NET FLOWS ($M) AUM ($M)

Financial Select Sector SPDR XLF -256.3 29,496.4 Financials

First Trust Dow Jones Internet FDN -247.2 7,660.7 Technology

iShares NASDAQ Biotechnology IBB -203.8 8,319.8 Health Care

Vanguard Real Estate VNQ -179.6 30,922.2 Real Estate

Technology Select Sector SPDR XLK -166.7 19,149.5 Technology

The top-performing fund was the Health Care Select Sector SPDR Fund (XLV), which was up 7.03% for the month; it was followed by the iShares Transportation Average ETF (IYT), which was up 6.53%, and the iShares U.S. Medical Devices ETF (IHI), which was up 5.44%. Although only a few funds notched negative returns, the worst performer was down quite a bit. The iShares U.S. Oil Equipment & Services ETF (IEZ) fell 11.36% during the month, while the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the SPDR S&P Metals & Mining ETF (XME) fell 9.26% and 5.24%, respectively. Flows were dominated by the Select Sector SPDR family, with the Consumer Staples Select Sector SPDR Fund (XLP) pulling in more than any other ETF, at $901.4 million, XLV gaining $607.4 million and the Industrial Select Sector SPDR Fund (XLI) pulling in $402.5 million. In terms of outflows, the Financial Select Sector SPDR Fund (XLF) led outflows, with a loss of $256.3 million, followed by the First Trust Dow Jones Internet Index Fund (FDN), which lost $247.2 million, and the iShares NASDAQ Biotechnology ETF (IBB), which lost $203.8 million.

November was mostly positive for sector ETFs.

Sector Performance NOVEMBER 2018

///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

≤-5

.0-3

.0 ≤

-4.9

-1.0

≤-2

.9-0

.1 ≤

-0.9 0

0.1

≤ 0

.91.

0 ≤

2.9

3.0

≤ 4

.9≥

5.0

KEY:

+

Source: Bloomberg. Data from 10/31/2018 to 11/30/2018. ETFs chosen to represent each sector based on the most liquid ETF in each segment of the ETF.com ETF Classification System.

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Note: This list intends to capture the returns of most liquid ETFs tracking individual countries around the world. It does not capture every country in the MSCI All Country World Index. Also, as indicated

by the design above, frontier market countries are not included in the MSCI All Country World Index.

Index Data Source: MSCI.ETF Return Data Source: Bloomberg.All return data from 10/31/2018 to 11/30/2018.

DEVELOPED MARKETS EMERGING MARKETS FRONTIER MARKETSAMERICAS EMEA ASIA-PACIFIC AMERICAS EMEA ASIA-PACIFIC

CANADA AUSTRIA AUSTRALIA BRAZIL EGYPT CHINA ARGENTINAEWC EWO EWA EWZ EGPT FXI ARGT

0.49% -2.46% 0.97% -0.87% 6.72% 6.95% 1.50%

UNITED STATES BELGIUM HONG KONG CHILE GREECE INDIA NIGERIASPY EWK EWH ECH GREK INDA NGE

1.85% 1.61% 8.00% 3.66% -2.59% 10.47% -5.59%

DENMARK JAPAN COLOMBIA POLAND INDONESIA PAKISTANEDEN EWJ GXG EPOL EIDO PAK

0.81% 0.91% -0.58% 8.38% 12.31% -3.60%

FINLAND NEW ZEALAND MEXICO QATAR MALAYSIA SAUDI ARABIAEFNL ENZL EWW QAT EWM KSA

-3.81% 6.54% -4.16% 4.26% -0.60% -3.97%

FRANCE SINGAPORE PERU RUSSIA PHILIPPINESEWQ EWS EPU RSX EPHE

-1.16% 3.10% 1.26% -1.68% 6.58%

GERMANY SOUTH AFRICA SOUTH KOREAEWG EZA EWY

-1.50% 9.47% 4.03%

IRELAND TURKEY TAIWANEIRL TUR EWT

-4.04% 12.46% 0.51%

ISRAEL UAE THAILANDEIS UAE THD

4.53% -4.68% -0.54%

ITALY VIETNAMEWI VNM

1.36% 3.43%

NETHERLANDSEWN

2.34%

NORWAYNORW

-5.29%

PORTUGALPGAL

-1.89%

SPAINEWP

2.93%

SWITZERLANDEWL

0.33%

UNITED KINGDOMEWU

-1.19%

for the key country ETFs. The iShares MSCI Turkey ETF (TUR) led the other funds, with an increase of 12.46%, followed by the iShares MSCI India ETF (INDA), up 10.47% and the iShares MSCI South Africa ETF (EZA), up 9.47%. At the other end of the spectrum was the Global X MSCI Nigeria ETF, down 5.59%, the Global X MSCI Norway ETF (NORW), down 5.29% and the iShares MSCI UAE ETF (UAE), down 4.68%. The SPDR S&P 500 Trust ETF (SPY) saw more inflows than any other country ETF, gaining $5.8 billion, while the iShares MSCI Brazil ETF (EWZ) and the iShares China Large-Cap ETF (FXI) pulled in $561.2 million and $448 million, respectively. In terms of outflows, the iShares MSCI Germany (EWG) led the losses, bleeding $253.4 million; the iShares MSCI Japan ETF (EWJ) lost $207.7 million, and the iShares MSCI Switzerland ETF (EWL) lost $179.8 million.

November was a mixed month

Country Returns NOVEMBER 2018

≤-5

.0-3

.0 ≤

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-1.0

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0.1

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.91.

0 ≤

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≤ 4

.9≥

5.0

KEY:

+-

Top Inflows |||||||||||||||||||||||||||||||||||||||||||||||||||||||||TICKER NET FLOWS ($M) AUM ($M)

SPDR S&P 500 SPY 5,813.9 265,046.4

iShares MSCI Brazil EWZ 561.2 7,335.9

iShares China Large-Cap FXI 448.0 5,825.6

iShares MSCI South Korea EWY 321.0 3,832.0

iShares MSCI Mexico EWW 176.3 992.9

Top Outflows ||||||||||||||||||||||||||||||||||||||||||||||||||||TICKER NET FLOWS ($M) AUM ($M)

iShares MSCI Germany EWG -253.4 2,439.6

iShares MSCI Japan EWJ -207.7 16,684.1

iShares MSCI Switzerland EWL -179.8 891.4

iShares MSCI France EWQ -162.1 594.6

iShares MSCI Hong Kong EWH -144.1 2,306.8

COUNTRIES IN REVIEW By Heather Bell

JANUARY 2019 33

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U.S. EQUITY: TOTAL MARKET

VanEck Vectors Morningstar Wide Moat MOAT 0.48 1,722.6 8.62 16.20 12.12

iShares Edge MSCI Min Vol USA USMV 0.15 19,188.3 8.61 12.78 12.15

Vanguard Dividend Appreciation VIG 0.08 30,880.1 7.29 13.31 10.07

Fidelity NASDAQ Composite ONEQ 0.21 1,825.8 6.79 13.74 13.61

iShares Core Dividend Growth DGRO 0.08 5,071.0 6.43 14.15 -

iShares Edge MSCI USA Momentum Factor MTUM 0.15 9,386.2 6.32 15.28 14.50

WisdomTree US Multifactor USMF 0.28 132.0 5.66 - -

ERShares Entrepreneur 30 ENTR 0.49 70.4 5.30 - -

SPDR MSCI USA StrategicFactors QUS 0.15 143.9 5.23 12.07 -

O'Shares FTSE US Quality Dividend OUSA 0.48 593.6 5.22 11.91 -

iShares ESG MSCI USA ESGU 0.15 111.1 4.96 - -

Invesco Defensive Equity DEF 0.60 188.8 4.75 13.14 9.62

iShares MSCI KLD 400 Social DSI 0.25 1,224.2 4.74 11.23 10.09

FlexShares Quality Dividend Defensive QDEF 0.37 331.4 4.69 11.56 10.21

Vanguard Total Stock Market VTI 0.04 101,769.0 4.35 11.76 10.61

iShares Dow Jones US IYY 0.20 1,182.9 4.27 11.60 10.44

Schwab US Broad Market SCHB 0.03 12,952.4 4.23 11.67 10.57

iShares Core S&P Total US Stock Market ITOT 0.03 15,717.7 4.21 11.80 10.73

WisdomTree US Quality Dividend Growth DGRW 0.28 2,432.1 4.19 13.14 11.42

Invesco Dividend Achievers PFM 0.55 320.9 4.18 11.63 8.92

iShares Russell 3000 IWV 0.20 8,534.1 4.11 11.55 10.46

Nationwide Max Diversification US Core MXDU 0.34 102.5 3.98 - -

iShares MSCI USA ESG Select SUSA 0.25 853.0 3.89 11.78 10.28

Vanguard Russell 3000 VTHR 0.15 394.4 3.87 11.50 10.38

SPDR Portfolio Total Stock Market SPTM 0.03 2,575.0 3.77 11.59 10.49

iShares Edge MSCI USA Size Factor SIZE 0.15 233.6 3.71 10.99 10.72

Invesco DWA Momentum PDP 0.63 1,491.0 3.54 8.35 8.69

TrimTabs All Cap US Free-Cash-Flow TTAC 0.59 128.9 3.44 - -

AI Powered Equity AIEQ 0.75 175.2 3.21 - -

iShares Edge MSCI USA Quality Factor QUAL 0.15 6,793.9 3.03 10.57 10.64

Goldman Sachs Hedge Industry VIP GVIP 0.45 108.5 2.98 - -

Invesco Dynamic Market PWC 0.60 159.2 2.58 10.38 8.82

PIMCO RAFI Dyn Multi-Factor US Equity MFUS 0.29 70.5 2.50 - -

WisdomTree US Total Dividend DTD 0.28 615.1 2.35 11.32 10.04

Schwab Fundamental US Broad Market FNDB 0.25 264.9 2.17 10.82 9.16

iShares MSCI USA Equal Weighted EUSA 0.15 216.4 1.98 10.46 9.43

WisdomTree US Total Earnings EXT 0.28 90.5 1.60 11.25 9.92

FlexShares Quality Dividend QDF 0.37 1,758.2 1.23 10.70 9.51

FlexShares Mstar US Market Factor Tilt TILT 0.25 1,396.4 1.21 10.78 9.06

Legg Mason Low Volatility High Dividend LVHD 0.27 600.4 1.21 - -

Invesco Insider Sentiment NFO 0.60 68.7 1.15 10.42 7.93

RiverFront Dynamic US Flex-Cap RFFC 0.52 151.5 1.01 - -

Invesco BuyBack Achievers PKW 0.63 1,509.1 0.80 8.81 8.29

First Trust US Equity Opportunities FPX 0.59 1,057.3 0.30 9.87 10.42

RiverFront Dyn US Dividend Advantage RFDA 0.52 150.1 0.27 - -

iShares Edge MSCI Multifactor USA LRGF 0.20 1,202.1 -0.56 10.12 -

Invesco Raymond James SB-1 Equity RYJ 0.75 173.1 -0.71 8.78 6.50

USAA MSCI USA Value Momentum Blend ULVM 0.20 390.8 -2.31 - -

C-Tracks M/H Strategic Div Reinvestor ETN DIVC 0.70 140.1 -2.35 12.24 -

Invesco DWA Tactical Sector Rotation DWTR 0.75 64.3 -2.68 2.54 -

ALPS Barron's 400 BFOR 0.66 165.2 -2.89 9.12 7.25

Direxion All Cap Insider Sentiment KNOW 0.59 186.5 -3.15 8.67 9.96

Cambria Shareholder Yield SYLD 0.59 119.8 -3.62 8.59 8.30

Alpha Architect US Quant Momentum QMOM 0.79 65.6 -3.75 - -

Vident Core US Equity VUSE 0.50 535.1 -3.85 8.25 -

Strategy Shares US Mkt Rotation Strategy HUSE 1.13 215.7 -5.66 4.00 6.20

Invesco S&P Spin-Off CSD 0.64 175.2 -7.39 7.29 2.04

Innovator IBD 50 FFTY 0.80 430.5 -7.41 9.36 -

AdvisorShares DoubleLine Value Equity DBLV 0.90 76.2 -7.88 5.98 7.75

Motley Fool 100 TMFC 0.50 143.0 - - -

Global X Adaptive US Factor AUSF 0.27 101.8 - - -

Vanguard US Multifactor VFMF 0.18 75.7 - - -

Vanguard ESG US Stock ESGV 0.12 68.1 - - -

U.S. EQUITY: TOTAL MARKET GROWTH

iShares Core S&P US Growth IUSG 0.04 5,410.3 8.64 13.31 12.42

First Trust Multi Cap Growth AlphaDEX FAD 0.70 186.8 4.13 10.85 9.67

U.S. EQUITY: TOTAL MARKET VALUE

iShares Core S&P US Value IUSV 0.04 4,832.4 0.42 10.09 8.61

iShares Edge MSCI USA Value Factor VLUE 0.15 4,136.5 -0.07 11.31 9.35

Aptus Fortified Value FTVA 0.79 83.0 -0.71 - -

First Trust Multi Cap Value AlphaDEX FAB 0.71 86.7 -3.73 9.41 6.03

Alpha Architect US Quantitative Value QVAL 0.79 101.9 -5.17 8.32 -

U.S. EQUITY: EXTENDED CAP

Vanguard Extended Market VXF 0.08 6,848.6 1.51 10.20 8.34

SPDR Portfolio Mid Cap SPMD 0.05 1,151.4 1.45 10.02 8.06

Invesco FTSE RAFI US 1500 Small-Mid PRFZ 0.39 1,953.7 0.47 10.54 7.45

U.S. EQUITY: LARGE CAP

Invesco QQQ Trust QQQ 0.20 65,430.1 9.35 15.18 15.84

Fidelity Low Volatility Factor FDLO 0.29 91.5 8.86 - -

SPDR SSGA US Large Cap Low Volatility LGLV 0.12 148.9 8.50 12.33 11.59

Pacer Trendpilot 100 PTNQ 0.65 331.0 8.36 10.69 -

Oppenheimer Russell 1000 Dyn Multifactor OMFL 0.29 251.3 7.78 - -

Invesco S&P 500 Low Volatility SPLV 0.25 8,354.2 7.09 11.34 11.28

Principal US Mega-Cap Multi-Factor USMC 0.12 1,545.0 6.56 - -

First Trust Horizon Managed Vol Domestic HUSV 0.70 157.9 6.10 - -

SPDR SSGA Gender Diversity SHE 0.20 360.8 5.97 - -

Barclays ETN+ Shiller CAPE ETN CAPE 0.45 118.7 5.91 14.98 13.23

iShares Russell Top 200 IWL 0.15 200.7 5.84 12.46 11.38

Invesco S&P 500 ex-Rate Sens Low Vol XRLV 0.25 140.6 5.66 12.82 -

Franklin LibertyQ US Equity FLQL 0.25 409.4 5.62 - -

Vanguard Mega Cap MGC 0.07 1,501.2 5.61 12.53 11.31

Invesco S&P 500 Top 50 XLG 0.20 785.5 5.50 12.67 11.41

Goldman Sachs ActiveBeta US Large Cap GSLC 0.09 4,034.2 5.35 11.54 -

Horizons Nasdaq-100 Covered Call QYLD 0.60 406.5 5.27 8.88 -

SPDR Dow Jones Industrial Average DIA 0.17 22,070.7 5.18 15.53 12.21

iShares S&P 100 OEF 0.20 4,727.0 5.15 11.93 10.95

ProShares S&P 500 Dividend Aristocrats NOBL 0.35 3,763.9 5.05 12.06 10.95

Fidelity Momentum Factor FDMO 0.29 101.8 5.02 - -

Fidelity Quality Factor FQAL 0.29 119.0 4.87 - -

iShares Core S&P 500 IVV 0.04 161,378.4 4.83 12.03 11.05

Vanguard S&P 500 VOO 0.04 101,575.6 4.75 12.01 11.06

Vanguard Large-Cap VV 0.05 12,968.3 4.74 11.95 10.93

SPDR S&P 500 Fossil Fuel Reserves Free SPYX 0.20 299.3 4.74 - -

SPDR Portfolio Large Cap SPLG 0.03 1,711.9 4.70 11.74 10.77

Schwab US Large-Cap SCHX 0.03 14,513.6 4.67 11.92 10.95

First Trust Capital Strength FTCS 0.61 1,349.3 4.66 12.60 11.37

FUND NAME TICKER EXP RATIO % AUM ($M) YTD % 3YR % 5YR %

U.S.-LISTED ETFs BY ASSET CLASS AND YEAR-TO-DATE RETURN

› Data as of 11/30/2018› Exp Ratio is annual expense ratio› AUM is net assets in $US millions› YTD is year-to-date› 3YR and 5YR returns are annualized› Includes all U.S.-listed ETFs and ETNs

with assets of $61 million and above› Source: FactSet

ETFDATA

FUND NAME TICKER EXP RATIO % AUM ($M) YTD % 3YR % 5YR %

JANUARY 2019 35

SPDR S&P 500 Trust SPY 0.09 267,022.1 4.65 11.90 10.95

Vanguard Russell 1000 VONE 0.12 909.4 4.56 11.71 10.71

Schwab 1000 SCHK 0.05 586.2 4.46 - -

iShares Russell 1000 IWB 0.15 17,262.8 4.43 11.71 10.72

Global X S&P 500 Catholic Values CATH 0.29 161.7 4.16 - -

SPDR Portfolio S&P 500 High Dividend SPYD 0.07 834.0 3.91 13.21 -

Nationwide Risk-Based US Equity RBUS 0.30 112.2 3.89 - -

Direxion NASDAQ-100 Equal Weighted QQQE 0.35 186.3 3.71 11.67 12.28

SPDR Russell 1000 Low Volatility Focus ONEV 0.20 459.6 3.69 - -

First Trust Nasdaq-100 Equal Weighted QQEW 0.60 515.0 3.69 11.48 12.04

First Trust NASDAQ-100 Ex-Tech Sector QQXT 0.60 85.3 3.57 6.95 8.67

Horizons S&P 500 Covered Call HSPX 0.98 83.3 3.44 8.82 7.38

VictoryShares US EQ Inc Enh Vol Wtd CDC 0.35 870.0 3.32 12.27 -

WisdomTree US LargeCap Dividend DLN 0.28 1,976.4 3.16 11.57 10.11

VictoryShares US Large Cap HiDiv Vol Wtd CDL 0.35 155.9 3.05 12.23 -

John Hancock Multifactor Large Cap JHML 0.35 764.0 2.98 11.27 -

JPMorgan Diversified Return US Equity JPUS 0.19 574.8 2.57 10.98 -

Schwab Fundamental US Large Company FNDX 0.25 4,621.6 2.52 10.98 9.35

Oppenheimer S&P 500 Revenue RWL 0.39 1,027.1 2.44 10.87 9.63

Invesco S&P 500 BuyWrite PBP 0.49 329.8 2.30 6.41 6.31

Alps Equal Sector Weight EQL 0.48 153.6 2.20 10.20 9.17

Invesco Russell Top 200 Equal Weight EQWL 0.25 61.2 2.12 12.06 10.37

Invesco Russell 1000 Low Beta Eq Wt USLB 0.35 155.3 2.05 9.36 -

FlexShares US Quality Large Cap QLC 0.32 63.5 1.99 9.85 -

Cambria Core Equity CCOR 1.21 80.7 1.92 - -

Invesco S&P 500 Equal Weight RSP 0.20 14,668.2 1.90 10.46 9.57

WisdomTree US Earnings 500 EPS 0.28 220.3 1.88 11.50 10.24

Global X Scientific Beta US SCIU 0.19 117.5 1.80 9.63 -

ProShares Large Cap Core Plus CSM 0.45 799.9 1.79 11.74 11.05

Goldman Sachs Equal Weight US Large Cap GSEW 0.09 76.2 1.75 - -

SPDR Russell 1000 Yield Focus ONEY 0.20 415.0 1.55 - -

Invesco S&P 500 High Dividend Low Vol SPHD 0.30 2,658.4 1.43 11.90 12.07

VictoryShares US 500 Volatility Wtd CFA 0.35 664.2 1.40 11.47 -

Pacer Trendpilot US Large Cap PTLC 0.60 1,376.1 1.36 8.01 -

VictoryShares US 500 Enh Volatility Wtd CFO 0.35 1,096.2 1.25 11.47 -

Invesco FTSE RAFI US 1000 PRF 0.39 5,085.0 1.22 10.46 8.98

WisdomTree CBOE S&P 500 PutWrite Strat PUTW 0.38 227.1 1.20 - -

Invesco S&P 500 Quality SPHQ 0.15 1,314.8 1.05 10.75 10.62

iShares Morningstar Large-Cap JKD 0.20 920.2 0.92 11.62 10.36

Hartford Multifactor US Equity ROUS 0.19 202.5 0.64 10.84 -

Invesco Russell 1000 Equal Weight EQAL 0.20 448.0 0.58 9.93 -

Xtrackers Russell 1000 Compr Factor DEUS 0.17 164.8 0.50 10.55 -

First Trust Rising Dividend Achievers RDVY 0.50 692.1 0.49 13.31 -

Pacer US Cash Cows 100 COWZ 0.49 182.3 0.18 - -

WisdomTree US Dividend ex-Financials DTN 0.38 792.6 -0.03 9.76 8.47

Main Sector Rotation SECT 0.88 401.6 -0.04 - -

Innovator Lunt Low Vol/High Beta Tactical LVHB 0.49 139.8 -0.05 - -

First Trust Large Cap Core AlphaDEX FEX 0.61 1,387.0 -0.08 10.51 8.91

ALPS Sector Dividend Dogs SDOG 0.40 2,155.2 -0.92 10.56 9.25

Invesco Russell 1000 Enh Equal Weight USEQ 0.29 140.4 -1.45 - -

Davis Select US Equity DUSA 0.65 138.9 -2.25 - -

SPDR Russell 1000 Momentum Focus ONEO 0.20 458.4 -2.32 - -

IQ Chaikin US Large Cap CLRG 0.25 429.6 -2.67 - -

Invesco S&P 500 High Beta SPHB 0.25 112.9 -4.92 9.73 7.72

Goldman Sachs JUST US Large Cap Equity JUST 0.20 210.9 - - -

Xtrackers Russell 1000 US QARP QARP 0.19 67.0 - - -

U.S. EQUITY: LARGE CAP GROWTH

iShares Morningstar Large-Cap Growth JKE 0.25 1,055.5 11.12 12.87 13.19

Invesco Dynamic Large Cap Growth PWB 0.57 666.2 10.38 14.29 13.27

Invesco Russell Top 200 Pure Growth PXLG 0.39 245.8 9.82 13.94 13.26

NuShares ESG Large-Cap Growth NULG 0.35 61.0 9.67 - -

SPDR Portfolio S&P 500 Growth SPYG 0.04 3,532.9 9.15 13.43 12.97

iShares S&P 500 Growth IVW 0.18 21,237.9 9.03 13.37 13.05

Vanguard S&P 500 Growth VOOG 0.15 2,237.2 9.00 13.37 12.93

iShares Russell Top 200 Growth IWY 0.20 1,223.9 8.14 14.52 13.78

Schwab US Large-Cap Growth SCHG 0.04 6,409.9 7.86 12.92 12.57

Vanguard Russell 1000 Growth VONG 0.12 2,067.5 7.43 13.76 12.88

iShares Russell 1000 Growth IWF 0.20 41,288.2 7.35 13.69 12.81

Vanguard Mega Cap Growth MGK 0.07 3,815.1 5.93 12.51 12.21

Vanguard Growth VUG 0.05 34,974.1 5.57 11.81 11.70

Invesco S&P 500 Pure Growth RPG 0.35 2,275.2 5.01 10.54 10.51

First Trust Large Cap Growth AlphaDEX FTC 0.62 905.3 3.09 9.49 10.26

U.S. EQUITY: LARGE CAP VALUE

Deep Value DVP 0.59 190.1 5.61 17.04 -

Vanguard Mega Cap Value MGV 0.07 2,175.7 5.27 12.54 10.56

Vanguard Value VTV 0.05 44,454.4 4.05 12.15 10.31

Fidelity Value Factor FVAL 0.29 101.3 3.10 - -

iShares Russell Top 200 Value IWX 0.20 391.5 2.98 10.08 8.64

iShares Morningstar Large-Cap Value JKF 0.25 406.1 2.83 11.40 8.95

Schwab US Large-Cap Value SCHV 0.04 4,855.0 2.09 11.05 9.32

Vanguard Russell 1000 Value VONV 0.12 1,688.4 1.22 9.57 8.44

iShares Russell 1000 Value IWD 0.20 38,825.9 1.09 9.55 8.42

SPDR Portfolio S&P 500 Value SPYV 0.04 2,597.3 0.48 10.05 8.43

Vanguard S&P 500 Value VOOV 0.15 907.7 0.30 9.98 8.53

iShares S&P 500 Value IVE 0.18 15,371.0 0.21 9.97 8.49

Invesco Russell Top 200 Pure Value PXLV 0.39 99.9 0.08 11.44 8.72

Invesco S&P 500 Pure Value RPV 0.35 930.3 -0.22 10.07 8.01

First Trust Large Cap Value AlphaDEX FTA 0.62 1,152.2 -3.38 10.82 7.61

Invesco Dynamic Large Cap Value PWV 0.56 1,252.6 -4.40 9.31 7.70

U.S. EQUITY: MID CAP

Invesco S&P MidCap Low Volatility XMLV 0.25 1,710.2 8.27 13.55 13.59

ProShares S&P MidCap 400 Div Aristocrats REGL 0.40 417.3 5.13 13.35 -

Schwab US Mid-Cap SCHM 0.05 5,115.7 2.12 10.60 9.70

WisdomTree US MidCap Dividend DON 0.38 3,281.4 1.52 11.12 10.43

iShares Russell Mid-Cap IWR 0.20 17,484.0 0.87 9.64 8.97

JPMorgan Diversified Return US Mid Cap JPME 0.24 132.8 0.76 - -

John Hancock Multifactor Mid Cap JHMM 0.45 716.5 0.75 10.11 -

Vanguard Mid-Cap VO 0.05 23,412.8 0.63 9.12 9.06

First Trust Mid Cap Core AlphaDEX FNX 0.63 841.5 0.32 9.76 7.04

Invesco Zacks Mid-Cap CZA 0.68 248.4 0.27 11.18 9.33

iShares Core S&P Mid-Cap IJH 0.07 47,309.4 0.17 10.42 9.18

SPDR S&P Midcap 400 Trust MDY 0.24 19,120.0 0.03 10.19 8.98

Vanguard S&P Mid-Cap 400 IVOO 0.15 897.4 0.02 10.32 9.06

Pacer Trendpilot US Mid Cap PTMC 0.62 647.8 -0.13 10.73 -

Invesco S&P MidCap 400 Equal Weight EWMC 0.40 101.1 -0.45 10.10 8.23

iShares Morningstar Mid-Cap JKG 0.25 703.5 -1.29 8.66 9.21

WisdomTree US MidCap Earnings EZM 0.38 1,097.5 -1.41 9.62 7.96

Oppenheimer S&P MidCap 400 Revenue RWK 0.39 360.6 -2.35 8.44 7.35

U.S. EQUITY: MID CAP GROWTH

Invesco Russell MidCap Pure Growth PXMG 0.39 251.1 15.89 17.04 12.15

iShares Morningstar Mid-Cap Growth JKH 0.30 318.8 5.78 11.01 9.73

First Trust Mid Cap Growth AlphaDEX FNY 0.70 231.9 4.87 11.74 9.08

iShares Russell Mid-Cap Growth IWP 0.25 8,812.9 4.57 11.00 9.95

Vanguard Mid-Cap Growth VOT 0.07 5,634.6 3.79 9.58 9.36

SPDR S&P 400 Mid Cap Growth MDYG 0.15 1,274.5 0.92 10.19 9.31

Vanguard S&P Mid-Cap 400 Growth IVOG 0.20 752.6 0.90 10.16 9.35

iShares S&P Mid-Cap 400 Growth IJK 0.25 7,526.7 0.87 10.12 9.33

Invesco S&P MidCap 400 Pure Growth RFG 0.35 569.7 -1.66 5.64 5.36

U.S. EQUITY: MID CAP VALUE

iShares Morningstar Mid-Cap Value JKI 0.30 443.4 -0.30 10.99 9.26

iShares S&P Mid-Cap 400 Value IJJ 0.25 5,843.0 -0.73 10.03 8.51

SPDR S&P 400 Mid Cap Value MDYV 0.15 1,001.9 -0.75 10.08 8.50

Vanguard S&P Mid-Cap 400 Value IVOV 0.20 687.5 -0.86 10.05 8.54

Vanguard Mid-Cap Value VOE 0.07 8,833.3 -2.05 8.72 8.75

iShares Russell Mid-Cap Value IWS 0.25 11,111.9 -2.22 8.66 8.17

Invesco S&P MidCap 400 Pure Value RFV 0.35 102.5 -4.79 9.70 7.12

U.S. EQUITY: SMALL CAP

ProShares Russell 2000 Dividend Growers SMDV 0.40 465.2 7.95 13.96 -

Invesco S&P SmallCap Low Volatility XSLV 0.25 1,385.5 4.39 12.92 11.31

iShares Core S&P Small Cap IJR 0.07 42,688.1 4.21 12.44 9.42

SPDR S&P 600 Small Cap SLY 0.15 1,102.5 4.06 12.29 9.33

FUND NAME TICKER EXP RATIO % AUM ($M) YTD % 3YR % 5YR % FUND NAME TICKER EXP RATIO % AUM ($M) YTD % 3YR % 5YR %



Vanguard S&P Small-Cap 600 VIOO 0.15 1,010.6 4.00 12.37 9.36

SPDR SSGA US Small Cap Low Volatility SMLV 0.12 184.1 3.00 10.53 9.92

iShares MSCI Multifactor USA Small-Cap SMLF 0.30 180.4 2.78 11.24 -

JPMorgan Diversified Ret US Small Cap JPSE 0.29 108.3 2.42 - -

Invesco DWA SmallCap Momentum DWAS 0.60 337.0 2.30 7.94 5.14

First Trust Small Cap Core AlphaDEX FYX 0.63 625.3 2.05 10.53 6.15

Vanguard Small-Cap VB 0.05 22,909.3 2.00 10.38 8.33

NuShares ESG Small-Cap NUSC 0.40 83.5 1.79 - -

USAA MSCI USA SmCap Val Momntm Blend USVM 0.25 84.7 1.77 - -

WisdomTree US SmallCap Earnings EES 0.38 702.5 1.20 11.73 7.39

SPDR Portfolio Small Cap SPSM 0.05 1,405.1 1.04 10.37 7.62

Vanguard Russell 2000 VTWO 0.15 1,480.8 1.01 10.14 7.55

iShares Russell 2000 IWM 0.19 45,390.3 0.97 10.13 7.57

O'Shares FTSE Russell SmCap Quality Div OUSM 0.48 127.9 0.36 - -

WisdomTree US Smallcap Qual Div Growth DGRS 0.38 111.8 0.31 9.97 6.82

Principal US Small-Cap Multi-Factor PSC 0.38 346.1 0.30 - -

Schwab US Small-Cap SCHA 0.05 7,606.0 0.07 9.57 7.57

VictoryShares US Discovery Enh Vol Wtd CSF 0.35 127.3 -0.02 8.15 -

Schwab Fundamental US Small Company FNDA 0.25 3,234.7 -0.43 9.60 7.80

John Hancock Multifactor Small Cap JHSC 0.50 333.8 -1.05 - -

WisdomTree US SmallCap Dividend DES 0.38 2,028.3 -1.55 10.37 7.64

iShares Morningstar Small-Cap JKJ 0.25 233.7 -2.62 8.78 7.19

Oppenheimer S&P SmallCap 600 Revenue RWJ 0.39 472.3 -3.01 7.70 5.84

IQ Chaikin US Small Cap CSML 0.35 440.5 -8.33 - -

U.S. EQUITY: SMALL CAP GROWTH

Invesco Russell 2000 Pure Growth PXSG 0.39 78.2 9.08 11.30 9.12

SPDR S&P 600 Small Cap Growth SLYG 0.15 1,934.3 8.87 13.28 10.41

iShares S&P Small-Cap 600 Growth IJT 0.25 6,106.5 8.72 13.23 10.38

Vanguard S&P Small-Cap 600 Growth VIOG 0.20 466.0 8.54 13.22 10.34

First Trust Small Cap Growth AlphaDEX FYC 0.70 403.8 7.52 12.94 8.96

Vanguard Small-Cap Growth VBK 0.07 8,104.8 5.63 11.26 8.18

Invesco S&P SmallCap 600 Pure Growth RZG 0.35 294.2 5.26 12.67 9.23

iShares Morningstar Small-Cap Growth JKK 0.30 187.3 4.68 10.96 8.32

Vanguard Russell 2000 Growth VTWG 0.20 282.2 2.71 9.99 8.26

iShares Russell 2000 Growth IWO 0.24 9,347.4 2.63 10.06 8.33

U.S. EQUITY: SMALL CAP VALUE

Invesco Russell 2000 Pure Value PXSV 0.39 70.2 -0.13 9.46 6.52

Vanguard S&P Small-Cap 600 Value VIOV 0.20 378.9 -0.45 11.35 8.12

SPDR S&P 600 Small Cap Value SLYV 0.15 1,688.7 -0.52 11.40 8.13

iShares S&P Small-Cap 600 Value IJS 0.25 6,024.7 -0.52 11.32 8.08

Vanguard Small-Cap Value VBR 0.07 12,896.4 -0.95 9.55 8.39

iShares Russell 2000 Value IWN 0.24 9,601.7 -0.98 9.99 6.65

Vanguard Russell 2000 Value VTWV 0.20 207.3 -1.30 10.00 6.61

iShares Morningstar Small Cap Value JKL 0.30 395.3 -5.37 7.55 6.23

Invesco S&P SmallCap 600 Pure Value RZV 0.35 155.0 -6.27 5.76 2.96

U.S. EQUITY: MICRO CAP

iShares Micro-Cap IWC 0.60 917.6 -1.00 8.59 6.26

First Trust Dow Jones Select MicroCap FDM 0.60 141.9 -2.95 10.76 8.42

U.S. EQUITY: BASIC MATERIALS

Invesco S&P 500 Equal Weight Materials RTM 0.40 134.7 -7.12 10.45 7.80

Materials Select Sector SPDR XLB 0.13 4,018.8 -8.58 8.19 6.33

iShares US Basic Materials IYM 0.43 450.9 -10.26 8.69 4.76

Vanguard Materials VAW 0.10 2,357.1 -10.37 8.72 6.04

Fidelity MSCI Materials FMAT 0.08 180.5 -10.46 8.56 5.91

First Trust Materials AlphaDEX FXZ 0.64 166.6 -13.60 9.50 5.22

Invesco DWA Basic Materials Momentum PYZ 0.60 81.1 -14.37 6.09 5.09

SPDR S&P Metals & Mining XME 0.35 523.3 -19.10 23.76 -4.20

U.S. EQUITY: CONSUMER CYCLICALS

VanEck Vectors Retail RTH 0.35 136.2 13.30 11.93 12.69

iShares US Consumer Services IYC 0.43 886.1 11.96 11.93 11.88

Amplify Online Retail IBUY 0.65 361.0 10.40 - -

Consumer Discr Select Sector SPDR XLY 0.13 13,496.5 10.36 11.74 12.07

Fidelity MSCI Consumer Discretionary FDIS 0.08 722.0 8.80 11.53 11.16

Vanguard Consumer Discretionary VCR 0.10 2,808.2 7.21 10.98 10.83

Invesco DWA Consumer Cyc Momentum PEZ 0.60 66.5 5.72 5.93 5.65

SPDR S&P Retail XRT 0.35 635.7 3.55 2.76 2.17

Invesco S&P 500 Equal Wt Consumer Discr RCD 0.40 90.2 1.24 5.78 6.36

Invesco S&P SmallCap Consumer Discr PSCD 0.29 82.7 0.94 9.45 5.87

Invesco Dyn Leisure & Entertainment PEJ 0.63 126.7 -0.47 6.25 6.36

First Trust Consumer Discr AlphaDEX FXD 0.64 365.6 -1.86 6.23 6.17

SPDR S&P Homebuilders XHB 0.35 660.6 -19.24 -0.01 2.81

iShares US Home Construction ITB 0.43 861.5 -25.70 4.69 7.34

U.S. EQUITY: CONSUMER NON-CYCLICALS

Invesco DWA Cons Staples Momentum PSL 0.60 184.0 11.39 9.17 11.62

Invesco S&P SmallCap Consumer Staples PSCC 0.29 108.3 7.51 12.67 11.63

Vanguard Consumer Staples VDC 0.10 4,535.7 1.37 7.19 8.31

Consumer Staples Select Sector SPDR XLP 0.13 10,206.7 0.91 7.19 8.31

Fidelity MSCI Consumer Staples FSTA 0.08 531.6 0.62 7.10 8.15

Invesco Dynamic Food & Beverage PBJ 0.63 74.5 -1.31 1.66 6.03

Invesco S&P 500 Equal Wt Cons Staples RHS 0.40 532.0 -1.36 7.10 9.80

First Trust Consumer Staples AlphaDEX FXG 0.64 353.8 -1.78 4.15 7.70

iShares US Consumer Goods IYK 0.43 502.7 -5.18 5.14 6.63

U.S. EQUITY: ENERGY

First Trust North Amer Energy Infrastr EMLP 0.95 2,224.8 -1.80 6.92 4.00

Tortoise North American Pipeline TPYP 0.40 187.8 -2.53 7.80 -

Barclays ETN+ Select MLP ETN ATMP 0.95 411.2 -2.54 4.50 -1.55

JP Morgan Alerian MLP ETN AMJ 0.85 2,946.4 -4.03 0.26 -5.86

ETRACS Alerian MLP ETN AMU 0.80 257.3 -4.13 0.30 -5.98

ETRACS Alerian MLP Infrastructure ETN MLPI 0.85 1,401.3 -4.40 -0.22 -5.81

Alerian MLP AMLP 0.85 8,790.8 -4.42 -0.22 -4.55

Global X MLP MLPA 0.46 840.1 -6.10 0.59 -5.33

iShares US Oil & Gas Expl/Prod IEO 0.43 392.8 -6.37 -0.09 -4.73

Global X MLP & Energy Infrastructure MLPX 0.45 543.0 -6.43 1.59 -0.78

Energy Select Sector SPDR XLE 0.13 15,482.9 -6.60 1.98 -2.66

C-Tracks M/H MLP Fundamental ETN MLPC 0.95 95.2 -6.77 -0.67 -7.22

iShares US Energy IYE 0.43 878.2 -7.12 0.81 -3.55

Invesco Dynamic Energy Expl/Prod PXE 0.65 73.2 -7.49 -4.45 -6.42

Vanguard Energy VDE 0.10 3,671.7 -7.55 1.15 -3.68

Fidelity MSCI Energy FENY 0.08 490.1 -7.62 0.65 -3.91

First Trust Energy AlphaDEX FXN 0.63 284.4 -8.94 -3.68 -9.53

SPDR S&P Oil & Gas Expl/Prod XOP 0.35 2,744.9 -11.30 -3.15 -12.62

Invesco S&P 500 Equal Weight Energy RYE 0.40 212.1 -11.73 0.03 -6.76

InfraCap MLP AMZA 1.93 513.1 -12.40 -3.48 -

Invesco DWA Energy Momentum PXI 0.60 62.9 -14.33 -4.69 -8.26

First Trust Natural Gas FCG 0.60 115.5 -20.41 -13.10 -27.62

iShares US Oil Equipment & Services IEZ 0.43 195.3 -27.06 -12.61 -15.12

SPDR S&P Oil & Gas Equipment/Services XES 0.35 283.7 -30.43 -15.79 -21.71

U.S. EQUITY: FINANCIALS

Invesco KBW Property/Casualty Ins KBWP 0.35 63.7 4.09 10.16 11.55

Invesco S&P SmallCap Financials PSCF 0.29 165.7 3.81 11.61 9.69

VanEck Vectors BDC Income BIZD 9.41 199.2 3.57 6.58 2.57

SPDR S&P Insurance KIE 0.35 737.9 2.08 10.53 10.15

ETRACS Wells Fargo BDC ETN BDCS 0.85 82.9 1.79 5.06 1.42

Invesco KBW HiDiv Yield Financial KBWD 2.40 303.0 1.11 7.96 5.79

iShares US Financials IYF 0.43 1,799.1 0.82 11.22 10.43

iShares US Financial Services IYG 0.43 1,666.5 -0.41 12.75 11.04

iShares US Broker-Dealers & Sec Exch IAI 0.43 250.0 -1.27 14.22 12.03

First Trust Financials AlphaDEX FXO 0.63 1,043.1 -1.55 10.00 9.01

iShares US Regional Banks IAT 0.43 682.7 -2.07 11.12 9.93

Financial Select Sector SPDR XLF 0.13 29,267.4 -2.17 12.62 11.08

Vanguard Financials VFH 0.10 7,385.5 -2.42 12.52 11.05

Fidelity MSCI Financials FNCL 0.08 1,268.7 -2.49 12.49 11.02

First Trust NASDAQ ABA Community Bank QABA 0.60 311.2 -3.09 7.62 8.38

Invesco KBW Bank KBWB 0.35 855.6 -3.20 12.23 10.33

Invesco KBW Regional Banking KBWR 0.35 122.8 -3.83 7.50 8.12

SPDR S&P Regional Banking KRE 0.35 3,918.4 -4.15 8.68 8.67

iShares US Insurance IAK 0.43 103.6 -4.53 7.65 7.74

Invesco S&P 500 Equal Weight Financials RYF 0.40 345.8 -4.58 11.90 10.71

SPDR S&P Bank KBE 0.35 2,923.4 -5.29 8.54 8.01

SPDR S&P Capital Markets KCE 0.35 71.5 -6.59 6.98 4.25

JANUARY 2019 37


First Trust Nasdaq Bank FTXO 0.60 220.2 -7.29 - -

U.S. EQUITY: HEALTH CARE

Invesco S&P SmallCap Health Care PSCH 0.29 1,162.3 30.80 21.23 18.94

iShares US Healthcare Providers IHF 0.43 1,210.6 27.75 17.81 16.72

iShares US Medical Devices IHI 0.43 3,045.6 24.96 21.63 19.57

SPDR S&P Health Care Services XHS 0.35 134.9 22.36 9.27 11.15

SPDR S&P Health Care Equipment XHE 0.35 681.1 21.04 20.97 17.83

Health Care Select Sector SPDR XLV 0.13 19,678.4 17.25 12.18 13.33

Fidelity MSCI Health Care FHLC 0.08 1,643.7 16.23 11.95 13.36

Vanguard Health Care VHT 0.10 9,097.4 16.20 11.92 13.44

iShares US Healthcare IYH 0.43 2,512.3 16.15 11.85 13.07

Invesco DWA Healthcare Momentum PTH 0.60 272.3 15.69 13.70 11.91

John Hancock Multifactor Healthcare JHMH 0.50 62.5 13.46 11.14 -

First Trust NYSE Arca Biotechnology FBT 0.56 2,760.5 12.43 7.60 15.33

Invesco Dynamic Biotech/Genome PBE 0.59 290.9 12.39 1.84 7.46

First Trust Health Care AlphaDEX FXH 0.62 2,340.8 12.02 9.20 10.44

Invesco S&P 500 Equal Wt Health Care RYH 0.40 735.1 10.18 9.86 13.16

Invesco Dynamic Pharmeceuticals PJP 0.57 535.9 10.06 0.94 8.21

iShares US Pharmaceuticals IHE 0.43 413.2 3.01 0.53 7.50

iShares NASDAQ Biotechnology IBB 0.47 8,230.9 2.36 -0.48 8.05

ALPS Medical Breakthroughs SBIO 0.50 220.9 2.35 1.94 -

SPDR S&P Pharmaceuticals XPH 0.35 303.2 0.64 -4.28 2.96

SPDR S&P BIOTECH XBI 0.35 4,325.4 -3.60 4.47 14.01

U.S. EQUITY: INDUSTRIALS

SPDR S&P Aerospace & Defense XAR 0.35 1,383.5 5.70 18.70 14.14

Invesco Aerospace & Defense PPA 0.60 902.8 3.02 16.28 14.08

iShares US Aerospace & Defense ITA 0.43 5,315.0 2.94 18.22 14.53

iShares Transportation Average IYT 0.43 722.5 2.81 11.41 9.67

Invesco S&P SmallCap Industrials PSCI 0.29 113.3 -0.97 11.56 8.13

iShares US Industrials IYJ 0.43 931.9 -1.61 11.99 9.62

SPDR S&P Transportation XTN 0.35 191.2 -1.61 12.01 10.62

Invesco S&P 500 Equal Weight Industrials RGI 0.40 215.4 -2.00 12.19 9.57

First Trust Industr/Prod Dur AlphaDEX FXR 0.63 459.3 -2.88 12.79 8.23

Industrial Select Sector SPDR XLI 0.13 11,774.9 -2.90 12.05 9.72

Vanguard Industrials VIS 0.10 3,594.0 -3.41 11.12 9.01

Fidelity MSCI Industrials FIDU 0.08 405.5 -3.63 11.26 8.74

Invesco DWA Industrials Momentum PRN 0.60 101.4 -6.79 7.51 4.33

First Trust RBA American Industrial Ren AIRR 0.70 150.7 -7.87 12.24 -

Invesco Dynamic Building & Construction PKB 0.58 148.1 -22.58 2.27 4.87

U.S. EQUITY: TECHNOLOGY

Invesco Dynamic Software PSJ 0.63 262.7 25.23 21.87 18.09

iShares North American Tech-Software IGV 0.47 1,899.0 20.15 21.12 19.13

SPDR FactSet Innovative Technology XITK 0.45 67.8 17.27 - -

SPDR S&P Software & Services XSW 0.35 128.4 16.82 16.35 13.89

First Trust Dow Jones Internet FDN 0.53 7,643.4 14.93 18.27 17.45

Invesco Dynamic Networking PXQ 0.63 70.1 12.70 13.37 12.23

Vanguard Information Technology VGT 0.10 19,560.9 11.78 19.21 17.68

iShares North American Tech IGM 0.47 1,445.4 11.29 19.15 17.73

First Trust Technology AlphaDEX FXL 0.63 1,921.5 10.72 19.18 15.59

Invesco S&P 500 Equal Weight Tech RYT 0.40 1,502.6 8.91 19.02 17.38

Fidelity MSCI Information Technology FTEC 0.08 2,202.1 8.90 18.17 17.10

iShares US Technology IYW 0.43 3,696.9 7.56 17.58 16.60

Invesco DWA Technology Momentum PTF 0.60 123.7 7.44 10.77 10.48

Technology Select Sector SPDR XLK 0.13 18,920.7 7.32 17.49 16.36

John Hancock Multifactor Technology JHMT 0.50 62.7 5.05 17.10 -

First Trust NASDAQ-100 Technology Sector QTEC 0.58 2,205.1 3.63 20.38 18.33

Invesco NASDAQ Internet PNQI 0.60 514.7 3.15 13.47 12.96

SPDR S&P Semiconductor XSD 0.35 241.3 2.12 16.99 20.24

SPDR NYSE Technology XNTK 0.35 718.0 1.26 16.19 15.45

Invesco S&P SmallCap Info Technology PSCT 0.29 367.5 0.22 12.41 12.19

iShares PHLX Semiconductor SOXX 0.47 1,268.7 0.07 23.86 20.92

VanEck Vectors Semiconductor SMH 0.35 889.6 -1.08 21.84 20.30

Invesco Dynamic Semiconductors PSI 0.61 182.2 -3.07 22.88 22.70

U.S. EQUITY: TELECOMMUNICATIONS

SPDR S&P Telecom XTL 0.35 116.5 4.94 8.76 7.47

Fidelity MSCI Communication Services FCOM 0.08 248.1 2.84 9.35 8.14

iShares US Telecommunications IYZ 0.43 418.1 -0.39 1.55 2.67

Vanguard Communication Services VOX 0.10 1,462.2 -9.26 1.60 2.83

Communication Svcs Select Sector SPDR XLC 0.13 3,110.3 - - -

U.S. EQUITY: UTILITIES

First Trust Utilities AlphaDEX FXU 0.62 385.6 12.01 11.66 10.52

Invesco DWA Utilities Momentum PUI 0.60 68.8 11.20 14.46 11.61

Invesco S&P 500 Equal Weight Utilities RYU 0.40 265.3 10.78 12.30 11.60

Vanguard Utilities VPU 0.10 3,277.4 8.89 13.72 11.98

Fidelity MSCI Utilities FUTY 0.08 481.5 8.75 13.59 11.91

iShares US Utilities IDU 0.43 783.8 8.35 12.90 11.62

Utilities Select Sector SPDR XLU 0.13 8,053.0 8.24 12.84 11.69

Invesco S&P SmallCap Util/Comm Svcs PSCU 0.29 75.6 7.96 14.49 14.24

U.S. EQUITY: REAL ESTATE

iShares Residential Real Estate REZ 0.48 330.3 10.66 7.21 12.17

Real Estate Select Sector SPDR XLRE 0.13 2,758.6 5.35 7.09 -

iShares Cohen & Steers REIT ICF 0.34 2,001.1 5.29 6.06 10.50

Schwab US REIT SCHH 0.07 4,845.3 4.63 5.68 9.80

SPDR Dow Jones REIT RWR 0.25 2,680.2 4.61 5.58 9.69

First Trust S&P REIT FRI 0.48 111.1 4.33 5.96 9.15

iShares Core US REIT USRT 0.08 777.2 3.91 6.41 9.63

iShares US Real Estate IYR 0.43 3,537.3 3.80 7.08 9.55

Fidelity MSCI Real Estate FREL 0.08 684.3 3.71 7.15 -

iShares Mortgage Real Estate REM 0.48 1,240.9 3.23 12.78 9.80

VanEck Vectors Mortgage REIT Income MORT 0.41 147.8 2.48 13.32 10.43

Vanguard Real Estate VNQ 0.12 30,990.1 2.11 5.80 9.23

IQ US Real Estate Small Cap ROOF 0.70 76.4 -0.95 5.65 6.65

Invesco KBW Premium Yield Equity REIT KBWY 0.35 368.5 -5.87 7.11 7.23

JPMorgan BetaBuilders MSCI US REIT BBRE 0.11 112.0 - - -

PPTY-U.S. Diversified Real Estate PPTY 0.53 90.1 - - -

U.S. EQUITY: HIGH DIVIDEND YIELD

SPDR S&P Dividend SDY 0.35 16,305.3 5.47 13.12 11.05

iShares Core High Dividend HDV 0.08 6,601.0 5.27 11.28 9.34

Oppenheimer S&P Ultra Dividend Rev RDIV 0.39 1,209.4 5.19 13.62 11.81

First Trust Value Line Dividend FVD 0.70 4,636.3 4.42 11.64 10.95

Vanguard High Dividend Yield VYM 0.08 22,383.6 2.98 11.55 10.26

Schwab US Dividend Equity SCHD 0.07 8,176.7 2.80 12.71 10.41

First Trust Morningstar Dividend Leaders FDL 0.45 1,494.8 2.47 11.66 10.33

iShares Select Dividend DVY 0.39 16,990.3 1.80 11.89 10.39

WisdomTree US High Dividend DHS 0.38 940.0 1.42 10.02 9.08

Invesco HiYld Equity Dividend Achievers PEY 0.54 740.4 1.14 12.26 12.09

Global X SuperDividend US DIV 0.45 418.6 0.83 6.47 5.44

WBI Power Factor High Dividend WBIY 0.70 136.9 -0.14 - -

GLOBAL EQUITY

ARK Innovation ARKK 0.75 1,304.1 19.88 29.45 -

ClearBridge All Cap Growth CACG 0.53 80.9 6.57 - -

iShares Edge MSCI Min Vol Global ACWV 0.20 3,577.9 3.80 9.85 8.64

iShares Global 100 IOO 0.40 1,914.1 1.30 9.91 6.73

First Trust Dorsey Wright Dynamic Focus 5 FVC 0.89 546.4 1.11 - -

First Trust Dorsey Wright Focus 5 FV 0.89 2,423.7 1.02 6.30 -

Strategy Shares EcoLogical Strategy HECO 0.98 69.8 0.52 10.43 8.95

iShares MSCI ACWI ACWI 0.32 9,433.5 -2.06 8.91 6.46

WBI BullBear Yield 1000 WBIG 1.04 72.4 -2.09 5.90 -

iShares MSCI ACWI Low Carbon Target CRBN 0.20 522.7 -2.60 8.11 -

SPDR MSCI ACWI IMI ACIM 0.25 106.2 -2.69 8.46 6.32

Vanguard Total World Stock VT 0.10 12,484.7 -2.73 8.71 6.44

SPDR MSCI ACWI Low Carbon Target LOWC 0.20 146.8 -2.96 8.08 -

SPDR Global Dow DGT 0.50 89.7 -3.08 9.37 5.95

Principal Active Global Dividend Income GDVD 0.58 683.4 -4.20 - -

Inspire Global Hope BLES 0.61 88.0 -6.15 - -

iShares Edge MSCI Multifactor Global ACWF 0.35 65.3 -6.33 7.92 -

ETFMG Alternative Harvest MJ 0.75 652.7 -9.40 - -

ROBO Global Robotics/Automation ROBO 0.95 1,531.3 -10.53 14.33 7.46

Cambria Global Value GVAL 0.68 143.2 -10.86 9.78 -

Davis Select Worldwide DWLD 0.65 225.2 -14.75 - -



Amplify Transformational Data Sharing BLOK 0.70 121.5 - - -

Reality Shares Nasdaq NexGen Economy BLCN 0.68 87.1 - - -

GLOBAL EQUITY EX-U.S.

Xtrackers MSCI All World ex US Hedged DBAW 0.40 99.6 -5.10 5.26 -

Invesco Intl Dividend Achievers PID 0.55 740.2 -5.70 4.71 0.27

Vanguard Intl Dividend Appreciation VIGI 0.25 889.4 -7.67 - -

VanEck Vectors Mstar International Moat MOTI 0.56 81.3 -8.09 6.70 -

SPDR MSCI ACWI ex-US CWI 0.30 1,496.5 -9.36 5.40 2.24

iShares MSCI ACWI ex US ACWX 0.31 3,556.0 -9.50 5.36 1.81

Vanguard FTSE All-World ex-US VEU 0.11 21,777.4 -9.73 5.55 2.16

Vanguard Total International Stock VXUS 0.11 10,626.8 -9.99 5.55 2.18

iShares Core MSCI Total International IXUS 0.10 12,479.8 -10.01 5.63 2.05

WisdomTree Glb ex-US Qual Div Growth DNL 0.58 63.2 -10.21 6.58 2.99

FlexShares Intl Quality Dividend IQDF 0.47 761.4 -12.27 4.66 0.36

FlexShares Intl Qual Div Defensive IQDE 0.47 73.8 -12.28 3.73 -0.22

Vanguard FTSE All-World ex-US Small-Cap VSS 0.13 5,102.7 -13.66 5.15 2.66

Vident International Equity VIDI 0.61 580.1 -13.72 7.13 1.39

Invesco International BuyBack Achievers IPKW 0.55 239.2 -15.30 7.39 -

First Trust Dorsey Wright Intl Focus 5 IFV 1.06 601.1 -16.99 1.69 -

AdvisorShares Dorsey Wright ADR AADR 0.88 143.4 -24.46 4.87 4.21

Davis Select International DINT 0.75 65.2 - - -

INTERNATIONAL EQUITY: BLENDED DEVELOPMENT

iShares MSCI All Country Asia ex Japan AAXJ 0.69 3,887.6 -11.98 8.53 3.71

iShares Asia 50 AIA 0.50 941.6 -12.00 11.61 5.39

INTERNATIONAL EQUITY: DEVELOPED

iShares MSCI Saudi Arabia KSA 0.74 205.7 10.03 7.96 -

iShares MSCI Israel EIS 0.62 127.8 7.33 4.62 4.59

Fidelity Dividend for Rising Rates FDRR 0.29 413.1 5.25 - -

iShares MSCI New Zealand ENZL 0.49 145.8 3.43 15.00 9.56

Global X MSCI Norway NORW 0.50 110.6 -0.42 10.05 -1.16

iShares MSCI Kokusai TOK 0.25 146.5 -0.43 8.78 7.00

iShares MSCI World URTH 0.24 549.2 -0.99 8.66 6.59

FlexShares STOXX Global ESG Impact ESGG 0.42 78.1 -1.19 - -

iShares Edge MSCI Min Vol EAFE EFAV 0.20 9,045.3 -2.72 5.43 5.65

Pacer Global Cash Cows Dividend GCOW 0.60 191.7 -2.84 - -

Xtrackers MSCI Europe Hedged Equity DBEU 0.45 943.1 -2.84 4.92 5.50

iShares Currency Hedged MSCI EAFE HEFA 0.35 3,183.9 -3.13 5.09 -

Xtrackers MSCI EAFE Hedged Equity DBEF 0.35 5,478.8 -3.44 4.97 5.69

WisdomTree Europe Hedged Equity HEDJ 0.58 4,412.4 -3.74 3.34 6.19

Invesco S&P Intl Dev Low Volatility IDLV 0.25 569.4 -3.96 6.14 3.53

iShares Currency Hedged MSCI Eurozone HEZU 0.52 1,445.0 -4.12 2.94 -

First Trust Horizon Managed Vol Dev Intl HDMV 0.80 61.0 -4.16 - -

iShares MSCI Switzerland EWL 0.49 906.8 -4.32 4.95 2.99

iShares Currency Hedged MSCI Japan HEWJ 0.49 1,057.7 -4.44 3.46 -

Xtrackers MSCI Japan Hedged Equity DBJP 0.46 977.9 -4.59 3.34 6.40

Knowledge Leaders Developed World KLDW 0.75 147.9 -4.87 8.46 -

WisdomTree Intl Hedged Qual Div Growth IHDG 0.58 472.0 -5.23 4.77 -

Hartford Multifactor Dev Mkts (ex-US) RODM 0.29 1,169.9 -5.58 6.77 -

WisdomTree Intl Dividend ex-Financials DOO 0.58 167.5 -5.62 4.18 0.50

WisdomTree Dyn Currency Hedged Intl DDWM 0.35 207.2 -5.78 - -

Nationwide Risk-Based Intl Equity RBIN 0.42 113.3 -5.90 - -

JPMorgan Diversified Ret Global Equity JPGE 0.38 207.5 -6.00 6.96 -

iShares Edge MSCI Intl Quality Factor IQLT 0.30 114.7 -6.24 4.54 -

SPDR MSCI EAFE StrategicFactors QEFA 0.30 234.2 -6.44 4.72 -

iShares Core MSCI Pacific IPAC 0.10 854.6 -6.83 7.17 -

iShares MSCI Japan EWJ 0.49 16,772.9 -6.94 5.43 4.29

ProShares MSCI EAFE Dividend Growers EFAD 0.50 110.0 -7.02 1.01 -

Franklin FTSE Japan FLJP 0.09 250.3 -7.03 - -

IQ 50 Percent Hedged FTSE International HFXI 0.20 424.4 -7.18 4.54 -

WisdomTree Japan Hedged SmCap Equity DXJS 0.58 117.3 -7.23 7.93 11.21

Invesco FTSE Intl Low Beta Equal Weight IDLB 0.45 112.3 -7.29 5.72 -

iShares JPX-Nikkei 400 JPXN 0.48 115.9 -7.66 4.92 4.27

WisdomTree Europe Hedged SmCap Eq EUSC 0.58 142.3 -7.74 5.85 -

WisdomTree International LargeCap Div DOL 0.48 385.3 -7.76 4.05 1.08

iShares MSCI Hong Kong EWH 0.49 2,279.6 -7.76 8.35 5.45

Goldman Sachs ActiveBeta Intl Equity GSIE 0.25 1,097.6 -8.02 5.08 -

iShares MSCI Pacific ex-Japan EPP 0.49 2,187.1 -8.10 7.91 2.03

iShares MSCI France EWQ 0.49 592.1 -8.18 6.25 2.63

iShares MSCI EAFE Growth EFG 0.40 3,638.9 -8.28 4.06 2.73

iShares ESG MSCI EAFE ESGD 0.20 452.6 -8.40 - -

iShares MSCI Australia EWA 0.49 1,217.8 -8.47 7.57 0.63

iShares MSCI Japan Small-Cap SCJ 0.49 324.7 -8.71 8.95 7.98

WisdomTree International Equity DWM 0.48 832.7 -8.73 4.51 1.90

Vanguard FTSE Pacific VPL 0.10 4,055.4 -8.88 7.05 3.86

iShares MSCI EAFE EFA 0.31 65,033.0 -8.93 4.09 1.84

iShares MSCI Netherlands EWN 0.49 141.1 -8.94 7.12 4.54

iShares Edge MSCI Intl Momentum Factor IMTM 0.30 148.0 -9.00 4.55 -

ALPS International Sector Dividend Dogs IDOG 0.50 287.3 -9.09 5.31 0.85

iShares Core MSCI Intl Dev Markets IDEV 0.05 1,114.2 -9.11 - -

Schwab Fundamental Intl Large Company FNDF 0.25 3,895.6 -9.11 5.57 1.91

iShares Core MSCI EAFE IEFA 0.08 55,246.8 -9.15 4.67 2.44

VictoryShares Dev Enh Volatility Wtd CIZ 0.47 151.9 -9.15 1.07 -

SPDR Portfolio Developed World ex-US SPDW 0.04 3,148.0 -9.16 4.76 2.24

iShares Currency Hedged MSCI Germany HEWG 0.53 272.6 -9.19 1.51 -

WisdomTree Japan Hedged Equity DXJ 0.48 4,683.5 -9.20 2.59 6.21

SPDR STOXX Europe 50 FEU 0.29 175.7 -9.27 1.98 -0.19

Global X Internet of Things SNSR 0.68 82.2 -9.36 - -

Schwab International Equity SCHF 0.06 15,866.4 -9.39 4.69 2.00

iShares Edge MSCI Intl Value Factor IVLU 0.30 278.7 -9.40 3.66 -

iShares MSCI Canada EWC 0.49 2,678.4 -9.41 6.72 0.29

JPMorgan Diversified Return Intl Equity JPIN 0.38 1,415.6 -9.51 4.09 -

SPDR MSCI EAFE Fossil Fuel Reserves Free EFAX 0.20 71.4 -9.53 - -

Vanguard FTSE Developed Markets VEA 0.07 67,596.6 -9.63 4.70 2.28

iShares MSCI EAFE Value EFV 0.38 5,686.3 -9.79 3.77 0.55

iShares MSCI Singapore EWS 0.49 527.8 -9.81 5.91 -0.33

John Hancock Multifactor Developed Intl JHMD 0.45 94.7 -9.86 - -

iShares MSCI Sweden EWD 0.49 241.3 -9.97 2.72 0.59

Invesco FTSE RAFI Dev Markets ex-US PXF 0.45 1,310.6 -10.04 5.14 1.52

iShares Europe IEV 0.60 2,132.5 -10.08 2.75 0.65

iShares MSCI United Kingdom EWU 0.49 1,815.5 -10.17 1.11 -0.93

WisdomTree Japan SmallCap Dividend DFJ 0.58 897.4 -10.19 9.60 8.77

iShares Core MSCI Europe IEUR 0.10 2,952.3 -10.24 3.21 -

Xtrackers FTSE Dev ex US Compr Factor DEEF 0.35 67.6 -10.25 4.96 -

WisdomTree Germany Hedged Equity DXGE 0.48 62.0 -10.35 2.83 5.39

Alpha Architect Value Momentum Trend VMOT 0.79 101.8 -10.45 - -

JPMorgan Diversified Return Europe JPEU 0.38 69.3 -10.48 - -

Vanguard FTSE Europe VGK 0.10 14,321.6 -10.58 3.28 1.19

WisdomTree International MidCap Div DIM 0.58 254.7 -10.71 5.06 3.60

iShares Edge MSCI Multifactor Intl INTF 0.30 1,024.5 -11.03 3.99 -

WisdomTree Intl Qual Dividend Growth IQDG 0.38 64.9 -11.06 - -

First Trust Japan AlphaDEX FJP 0.80 162.4 -11.54 3.75 3.70

Invesco DWA Dev Markets Momentum PIZ 0.81 207.0 -11.60 2.19 0.39

SPDR Euro STOXX 50 FEZ 0.29 2,759.4 -11.60 2.05 -0.18

iShares MSCI Spain EWP 0.49 998.4 -11.70 1.35 -1.93

iShares MSCI EAFE Small-Cap SCZ 0.39 9,117.8 -11.77 6.25 4.89

iShares MSCI Eurozone EZU 0.49 7,629.4 -12.04 3.25 0.88

FlexShares Mstar DM ex-US Factor Tilt TLTD 0.39 967.5 -12.30 4.83 2.02

SPDR S&P International Small Cap GWX 0.40 787.8 -12.49 6.31 4.04

USAA MSCI Intl Value Momentum Blend UIVM 0.35 291.7 -12.49 - -

First Trust Switzerland AlphaDEX FSZ 0.80 176.4 -12.50 7.00 4.34

Invesco FTSE RAFI DM ex-US SmallMid PDN 0.49 293.7 -12.70 6.59 3.62

iShares Edge MSCI Multifactor Intl SmCap ISCF 0.40 67.4 -12.74 6.77 -

Franklin FTSE Europe FLEE 0.09 71.6 -12.76 - -

Schwab Fundamental Intl Small Company FNDC 0.39 1,788.4 -12.88 6.76 4.50

Schwab International Small-Cap Equity SCHC 0.12 2,075.2 -12.97 4.73 2.68

WisdomTree Intl SmallCap Dividend DLS 0.58 1,640.1 -13.10 7.00 4.17

First Trust RiverFront Dyn Developed Intl RFDI 0.83 460.3 -13.22 - -

First Trust RiverFront Dynamic Europe RFEU 0.83 86.2 -13.76 - -

iShares MSCI Italy EWI 0.49 167.6 -14.25 -1.12 -1.04

iShares MSCI Austria EWO 0.49 105.5 -14.33 12.06 2.81

JANUARY 2019 39


First Trust Europe AlphaDEX FEP 0.80 702.2 -14.58 5.07 2.19

iShares MSCI Europe Small-Cap IEUS 0.40 195.3 -15.23 3.90 4.52

First Trust Dev Mkts ex-US AlphaDEX FDT 0.80 1,076.1 -15.28 4.75 2.25

First Trust Eurozone AlphaDEX FEUZ 0.80 67.7 -16.07 6.23 -

WisdomTree Europe SmallCap Dividend DFE 0.58 780.9 -16.67 4.20 3.84

iShares MSCI Germany EWG 0.49 2,448.6 -16.75 1.84 -0.46

Global X Robotics & Artificial Intelligence BOTZ 0.68 1,733.2 -16.84 - -

Pacer Trendpilot European PTEU 0.66 158.0 -17.01 - -

Alpha Architect Intl Quantitative Value IVAL 0.79 90.5 -17.42 5.02 -

First Trust Germany AlphaDEX FGM 0.80 167.5 -19.82 5.42 1.56

Global X MSCI Greece GREK 0.59 250.2 -26.95 -3.04 -18.90

JPMorgan BetaBuilders Japan BBJP 0.19 2,791.4 - - -

JPMorgan BetaBuilders Canada BBCA 0.19 2,219.4 - - -

JPMorgan BetaBuilders Europe BBEU 0.09 1,436.1 - - -

JPMorgan BetaBuilders Dev Asia ex-Japan BBAX 0.19 688.2 - - -

INTERNATIONAL EQUITY: EMERGING

iShares MSCI Brazil EWZ 0.62 7,432.2 -0.01 23.57 -0.71

iShares MSCI Russia ERUS 0.62 530.6 -0.05 12.27 -2.05

First Trust Brazil AlphaDEX FBZ 0.80 155.0 -1.26 22.39 -1.39

iShares Emerging Markets Dividend DVYE 0.49 521.6 -3.27 12.45 -0.30

VanEck Vectors Russia RSX 0.67 1,497.2 -3.58 10.39 -3.17

iShares Latin America 40 ILF 0.48 1,160.8 -4.37 14.64 -1.11

SPDR S&P Emerging Markets Dividend EDIV 0.49 413.6 -4.40 10.70 -1.61

Invesco S&P Emerging Markets Low Vol EELV 0.29 268.2 -4.40 6.43 -0.70

iShares India 50 INDY 0.92 781.0 -4.49 9.44 9.75

iShares Edge MSCI Min Vol EM EEMV 0.25 4,734.6 -4.77 7.06 1.82

iShares MSCI Thailand THD 0.62 496.7 -5.11 13.33 6.00

Invesco FTSE RAFI Emerging Markets PXH 0.50 1,202.2 -5.27 14.60 2.66

WisdomTree EM High Dividend DEM 0.63 1,921.0 -5.43 11.59 -0.27

Invesco BRIC EEB 0.64 62.7 -6.03 12.37 1.90

iShares MSCI Malaysia EWM 0.49 564.0 -7.00 1.87 -5.33

Schwab Fundamental EM Large Company FNDE 0.39 2,208.4 -7.38 13.87 1.82

iShares MSCI India INDA 0.68 4,670.8 -7.41 7.72 7.83

iShares Currency Hedged MSCI EM HEEM 0.69 287.5 -7.60 7.34 -

iShares MSCI Taiwan EWT 0.62 3,477.1 -8.04 9.27 4.99

JPMorgan Diversified Return EM JPEM 0.47 235.7 -8.28 9.16 -

Invesco India PIN 0.79 215.0 -8.30 8.74 8.35

Xtrackers MSCI EM Hedged Equity DBEM 0.65 122.5 -8.63 6.54 1.47

iShares MSCI Brazil Small-Cap EWZS 0.62 66.8 -8.75 29.84 -3.36

iShares MSCI BRIC BKF 0.70 185.8 -9.04 11.37 2.94

Invesco BLDRS Emerging Markets 50 ADR ADRE 0.18 128.2 -9.41 10.21 2.40

SPDR Portfolio Emerging Markets SPEM 0.11 1,761.6 -10.40 9.36 2.61

Franklin LibertyQ Emerging Markets FLQE 0.55 283.6 -10.41 - -

SPDR S&P Emerging Asia Pacific GMF 0.49 414.5 -10.58 9.21 5.86

Hartford Multifactor Emerging Markets ROAM 0.49 62.0 -10.64 6.34 -

Schwab Emerging Markets Equity SCHE 0.13 4,804.5 -10.67 8.83 2.22

SPDR MSCI EM StrategicFactors QEMM 0.30 257.4 -10.77 7.41 -

PIMCO RAFI Dynamic Multi-Factor EM MFEM 0.49 346.1 -11.24 - -

WisdomTree India Earnings EPI 0.84 1,493.2 -11.36 8.27 9.10

iShares MSCI Indonesia EIDO 0.62 486.6 -11.42 8.20 2.90

Goldman Sachs ActiveBeta EM GEM 0.45 1,616.7 -11.52 8.36 -

Vanguard FTSE Emerging Markets VWO 0.14 56,485.5 -11.82 7.89 1.76

iShares ESG MSCI EM ESGE 0.25 439.0 -11.83 - -

iShares MSCI Emerging Markets EEM 0.69 29,940.3 -12.24 8.69 1.38

First Trust Emerging Markets AlphaDEX FEM 0.80 454.9 -12.31 11.44 1.76

iShares Core MSCI Emerging Markets IEMG 0.14 50,105.5 -12.33 8.63 1.88

iShares MSCI Emerging Markets Asia EEMA 0.49 434.0 -12.61 9.06 3.82

SPDR S&P China GXC 0.59 961.7 -12.77 8.84 5.18

Invesco China Small Cap HAO 0.75 65.7 -13.02 4.01 2.02

iShares MSCI Peru EPU 0.62 145.0 -13.07 20.33 4.02

iShares MSCI China MCHI 0.62 3,756.5 -13.21 8.99 4.78

VanEck Vectors Brazil Small-Cap BRF 0.59 89.5 -13.30 26.34 -4.34

WisdomTree EM Quality Dividend Growth DGRE 0.32 69.7 -13.75 6.53 0.80

USAA MSCI EM Value Momentum Blend UEVM 0.45 167.1 -13.80 - -

iShares MSCI Poland EPOL 0.63 263.8 -13.99 9.80 -3.60

Global X MSCI Colombia GXG 0.61 82.5 -14.27 6.57 -12.48

First Trust BICK BICK 0.64 163.5 -14.31 10.16 2.28

WisdomTree EM SmallCap Dividend DGS 0.63 1,294.9 -14.37 9.63 1.38

WisdomTree EM ex-State-Owned Enterpr XSOE 0.32 175.9 -15.04 9.08 -

FlexShares Mstar EM Factor Tilt TLTE 0.59 510.2 -15.05 7.39 1.22

First Trust RiverFront Dynamic EM RFEM 0.95 106.0 -15.39 - -

iShares Edge MSCI Multifactor EM EMGF 0.45 270.5 -15.50 - -

iShares MSCI Chile ECH 0.62 438.8 -15.89 12.04 -0.17

SPDR S&P Emerging Markets Small Cap EWX 0.65 460.3 -15.97 6.48 0.98

First Trust Chindia FNI 0.60 150.6 -16.48 6.25 4.75

iShares MSCI Emerging Markets Small Cap EEMS 0.69 230.9 -16.72 4.20 0.58

iShares MSCI Mexico EWW 0.49 1,062.9 -17.12 -7.04 -7.94

iShares MSCI Philippines EPHE 0.62 139.8 -17.47 -1.84 -0.25

First Trust EM Small Cap AlphaDEX FEMS 0.80 171.6 -18.83 10.52 2.06

iShares MSCI South Korea EWY 0.62 3,882.4 -19.10 6.98 0.42

Invesco DWA EM Momentum PIE 0.90 180.5 -19.21 2.96 -1.22

WisdomTree China ex-State-Owned Ent CXSE 0.32 157.7 -21.91 10.92 5.88

Invesco Golden Dragon China PGJ 0.70 177.7 -22.81 3.63 4.57

iShares MSCI South Africa EZA 0.62 486.8 -23.34 2.73 -1.15

KraneShares Bosera MSCI China A Share KBA 0.60 306.3 -23.72 -7.00 -

Xtrackers Harvest CSI 300 China A-Shares ASHR 0.66 1,129.1 -24.52 -4.92 3.67

iShares MSCI India Small Cap SMIN 0.75 253.0 -26.35 6.18 14.14

iShares MSCI Turkey TUR 0.62 556.9 -37.64 -9.33 -11.93

VanEck Vectors India Small-Cap SCIF 0.72 183.3 -38.22 0.06 9.17

John Hancock Multifactor Emerging Mkts JHEM 0.55 291.0 - - -

INTERNATIONAL EQUITY: FRONTIER

VanEck Vectors Vietnam VNM 0.66 332.5 -12.19 2.74 -1.78

iShares MSCI Frontier 100 FM 0.79 492.5 -14.40 5.55 0.82

Global X MSCI Argentina ARGT 0.59 92.4 -27.22 11.44 4.74

GLOBAL EQUITY: SECTOR

ARK Genomic Revolution ARKG 0.75 323.1 21.64 13.43 -

ARK Web x.0 ARKW 0.75 499.4 17.17 32.98 -

ETFMG Prime Cyber Security HACK 0.64 1,547.3 15.55 10.87 -

First Trust Cloud Computing SKYY 0.60 1,754.4 13.32 19.12 15.80

iShares Global Healthcare IXJ 0.47 1,764.8 11.92 8.60 9.74

Global X FinTech FINX 0.68 327.3 11.89 - -

ETFMG Prime Mobile Payments IPAY 0.80 417.2 11.35 15.13 -

First Trust NASDAQ Cybersecurity CIBR 0.60 731.1 10.09 11.52 -

VanEck Vectors Pharmaceutical PPH 0.35 276.3 7.30 0.95 5.80

iShares Global Utilities JXI 0.47 169.5 4.96 8.91 6.74

First Trust NASDAQ Technology Dividend TDIV 0.50 878.9 4.22 13.91 11.26

iShares Exponential Technologies XT 0.47 2,331.3 3.50 14.58 -

iShares Global Tech IXN 0.47 2,502.6 2.60 17.13 15.34

Global X SuperDividend REIT SRET 0.58 130.1 2.10 13.17 -

VanEck Vectors Agribusiness MOO 0.54 813.8 1.35 10.98 5.45

iShares Global REIT REET 0.14 1,333.4 1.27 5.05 -

Invesco Water Resources PHO 0.62 804.6 1.25 11.85 4.32

US Global Jets JETS 0.60 95.0 1.14 10.95 -

ARK Industrial Innovation ARKQ 0.75 174.8 1.03 20.03 -

iShares Global Consumer Discretionary RXI 0.47 217.9 0.48 7.32 7.17

SPDR Dow Jones Global Real Estate RWO 0.50 2,221.2 -0.07 4.01 6.04

First Trust Water FIW 0.56 315.4 -0.93 16.31 8.79

Davis Select Financial DFNL 0.65 156.0 -1.50 - -

FlexShares STOXX Global Broad Infrastr NFRA 0.47 798.7 -2.00 6.28 5.00

iShares Global Clean Energy ICLN 0.47 166.5 -2.20 1.29 -0.51

Invesco WilderHill Clean Energy PBW 0.70 109.0 -2.52 6.39 -3.23

First Trust Clean Edge Green Energy QCLN 0.60 91.3 -3.17 10.61 3.30

Invesco Cleantech PZD 0.67 158.7 -3.30 11.96 6.60

FlexShares Global Quality Real Estate GQRE 0.45 282.7 -3.55 4.46 6.57

iShares Global Consumer Staples KXI 0.47 629.4 -3.63 4.84 5.48

Invesco Global Water PIO 0.75 171.6 -3.86 6.24 3.69

VanEck Vectors Global Alternative Energy GEX 0.63 87.5 -3.87 5.11 2.40

FlexShares Mstar Global Upstr Nat Res GUNR 0.46 5,361.5 -5.19 11.70 0.94

iShares Global Energy IXC 0.47 1,533.5 -5.33 5.16 -1.99



Invesco S&P Global Water CGW 0.61 549.1 -5.51 7.11 6.10

VanEck Vectors Natural Resources HAP 0.49 85.6 -6.02 9.27 1.09

iShares Global Industrials EXI 0.47 204.8 -6.55 8.82 6.21

First Trust Global Wind Energy FAN 0.60 71.4 -6.57 6.52 4.94

iShares Global Infrastructure IGF 0.47 2,635.8 -7.08 6.35 4.34

SPDR S&P Global Infrastructure GII 0.40 279.9 -7.13 6.45 4.20

Global X US Infrastructure Development PAVE 0.47 139.7 -7.15 - -

Invesco Global Listed Private Equity PSP 2.03 215.2 -7.31 6.89 4.75

iShares Global Comm Services IXP 0.47 234.4 -7.62 0.87 0.87

iShares Global Financials IXG 0.47 539.6 -8.04 7.69 4.99

IQ Global Resources GRES 0.78 189.1 -8.28 7.29 -0.64

SPDR S&P Global Natural Resources GNR 0.40 1,389.3 -8.38 11.68 0.44

iShares Global Timber & Forestry WOOD 0.47 313.1 -9.83 8.72 6.16

Global X Social Media SOCL 0.65 134.6 -10.99 13.69 8.98

SPDR S&P North American Natural Res NANR 0.35 665.6 -11.03 - -

iShares North American Nat Resources IGE 0.47 816.7 -11.56 1.14 -4.30

VanEck Vectors Steel SLX 0.56 76.1 -12.52 24.98 -0.79

iShares Global Materials MXI 0.47 223.9 -12.80 10.29 1.92

ETFMG Video Game Tech GAMR 0.82 108.2 -12.89 - -

VanEck Vectors Coal KOL 0.60 61.7 -13.41 26.88 -4.32

Invesco MSCI Global Timber CUT 0.55 165.4 -14.25 4.15 3.45

VanEck Vectors Unconventional Oil & Gas FRAK 0.54 64.7 -16.02 -6.25 -13.29

Invesco Solar TAN 0.70 286.9 -16.24 -4.87 -9.39

Global X Uranium URA 0.69 315.1 -16.68 0.76 -13.30

iShares MSCI Glb Metals/Mining Producers PICK 0.39 306.1 -16.77 18.69 -2.58

VanEck Vectors Gold Miners GDX 0.53 8,980.8 -17.86 12.23 -2.35

Global X Lithium & Battery Tech LIT 0.75 738.2 -19.01 17.83 5.77

iShares MSCI Global Gold Miners RING 0.39 176.9 -21.23 11.97 -4.18

VanEck Vectors Junior Gold Miners GDXJ 0.54 3,937.0 -22.09 14.20 -2.64

Sprott Gold Miners SGDM 0.57 124.3 -26.51 6.20 -

Global X Copper Miners COPX 0.65 68.1 -27.82 17.35 -4.71

Global X Silver Miners SIL 0.65 313.3 -29.38 7.31 -7.16

VanEck Vectors Oil Services OIH 0.35 1,117.7 -30.60 -14.70 -16.21

VanEck Vectors Rare Earth/Strat Metals REMX 0.57 127.9 -38.58 10.02 -11.14

GLOBAL EX-U.S. EQUITY: SECTOR

VanEck Vectors Biotech BBH 0.35 423.4 -0.22 0.34 7.48

iShares Intl Developed Real Estate IFGL 0.48 467.6 -4.05 5.09 2.64

SPDR Dow Jones International Real Estate RWX 0.59 2,486.7 -5.95 2.29 1.85

iShares International Developed Property WPS 0.48 130.4 -6.69 5.14 3.34

Vanguard Global ex-US Real Estate VNQI 0.14 5,481.9 -7.32 5.99 3.71

WisdomTree Global ex-US Real Estate DRW 0.58 99.2 -8.48 8.76 5.68

INTERNATIONAL EQUITY: DEVELOPED SECTOR

iShares MSCI Europe Financials EUFN 0.48 988.6 -17.77 -0.33 -2.05

INTERNATIONAL EQUITY: EMERGING SECTOR

Columbia India Consumer INCO 0.76 136.1 -12.04 11.15 15.00

Emerging Markets Internet & Ecommerce EMQQ 0.86 315.8 -22.88 7.32 -

Global X MSCI China Consumer Discr CHIQ 0.65 124.9 -24.16 4.61 -0.93

Columbia Emerging Markets Consumer ECON 0.59 334.6 -24.39 -1.90 -3.75

KraneShares CSI China Internet KWEB 0.70 1,732.5 -25.75 4.50 7.47

Invesco China Technology CQQQ 0.70 474.0 -27.45 7.40 6.49

GLOBAL EQUITY: HIGH DIVIDEND YIELD

Fidelity High Dividend FDVV 0.29 237.2 7.86 - -

WisdomTree Global High Dividend DEW 0.58 94.9 -3.80 7.60 2.94

SPDR S&P Global Dividend WDIV 0.40 202.1 -4.29 7.45 4.75

Global X Superdividend SDIV 0.58 917.0 -6.22 5.37 2.91

First Trust Dow Jones Global Select Div FGD 0.58 461.6 -6.38 6.36 2.10

GLOBAL EX-U.S. EQUITY: HIGH DIVIDEND YIELD

SPDR S&P International Dividend DWX 0.45 810.1 -8.03 6.60 -0.17

Vanguard International High Dividend Yld VYMI 0.32 910.7 -8.89 - -

INTERNATIONAL EQUITY: HIGH DIVIDEND YIELD

First Trust Stoxx European Select Dividend FDD 0.60 386.5 -4.50 4.74 2.61

iShares International Select Dividend IDV 0.50 4,183.7 -4.76 6.55 0.97

WisdomTree International High Dividend DTH 0.58 270.9 -8.30 4.41 0.73

Xtrackers MSCI EAFE High Div Yield Equity HDEF 0.20 200.4 -10.14 0.27 -

U.S. FIXED INCOME: BROAD MARKET - BROAD MATURITIES

iShares Edge US Fixed Income Bal Risk FIBR 0.25 119.4 -1.74 2.20 -

iShares Core Total USD Bond Market IUSB 0.06 2,444.2 -1.79 1.71 -

IQ Enhanced Core Plus Bond US AGGP 0.38 178.2 -2.96 - -

SPDR ICE BofAML Crossover Corp Bond CJNK 0.30 69.6 -3.40 4.08 3.73

U.S. FIXED INCOME: BROAD MARKET - LONG-TERM

iShares Core 10+ Year USD Bond ILTB 0.06 194.7 -8.28 2.78 4.73

U.S. FIXED INCOME: BROAD MARKET - SHORT-TERM

First Trust Enhanced Short Maturity FTSM 0.35 3,495.7 1.84 1.51 -

USAA Core Short-Term Bond USTB 0.35 64.1 0.56 - -

iShares Core 1-5 Year USD Bond ISTB 0.06 2,255.2 0.14 1.41 1.21

U.S. FIXED INCOME: GOVERNMENT/CREDIT - INTERMEDIATE

USAA Core Intermediate-Term Bond UITB 0.40 166.9 -2.36 - -

Vident Core US Bond Strategy VBND 0.43 488.1 -2.53 0.88 -

U.S. FIXED INCOME: GOVERNMENT/CREDIT - LONG-TERM

ProShares Inv Grade-Interest Rate Hedged IGHG 0.30 414.1 -2.59 2.81 1.39

iShares Long-Term Corporate Bond IGLB 0.06 562.5 -9.46 3.15 4.22

Vanguard Long-Term Corporate Bond VCLT 0.07 2,379.5 -9.58 3.36 4.58

SPDR Portfolio Long Term Corporate Bond SPLB 0.07 365.0 -9.80 3.62 4.51

U.S. FIXED INCOME: GOVERNMENT

WisdomTree Floating Rate Treasury USFR 0.15 829.8 1.95 1.19 -

iShares Treasury Floating Rate Bond TFLO 0.15 397.5 1.62 1.05 -

iShares US Treasury Bond GOVT 0.15 6,787.6 -1.22 0.51 1.30

Invesco 1-30 Laddered Treasury PLW 0.25 134.1 -3.88 0.48 2.84

U.S. FIXED INCOME: TREASURY - SHORT TERM

Invesco Treasury Collateral CLTL 0.08 517.9 1.67 - -

Goldman Sachs Access Treasury 0-1 Year GBIL 0.12 2,744.7 1.57 - -

SPDR Bloomberg Barclays 1-3 Month T-Bill BIL 0.14 7,042.2 1.55 0.77 0.43

iShares Short Treasury Bond SHV 0.15 17,315.6 1.52 0.86 0.52

Franklin Liberty Short Duration US Govt FTSD 0.25 184.4 0.89 0.98 0.68

Vanguard Short-Term Treasury VGSH 0.07 4,643.4 0.72 0.60 0.56

Schwab Short-Term US Treasury SCHO 0.06 3,773.2 0.72 0.58 0.54

iShares 1-3 Year Treasury Bond SHY 0.15 17,169.7 0.70 0.54 0.50

SPDR Portfolio Short Term Treasury SPTS 0.06 651.2 0.31 0.55 0.55

U.S. FIXED INCOME: TREASURY - INTERMEDIATE

SPDR Bloomberg Barclays Intermed Treas ITE 0.10 636.4 0.01 0.59 0.95

iShares 3-7 Year Treasury Bond IEI 0.15 7,794.2 -0.41 0.58 1.10

Schwab Intermediate-Term US Treasury SCHR 0.06 3,149.2 -0.61 0.57 1.30

Vanguard Intermediate-Term Treasury VGIT 0.07 3,130.5 -0.69 0.61 1.25

iShares 7-10 Year Treasury Bond IEF 0.15 9,246.4 -1.76 0.43 1.98

U.S. FIXED INCOME: TREASURY - LONG-TERM

iShares 10-20 Year Treasury Bond TLH 0.15 666.8 -3.57 0.32 2.88

Vanguard Long-Term Treasury VGLT 0.07 814.8 -6.77 0.76 4.39

SPDR Portfolio Long Term Treasury SPTL 0.06 1,205.9 -7.01 0.68 4.35

iShares 20+ Year Treasury Bond TLT 0.15 7,760.5 -7.05 0.78 4.73

Vanguard Extended Duration Treasury EDV 0.07 557.6 -10.61 0.90 7.24

PIMCO 25+ Year Zero Coupon US Treasury ZROZ 0.15 152.9 -11.89 0.70 7.26

U.S. FIXED INCOME: AGENCIES

iShares Agency Bond AGZ 0.20 453.9 -0.24 0.94 1.42

U.S. FIXED INCOME: AGENCY MBS

First Trust Low Duration Opportunities LMBS 0.68 1,904.8 1.17 3.23 -

FlexShares Disciplined Duration MBS MBSD 0.20 71.9 -0.39 0.59 -

SPDR Bloomberg Mortgage Backed Bond MBG 0.06 218.3 -0.72 0.83 1.89

Vanguard Mortgage-Backed Securities VMBS 0.07 7,195.0 -0.74 1.02 1.95

iShares MBS MBB 0.09 11,633.1 -0.92 0.88 1.87

iShares GNMA Bond GNMA 0.15 105.4 -1.11 0.57 1.44

U.S. FIXED INCOME: TIPS

iShares 0-5 Year TIPS Bond STIP 0.06 2,296.7 0.41 1.24 0.42

Vanguard Short-Term Infl-Protected Sec VTIP 0.06 5,893.2 0.36 1.22 0.40

PIMCO 1-5 Year US TIPS STPZ 0.20 822.4 0.03 1.07 0.26

FlexShares iBoxx 3 Year Target Dur TIPS TDTT 0.18 1,591.4 -0.10 0.95 0.22

SPDR Bloomberg Barclays 1-10 Year TIPS TIPX 0.15 307.4 -0.81 1.35 0.70

FlexShares iBoxx 5 Year Target Dur TIPS TDTF 0.18 832.2 -1.49 1.30 0.52

iShares TIPS Bond TIP 0.20 21,799.7 -1.94 1.50 1.16

JANUARY 2019 41


Schwab US TIPS SCHP 0.05 5,823.7 -1.98 1.54 1.21

SPDR Bloomberg Barclays TIPS IPE 0.15 1,670.4 -2.08 1.52 1.28

PIMCO 15+ Year US TIPS LTPZ 0.20 198.8 -8.39 2.25 3.10

U.S. FIXED INCOME: MUNICIPAL - BROAD MARKET

First Trust Managed Municipal FMB 0.50 460.4 -0.33 2.89 -

Vanguard Tax-Exempt Bond VTEB 0.09 3,677.7 -0.36 1.93 -

iShares National Muni Bond MUB 0.07 10,551.5 -0.41 1.70 3.13

iShares California Muni Bond CMF 0.25 1,030.3 -0.57 1.56 3.34

Hartford Municipal Opportunities HMOP 0.29 102.6 -0.66 - -

iShares New York Muni Bond NYF 0.25 316.2 -0.74 1.50 3.11

SPDR Nuveen Bloomberg Barclays Muni TFI 0.23 2,767.0 -0.95 1.74 3.27

Invesco California AMT-Free Muni Bond PWZ 0.28 300.1 -1.11 2.52 4.85

Invesco National AMT-Free Muni Bond PZA 0.28 1,517.4 -1.57 2.32 4.76

Invesco Taxable Municipal Bond BAB 0.28 831.5 -2.41 3.75 5.37

VanEck Vectors CEF Municipal Income XMPT 1.56 117.9 -5.99 2.00 6.20

U.S. FIXED INCOME: MUNICIPAL - SHORT-TERM

iShares Short Maturity Municipal Bond MEAR 0.25 137.2 1.31 0.97 -

VanEck Vectors AMT-Free Short Municipal SMB 0.20 199.1 1.24 0.76 0.91

iShares iBonds Sep 2019 Term Muni Bond IBMH 0.18 289.1 1.18 0.88 -

PIMCO Short Term Municipal Bond Active SMMU 0.35 80.0 1.14 0.90 0.86

iShares Short-Term National Muni Bond SUB 0.07 1,796.3 1.08 0.62 0.59

iShares iBonds Sep 2020 Term Muni Bond IBMI 0.18 314.8 0.84 0.90 -

SPDR Nuveen Bloomberg Short Term Muni SHM 0.20 3,677.5 0.77 0.42 0.69

U.S. FIXED INCOME: MUNICIPAL - INTERMEDIATE

iShares iBonds Dec 2021 Term Muni Bond IBMJ 0.18 239.1 0.83 1.06 -

iShares iBonds Dec 2022 Term Muni Bond IBMK 0.18 238.9 0.42 1.32 -

iShares iBonds Dec 2023 Term Muni Bond IBML 0.18 121.7 0.07 - -

PIMCO Intermediate Muni Bond Active MUNI 0.35 278.1 -0.03 1.76 2.41

VanEck Vectors AMT-Free Intermed Muni ITM 0.24 1,645.7 -0.94 1.74 3.32

U.S. FIXED INCOME: MUNICIPAL - LONG-TERM

VanEck Vectors AMT-Free Long Municipal MLN 0.24 140.5 -2.34 2.27 4.94

U.S. FIXED INCOME: MUNICIPAL - HIGH YIELD

SPDR Nuveen S&P High Yield Muni Bond HYMB 0.35 633.5 3.34 3.27 5.59

VanEck Vectors Short High-Yield Muni SHYD 0.35 154.4 2.64 2.21 -

VanEck Vectors High-Yield Municipal HYD 0.35 2,336.6 1.11 4.06 5.82

U.S. FIXED INCOME: MUNICIPAL - VRDO

Invesco VRDO Tax-Free Weekly PVI 0.25 63.6 1.17 0.60 0.32

U.S. FIXED INCOME: CORPORATE - INVESTMENT GRADE - BROAD MATURITIES

WisdomTree Interest Rate Hedged US Agg AGZD 0.23 71.2 0.50 1.87 -

iShares Interest Rate Hedged Corp Bond LQDH 0.24 211.7 -1.16 3.33 -

iShares Core US Aggregate Bond AGG 0.05 53,558.3 -1.85 1.28 1.97

Schwab US Aggregate Bond SCHZ 0.04 5,357.7 -1.85 1.20 1.92

Vanguard Total Bond Market BND 0.05 35,737.7 -1.98 1.28 1.94

SPDR Portfolio Aggregate Bond SPAB 0.04 3,248.3 -1.98 1.29 1.96

iShares Government/Credit Bond GBF 0.20 103.3 -2.43 1.16 1.82

NuShares Enhanced Yield US Agg Bond NUAG 0.20 71.2 -3.32 - -

WisdomTree Yield Enhanced US Agg AGGY 0.12 384.7 -3.60 1.65 -

iShares Broad USD Inv Gr Corporate Bond USIG 0.06 2,228.6 -3.82 2.15 2.66

Vanguard Total Corporate Bond VTC 0.07 75.3 -4.08 - -

iShares Aaa-A Rated Corporate Bond QLTA 0.15 138.5 -4.08 1.72 2.44

Goldman Sachs Access Inv Gr Corp Bond GIGB 0.14 353.9 -4.28 - -

iShares Edge Inv Gr Enhanced Bond IGEB 0.18 67.9 -4.34 - -

PIMCO Inv Gr Corporate Bond CORP 0.20 774.3 -4.65 2.34 2.81

iShares iBoxx USD Inv Gr Corporate Bond LQD 0.15 29,917.2 -5.54 2.04 2.84

Vanguard Long-Term Bond BLV 0.07 2,129.8 -8.32 2.34 4.47

Principal Inv Gr Corporate Active IG 0.26 222.7 - - -

U.S. FIXED INCOME: CORPORATE - INVESTMENT GRADE - SHORT-TERM

JPMorgan Ultra-Short Income JPST 0.18 4,370.8 2.02 - -

iShares Ultra Short-Term Bond ICSH 0.08 689.4 1.96 1.54 -

SPDR SSgA Ultra Short Term Bond ULST 0.20 108.7 1.95 1.59 1.03

Invesco BulletShares 2018 Corporate Bond BSCI 0.10 625.6 1.92 1.65 1.76

PIMCO Enhanced Short Maturity Active MINT 0.35 12,146.5 1.72 1.85 1.32

iShares Short Maturity Bond NEAR 0.25 5,645.5 1.71 1.52 1.20

iShares iBonds Dec 2018 Term Corporate IBDH 0.10 313.3 1.57 1.70 -

Invesco BulletShares 2019 Corporate Bond BSCJ 0.10 1,267.1 1.56 1.97 2.17

AdvisorShares Sage Core Reserves HOLD 0.35 66.9 1.43 1.20 -

iShares iBonds Dec 2019 Term Corporate IBDK 0.10 719.4 1.42 1.63 -

iShares iBonds Mar 2020 Corporate IBDC 0.10 126.9 1.27 2.02 2.52

iShares iBonds Mar 2020 Corp ex-Fin IBCD 0.10 85.2 0.88 1.65 2.13

SPDR Portfolio Short Term Corporate Bond SPSB 0.07 4,477.0 0.77 1.38 1.23

Arrow Reserve Capital Management ARCM 0.42 71.1 0.65 - -

iShares iBonds Dec 2020 Term Corporate IBDL 0.10 856.3 0.61 1.94 -

Invesco BulletShares 2020 Corp Bond BSCK 0.10 1,411.2 0.52 2.00 2.67

iShares Short-Term Corporate Bond IGSB 0.06 10,221.6 0.46 1.10 0.98

Vanguard Short-Term Bond BSV 0.07 25,398.5 0.34 0.91 0.94

iShares 0-5 Year Inv Grade Corp Bond SLQD 0.06 1,392.0 0.22 1.35 1.36

Fidelity Limited Term Bond FLTB 0.36 120.0 0.14 1.21 -

Vanguard Short-Term Corporate Bond VCSH 0.07 20,716.3 0.09 1.53 1.56

PGIM Ultra Short Bond PULS 0.15 118.9 - - -

U.S. FIXED INCOME: CORPORATE - INVESTMENT GRADE - INTERMEDIATE

iShares iBonds Dec 2021 Term Corporate IBDM 0.10 857.9 -0.14 1.94 -

Invesco BulletShares 2021 Corporate Bond BSCL 0.10 1,124.3 -0.24 2.30 3.18

iShares iBonds Dec 2022 Term Corporate IBDN 0.10 570.2 -1.00 2.08 -

Invesco BulletShares 2022 Corporate Bond BSCM 0.10 895.2 -1.03 2.46 3.36

Invesco BulletShares 2023 Corporate Bond BSCN 0.10 452.6 -1.42 2.83 -

iShares iBonds Dec 2023 Term Corporate IBDO 0.10 490.1 -1.49 2.32 -

SPDR Portfolio Intermediate Corp Bond SPIB 0.07 3,913.5 -1.59 1.77 2.18

Invesco Fundamental Inv Gr Corp Bond PFIG 0.22 118.3 -1.92 1.67 2.16

iShares Intermediate Corporate Bond IGIB 0.06 5,511.8 -1.93 1.41 1.80

iShares iBonds Dec 2024 Term Corporate IBDP 0.10 308.6 -2.40 2.57 -

FlexShares Credit-Scored US Corp Bond SKOR 0.22 75.1 -2.48 1.36 -

Invesco BulletShares 2024 Corporate Bond BSCO 0.10 323.4 -2.53 2.60 -

iShares iBonds Dec 2025 Term Corporate IBDQ 0.10 331.8 -3.00 2.56 -

Vanguard Intermediate Corporate Bond VCIT 0.07 18,374.2 -3.24 2.12 3.01

Invesco BulletShares 2025 Corporate Bond BSCP 0.10 137.1 -3.31 2.16 -

iShares iBonds Dec 2026 Term Corporate IBDR 0.10 152.1 -3.84 - -

iShares iBonds Dec 2027 Term Corporate IBDS 0.10 137.4 -4.47 - -

U.S. FIXED INCOME: CORPORATE - INVESTMENT GRADE - FLOATING RATE

iShares Floating Rate Bond FLOT 0.20 12,408.7 1.73 1.68 1.12

SPDR Bloomberg Inv Gr Floating Rate FLRN 0.15 4,670.2 1.71 1.72 1.15

Invesco Variable Rate Investment Grade VRIG 0.30 448.1 1.28 - -

VanEck Vectors Inv Gr Floating Rate FLTR 0.14 711.5 1.10 2.06 1.34

U.S. FIXED INCOME: CORPORATE - HIGH YIELD - BROAD MATURITIES

High Yield HYLD 1.25 173.3 3.46 7.86 0.04

ProShares HiYld-Interest Rate Hedged HYHG 0.50 187.2 2.64 6.23 1.58

iShares Interest Rate Hedged HiYld Bond HYGH 0.54 397.6 2.58 6.71 -

Invesco Senior Loan BKLN 0.65 6,124.2 2.00 4.08 2.21

Highland iBoxx Senior Loan SNLN 0.55 487.3 1.94 3.78 2.12

Xtrackers USD HiYld Corp Bond HYLB 0.20 1,974.3 0.27 - -

iShares iBoxx USD HiYld Corp Bond HYG 0.49 14,210.0 0.07 5.66 3.18

iShares Broad USD HiYld Corp Bond USHY 0.22 254.1 -0.63 - -

SPDR Bloomberg Barclays High Yield Bond JNK 0.40 7,232.4 -0.97 5.36 2.64

JPMorgan Disciplined High Yield JPHY 0.40 140.8 -1.59 - -

IQ S&P High Yield Low Volatility Bond HYLV 0.40 85.6 -1.95 - -

iShares Fallen Angels USD Bond FALN 0.25 65.6 -2.65 - -

VanEck Vectors Fallen Angel HiYld Bond ANGL 0.35 866.6 -4.06 8.65 6.30

Xtrackers High Beta High Yield Bond HYUP 0.35 143.5 - - -

Xtrackers Low Beta High Yield Bond HYDW 0.25 137.7 - - -

U.S. FIXED INCOME: CORPORATE - HIGH YIELD - SHORT-TERM

WisdomTree Negative Dur High Yield Bond HYND 0.48 64.8 5.96 5.99 -

Invesco BulletShares 2018 HiYld Corp Bond BSJI 0.42 507.2 2.31 4.79 2.68

Invesco BulletShares 2019 HiYld Corp Bond BSJJ 0.42 1,147.8 1.99 5.29 3.14

iShares 0-5 Year HiYld Corp Bond SHYG 0.30 2,847.1 1.93 5.89 3.27

SPDR Bloomberg Short Term HiYld Bond SJNK 0.40 2,908.8 1.75 6.13 2.60

WisdomTree Int Rate Hedged HiYld Bond HYZD 0.43 297.6 1.68 6.61 -

PIMCO 0-5 Year HiYld Corp Bond HYS 0.55 1,368.9 1.33 6.45 3.36

Invesco BulletShares 2020 HiYld Corp Bond BSJK 0.42 965.8 1.12 5.69 3.35

U.S. FIXED INCOME: CORPORATE - HIGH YIELD - INTERMEDIATE

Invesco BulletShares 2021 HiYld Corp Bond BSJL 0.42 513.0 0.99 5.88 -

Invesco BulletShares 2022 HiYld Corp Bond BSJM 0.42 290.1 0.87 6.29 -



Invesco BulletShares 2023 HiYld Corp Bond BSJN 0.42 129.5 0.48 5.71 -

iShares Intermediate Govt/Credit Bond GVI 0.20 1,960.4 -0.56 0.95 1.28

Invesco Fundamental HiYld Corp Bond PHB 0.50 864.3 -1.07 4.80 3.16

Vanguard Intermediate-Term Bond BIV 0.07 12,378.2 -2.14 1.26 2.26

U.S. FIXED INCOME: CORPORATE - ASSET-BACKED

iShares CMBS CMBS 0.25 317.0 -0.98 1.39 1.64

U.S. FIXED INCOME: CORPORATE - CONVERTIBLES

iShares Convertible Bond ICVT 0.20 300.8 3.94 9.71 -

SPDR Bloomberg Barclays Convertible Sec CWB 0.40 4,336.7 3.67 9.35 7.49

U.S. FIXED INCOME: CORPORATE - PREFERRED STOCK

VanEck Vectors Pref Sec ex Financials PFXF 0.41 513.4 -1.80 3.93 4.87

Invesco Financial Preferred PGF 0.63 1,413.4 -2.74 3.29 6.14

Global X US Preferred PFFD 0.23 189.0 -3.02 - -

iShares US Preferred Stock PFF 0.46 14,623.6 -3.15 1.94 4.49

Invesco Preferred PGX 0.51 4,621.1 -3.54 2.78 5.75

SPDR Wells Fargo Preferred Stock PSK 0.45 628.3 -4.02 2.06 5.55

Invesco Variable Rate Preferred VRP 0.50 1,661.5 -4.12 3.69 -

GLOBAL FIXED INCOME

First Trust SSI Strategic Convertible Sec FCVT 0.95 203.3 2.61 7.17 -

iShares Core Intl Aggregate Bond IAGG 0.09 919.0 2.08 2.88 -

Invesco Ultra Short Duration GSY 0.25 1,805.6 2.04 1.91 1.53

FlexShares Ready Access Variable Income RAVI 0.25 290.2 1.75 1.45 1.09

Vanguard Total International Bond BNDX 0.11 12,455.0 1.62 2.82 3.56

Janus Henderson Short Duration Income VNLA 0.35 805.8 1.45 - -

PIMCO Enhanced Low Duration Active LDUR 0.60 222.4 1.34 1.95 -

Invesco Global Short Term HiYld Bond PGHY 0.35 211.6 1.23 5.41 3.58

Virtus Newfleet Dynamic Credit BLHY 0.71 64.8 0.95 - -

AdvisorShares Newfleet Multi-Sector Inc MINC 0.75 128.4 0.80 1.89 1.86

RiverFront Strategic Income RIGS 0.47 152.9 0.43 4.32 3.43

SPDR DoubleLine Short Dur TR Tactical STOT 0.45 82.5 0.30 - -

SPDR DoubleLine Total Return Tactical TOTL 0.55 2,840.0 -0.34 1.82 -

PIMCO Active Bond BOND 0.61 1,926.9 -1.48 1.98 2.59

First Trust TCW Opportunistic Fixed Inc FIXD 0.55 354.8 -1.63 - -

JPMorgan Global Bond Opportunities JPGB 0.55 182.2 -1.66 - -

Fidelity Total Bond FBND 0.36 453.1 -1.84 2.44 -

RiverFront Dynamic Core Income RFCI 0.52 150.5 -2.31 - -

Hartford Total Return Bond HTRB 0.29 445.0 -2.68 - -

Virtus Newfleet Multi-Sector Bond NFLT 0.80 76.6 -2.69 3.51 -

Columbia Diversified Fixed Inc Allocation DIAL 0.28 91.5 -2.79 - -

FormulaFolios Tactical Income FFTI 1.05 201.7 -2.87 - -

First Trust Preferred Securities & Income FPE 0.85 3,291.9 -3.48 4.55 6.15

SPDR Bloomberg Barclays Intl Treasury BWX 0.35 1,027.9 -3.86 2.47 -0.70

SPDR Bloomberg Short Tm Intl Treasury BWZ 0.35 307.6 -4.31 1.66 -2.85

SPDR FTSE Intl Govt Infl-Protected Bond WIP 0.50 443.8 -6.99 2.54 -0.52

SPDR Bloomberg Barclays Intl Corp Bond IBND 0.50 185.5 -7.57 2.57 -1.74

SPDR Dorsey Wright Fixed Inc Allocation DWFI 0.60 128.0 -8.06 - -

First Trust TCW Unconstrained Plus Bond UCON 0.75 134.7 - - -

Hartford Short Duration HSRT 0.29 105.5 - - -

GLOBAL FIXED INCOME: CORPORATE - PREFERRED STOCK

Global X SuperIncome Preferred SPFF 0.58 180.1 -1.63 1.14 1.36

First Trust Institutional Preferred Sec/Inc FPEI 0.85 95.7 -4.48 - -

GLOBAL FIXED INCOME: HIGH YIELD

SPDR Blackstone / GSO Senior Loan SRLN 0.70 3,194.8 2.29 3.91 2.57

First Trust Senior Loan FTSL 0.88 1,894.8 1.91 3.67 2.82

First Trust Tactical High Yield HYLS 1.10 1,304.9 0.65 4.80 3.51

VanEck Vectors Intl High Yield Bond IHY 0.40 127.3 -5.17 5.20 2.05

INTERNATIONAL FIXED INCOME: DEVELOPED

iShares US & Intl High Yield Corp Bond GHYG 0.40 208.6 -2.07 5.46 2.38

iShares International Treasury Bond IGOV 0.35 826.0 -4.51 2.87 -0.56

iShares 1-3 Year Intl Treasury Bond ISHG 0.35 76.5 -4.91 1.75 -3.18

Invesco International Corporate Bond PICB 0.50 117.8 -8.51 1.33 -1.35

iShares International High Yield Bond HYXU 0.40 65.0 -8.57 4.46 -0.80

INTERNATIONAL FIXED INCOME: EMERGING

iShares J.P. Morgan EM Corporate Bond CEMB 0.50 71.0 -3.60 4.30 3.43

Invesco Chinese Yuan Dim Sum Bond DSUM 0.45 70.5 -3.64 0.66 0.11

VanEck Vectors EM High Yield Bond HYEM 0.40 269.8 -3.79 5.32 3.88

Vanguard Emerging Markets Government Bond VWOB 0.32 1,049.0 -4.33 3.90 3.96

iShares Emerging Markets High Yield Bond EMHY 0.50 389.5 -6.25 4.74 4.16

iShares JPM USD Emerging Markets Bond EMB 0.40 14,948.3 -7.24 3.25 3.73

SPDR Bloomberg EM Local Bond EBND 0.40 590.1 -7.27 3.79 -1.02

iShares China Large-Cap FXI 0.74 5,800.3 -7.76 6.92 3.43

Invesco Emerging Mkts Sovereign Debt PCY 0.50 3,679.3 -8.22 2.53 4.26

iShares JPM EM Local Currency Bond LEMB 0.30 406.2 -8.28 2.99 -1.51

WisdomTree Emerging Markets Local Debt ELD 0.55 173.8 -8.37 3.53 -1.67

VanEck Vectors JPM EM Local Curr Bond EMLC 0.30 4,561.9 -8.71 3.45 -1.85

COMMODITIES: BROAD MARKET

iShares Commodities Select Strategy COMT 0.48 604.4 -2.27 7.31 -

Aberdeen Standard All Commdty K-1 Free BCI 0.29 174.5 -5.15 - -

iPath Bloomberg Commodity ETN DJP 0.70 820.8 -5.98 1.04 -8.77

WisdomTree Continuous Commodity GCC 0.86 152.2 -6.76 -1.30 -7.03

iShares S&P GSCI Commodity GSG 0.80 1,253.4 -7.19 -0.87 -13.81

Invesco DB Commodity DBC 0.89 2,026.0 -7.95 2.52 -9.73

ETRACS UBS Const Mat Commdty ETN UCI 0.55 86.9 -7.99 4.24 -6.97

Invesco Opt Yld Divrsfd Commodity No K-1 PDBC 0.59 2,107.2 -9.26 1.88 -

United States Commodity USCI 1.03 508.5 -10.04 -1.84 -7.29

First Trust Global Tactical Commodity FTGC 0.95 194.1 -10.05 -3.29 -8.53

COMMODITIES: AGRICULTURE

Invesco DB Agriculture DBA 0.89 580.6 -7.84 -5.53 -6.99

COMMODITIES: ENERGY

United States Natural Gas UNG 1.29 371.6 60.03 2.28 -13.40

Invesco DB Energy DBE 0.78 168.2 -6.40 2.66 -13.87

Invesco DB Oil DBO 0.78 290.9 -6.60 -3.22 -18.72

United States Brent Oil BNO 0.88 81.2 -7.68 4.10 -17.43

United States Oil USO 0.84 1,586.4 -10.66 -6.02 -20.34

iPath Series B S&P GSCI Crude Oil ETN OIL 0.45 77.0 -11.21 - -

COMMODITIES: INDUSTRIAL METALS

Invesco DB Base Metals DBB 0.80 167.6 -16.07 12.26 0.37

COMMODITIES: PRECIOUS METALS

ETFS Physical Palladium PALL 0.60 155.8 9.94 28.59 9.74

iShares Gold Trust IAU 0.25 10,710.7 -6.39 4.43 -0.70

GraniteShares Gold Trust BAR 0.17 300.9 -6.46 - -

ETFS Physical Swiss Gold SGOL 0.17 804.3 -6.53 4.28 -0.85

SPDR Gold Trust GLD 0.40 30,022.3 -6.56 4.26 -0.87

VanEck Merk Gold OUNZ 0.40 135.0 -6.69 4.19 -

Invesco DB Gold DGL 0.78 99.9 -7.54 3.15 -1.85

Aberdeen Standard Phys Precious Metals GLTR 0.60 337.9 -8.44 4.33 -2.61

Invesco DB Precious Metals DBP 0.78 112.1 -9.43 2.36 -3.07

Aberdeen Standard Physical Platinum PPLT 0.60 501.3 -14.49 -1.89 -10.74

ETFS Physical Silver SIVR 0.30 323.2 -16.59 -0.12 -6.92

iShares Silver Trust SLV 0.50 4,585.4 -16.70 -0.30 -7.09

SPDR Gold MiniShares Trust GLDM 0.18 310.0 - - -

Perth Mint Physical Gold AAAU 0.18 71.7 - - -

CURRENCY: DEVELOPED

Invesco CurrencyShares Japanese Yen FXY 0.40 147.6 -1.08 2.27 -2.45

Invesco CurrencyShares Swiss Franc FXF 0.40 182.8 -3.54 -0.21 -2.88

Invesco CurrencyShares Canadian Dollar FXC 0.40 152.4 -5.15 0.08 -4.42

Invesco CurrencyShares Australian Dollar FXA 0.40 113.4 -5.76 1.19 -3.19

Invesco CurrencyShares British Pound FXB 0.40 142.5 -5.81 -5.72 -5.19

Invesco CurrencyShares Euro FXE 0.40 272.2 -6.35 1.51 -4.22

ASSET ALLOCATION

Aptus Behavioral Momentum BEMO 0.79 75.6 2.13 - -

EquityCompass Tactical Risk Manager TERM 0.65 61.4 1.38 - -

DeltaShares S&P 500 Managed Risk DMRL 0.35 403.4 1.20 - -

FormulaFolios Hedged Growth FFHG 1.16 72.2 -0.55 - -

Multi-Asset Diversified Income MDIV 0.70 626.4 -0.62 4.88 3.13

Principal EDGE Active Income YLD 0.65 292.5 -1.04 6.47 -

First Trust Strategic Income FDIV 0.88 82.2 -1.15 5.08 -

iShares Core Moderate Allocation AOM 0.25 999.3 -1.73 4.63 3.83

iShares Core Conservative Allocation AOK 0.25 466.5 -1.83 3.87 3.18

Invesco Zacks Multi-Asset Income CVY 0.88 262.9 -1.98 8.09 1.76

JANUARY 2019 43


iShares Core Growth Allocation AOR 0.25 1,150.3 -2.17 6.02 5.19

iShares Core Aggressive Allocation AOA 0.25 881.5 -2.40 7.40 6.17

SPDR SSgA Global Allocation GAL 0.35 254.8 -2.45 5.29 4.40

SPDR SSGA Income Allocation INKM 0.50 92.8 -3.03 4.89 4.07

iShares Morningstar Multi-Asset Income IYLD 0.60 294.9 -3.28 5.29 4.46

Pacer WealthShield PWS 0.60 90.6 -3.39 - -

ClearShares OCIO OCIO 0.67 108.1 -3.58 - -

Arrow Dow Jones Global Yield GYLD 0.75 64.0 -4.43 1.86 -2.62

DeltaShares S&P 400 Managed Risk DMRM 0.45 105.7 -4.50 - -

Invesco CEF Income Composite PCEF 2.07 679.4 -4.51 7.66 5.60

WBI BullBear Global Income WBII 1.28 76.9 -4.83 0.43 -

YieldShares High Income YYY 2.02 192.0 -5.12 7.30 3.35

Cambria Global Momentum GMOM 1.07 108.2 -7.32 5.02 -

WBI BullBear Global High Income WBIH 1.23 208.4 -8.19 0.66 -

DeltaShares S&P Intl Managed Risk DMRI 0.50 208.8 -8.28 - -

ALTERNATIVES: ABSOLUTE RETURN

IQ Merger Arbitrage MNA 0.78 758.0 2.51 5.18 3.80

WisdomTree Dyn Long/Short US Equity DYLS 0.48 171.8 1.75 - -

Hull Tactical US HTUS 0.96 62.8 1.36 7.45 -

Reality Shares DIVS DIVY 0.85 71.5 0.50 4.78 -

WisdomTree Managed Futures Strategy WTMF 0.65 221.6 0.20 -1.64 -0.45

First Trust Long/Short Equity FTLS 1.48 156.2 -0.76 6.13 -

IQ Hedge Multi-Strategy Tracker QAI 0.79 1,193.0 -1.61 1.36 1.14

Cambria Global Asset Allocation GAA 0.33 61.7 -4.89 5.61 -

JPMorgan Diversified Alternatives JPHF 0.85 208.4 -6.80 - -

SPDR SSgA Multi-Asset Real Return RLY 0.50 129.8 -7.32 3.57 -1.72

ALTERNATIVES: TACTICAL TOOLS

iPath S&P 500 VIX Short-Term Futures ETN VXX 0.89 865.1 23.53 -51.37 -45.63

ProShares VIX Short-Term Futures VIXY 0.87 115.5 22.55 -51.53 -45.84

iPath Ser B S&P 500 VIX ShTm Futures ETN VXXB 0.89 132.6 - - -

LEVERAGED

ProShares Ultra VIX Short-Term Futures UVXY 1.65 296.2 411.56 -73.07 -73.32

VelocityShares 3X Long Natural Gas ETN UGAZ 1.65 777.2 130.41 -35.90 -62.12

Direxion Daily Healthcare Bull 3x CURE 1.09 180.1 37.65 26.02 30.55

ProShares Ultra Health Care RXL 0.95 148.2 27.27 20.32 23.12

ProShares Ultra QQQ QLD 0.95 1,805.2 11.61 0.33 11.84

ProShares UltraPro QQQ TQQQ 0.95 4,234.4 9.62 35.83 39.79

UBS AG FI Enh Large Cap Growth ETN FBGX 1.29 1,439.4 9.38 24.97 -

Credit Suisse FI Large Cap Growth Enh ETN FLGE 1.52 1,942.9 8.29 24.60 -

ProShares Ultra Technology ROM 0.95 293.0 8.00 31.82 30.29

ProShares Ultra Dow30 DDM 0.95 391.7 4.31 28.23 21.56

ProShares Ultra S&P 500 SSO 0.90 2,467.9 3.77 20.51 18.88

Direxion Daily Technology Bull 3x TECL 1.09 608.1 2.72 43.28 41.01

ProShares Ultra Real Estate URE 0.95 135.7 2.32 10.31 16.06

ProShares UltraPro Dow30 UDOW 0.95 521.4 2.22 41.44 30.52

ETRACS Monthly 2xLev Mortgage REIT ETN MORL 0.80 447.3 2.20 25.40 19.00

Credit Suisse X-Links Mo 2xLev Mort REIT ETN REML 1.30 61.8 1.87 - -

ProShares UltraPro S&P500 UPRO 0.92 1,479.2 1.50 28.76 26.18

Direxion Daily S&P 500 Bull 3x SPXL 1.04 1,097.9 1.44 28.43 25.82

ETRACS 2xLev Long Wells Fargo BDC ETN BDCL 0.85 206.1 0.21 7.76 0.85

PortfolioPlus S&P 500 PPLC 0.37 77.6 -0.96 12.42 -

ProShares Ultra NASDAQ Biotechnology BIB 0.95 307.1 -2.91 -8.13 8.00

ProShares Ultra Russell2000 UWM 0.95 179.0 -3.25 15.89 10.91

ProShares Ultra Financials UYG 0.95 797.0 -3.37 18.81 17.74

UBS AG FI Enhanced Global High Yield ETN FIHD 1.65 1,524.0 -4.14 - -

ProShares Ultra MidCap400 MVV 0.95 141.7 -4.37 16.99 14.67

Direxion Daily Financial Bull 3x FAS 1.02 1,664.5 -7.48 26.10 24.66

ProShares UltraPro Russell2000 URTY 0.95 118.3 -8.82 19.73 12.37

Direxion Daily Small Cap Bull 3x TNA 1.10 935.4 -9.34 19.32 11.92

Direxion Daily Mid Cap Bull 3x MIDU 1.08 63.3 -10.26 22.08 18.98

ETRACS Monthly Pay 2xLev CEF ETN CEFL 0.90 220.9 -12.55 12.61 -

ETRACS 2xMo Lev MLP Infrastr ETN Ser B MLPQ 0.85 71.0 -13.95 - -

DB Gold Double Long ETN DGP 0.75 78.0 -15.49 4.81 -4.93

ProShares Ultra Gold UGL 5.07 77.2 -16.20 4.23 -5.27

ProShares Ultra Oil & Gas DIG 0.95 93.2 -19.35 -4.44 -12.61

UBS AG FI Enhanced Europe 50 ETN FIEE 1.95 476.1 -20.73 - -

Direxion Daily Semiconductor Bull 3x SOXL 1.02 590.1 -22.10 57.51 49.74

Direxion Daily 20+ Year Treasury Bull 3X TMF 1.11 98.1 -24.55 -4.13 7.63

VelocityShares 3X Long Gold ETN UGLD 1.35 128.2 -25.23 3.41 -10.66

VelocityShares Daily 2x VIX Sh-Tm ETN TVIX 1.65 484.2 -27.98 -86.08 -82.11

ProShares Ultra Bloomberg Crude Oil UCO 1.27 363.4 -28.33 -21.94 -43.41

Direxion Daily MSCI Brazil Bull 3X BRZU 1.29 352.8 -31.01 23.07 -34.37

Direxion Daily Russia Bull 3x RUSL 1.28 144.9 -31.75 4.20 -35.97

Direxion Daily Energy Bull 3x ERX 1.10 368.1 -31.96 -10.85 -21.98

Direxion Daily MSCI India Bull 3x INDL 1.36 104.1 -33.15 9.34 6.91

ProShares Ultra Silver AGQ 5.28 178.6 -33.98 -7.59 -19.73

Direxion Daily S&P Biotech Bull 3X LABU 1.08 651.2 -34.37 -18.55 -

Direxion Daily FTSE China Bull 3X YINN 1.34 312.7 -37.16 2.45 -8.86

Direxion Daily MSCI EM Bull 3x EDC 1.26 229.7 -43.56 10.75 -9.58

VelocityShares 3x Long Crude Oil ETN UWT 1.50 320.6 -45.45 - -

Direxion Daily CSI 300 China A Sh Bull 2X CHAU 1.04 81.3 -45.61 -9.98 -

ProShares UltraPro 3x Crude Oil OILU 1.03 67.9 -46.28 - -

Direxion Dly S&P Oil/Gas Exp/Prod Bull 3X GUSH 1.15 163.7 -47.99 -37.11 -

VelocityShares 3X Long Silver ETN USLV 1.65 242.8 -50.52 -18.45 -35.44

Direxion Daily Gold Miners Bull 3x NUGT 1.20 1,081.1 -57.86 -13.09 -44.81

Direxion Daily Junior Gold Miners Bull 3X JNUG 1.18 601.1 -63.68 -19.17 -55.59

Barclays ETN+ FI Enh Global HiYld ETN Ser B FIYY 0.93 1,521.8 - - -

Barclays ETN+ FI Enh Europe 50 ETN Ser C FFEU 1.05 680.4 - - -

BMO REX MicroSectors FANG+ 3X Lev ETN FNGU 0.95 83.9 - - -

INVERSE

Direxion Daily Gold Miners Bear 3x DUST 1.08 113.8 40.56 -67.13 -56.31

iPath US Treasury 10-Year Bear ETN DTYS 0.75 62.4 25.94 5.20 -4.94

ProShares UltraPro Short 20+ Yr Treasury TTT 0.95 83.7 24.89 -7.15 -19.54

Direxion Daily 20+ Year Treasury Bear 3x TMV 1.02 351.4 23.48 -8.23 -20.64

Direxion Daily CSI 300 China A Sh Bear 1X CHAD 0.85 94.5 22.70 -4.57 -

Direxion Daily MSCI EM Bear 3X EDZ 1.12 86.8 21.13 -36.36 -22.81

ProShares UltraShort 20+ Year Treasury TBT 0.89 1,556.1 17.23 -3.58 -12.35

ProShares UltraShort Euro EUO 0.99 161.1 16.51 -3.06 7.10

ProShares Short MSCI Emerging Markets EUM 0.95 232.8 10.85 -11.25 -5.43

ProShares Short 20+ Year Treasury TBF 0.91 514.2 9.15 -1.21 -5.88

Invesco DB US Dollar Bullish UUP 0.79 532.3 7.87 -0.17 3.64

ProShares UltraShort 7-10 Year Treasury PST 0.95 115.6 6.92 -0.20 -4.58

WisdomTree Bloomberg US Dollar Bullish USDU 0.50 85.0 6.37 -0.01 -

ProShares UltraShort Bloomberg Crude Oil SCO 1.25 114.0 6.27 -19.74 8.01

ProShares UltraShort Yen YCS 1.00 66.7 4.85 -5.17 3.17

Sit Rising Rate RISE 1.33 67.9 4.50 0.94 -

ProShares Short High Yield SJB 0.95 124.5 0.38 -6.28 -4.71

ProShares Short Russell2000 RWM 0.95 238.3 -1.18 -10.94 -9.57

AdvisorShares Ranger Equity Bear HDGE 2.72 131.2 -1.66 -9.66 -10.51

VelocityShares 3x Inverse Crude Oil ETN DWT 1.50 138.4 -2.06 - -

ProShares Short S&P500 SH 0.89 1,608.5 -3.98 -11.02 -10.96

ProShares Short Dow30 DOG 0.95 223.3 -4.86 -13.90 -12.02

Direxion Daily FTSE China Bear 3X YANG 1.09 89.4 -5.10 -60.37 -50.56

ProShares UltraShort Russell2000 TWM 0.95 70.3 -5.93 -22.82 -20.07

ProShares Short QQQ PSQ 0.95 417.9 -10.12 -14.71 -15.72

ProShares UltraShort S&P500 SDS 0.89 777.2 -10.54 -22.06 -21.75

Direxion Daily Small Cap Bear 3x TZA 1.10 268.3 -11.21 -34.77 -31.65

Direxion Daily Financial Bear 3X FAZ 1.10 138.6 -11.82 -36.02 -35.64

ProShares UltraShort Dow30 DXD 0.95 141.3 -12.24 -27.03 -23.60

ProShares UltraPro Short S&P500 SPXU 0.91 426.1 -18.47 -32.78 -32.36

Direxion Daily S&P 500 Bear 3X SPXS 1.10 263.8 -18.76 -33.22 -33.03

ProShares UltraPro Short Dow30 SDOW 0.95 170.4 -20.85 -39.16 -34.72

ProShares UltraShort QQQ QID 0.95 250.7 -22.94 -29.17 -30.53

VelocityShares Daily Inv VIX Med-Term ETN ZIV 1.35 101.7 -23.31 16.89 13.69

Direxion Daily Semiconductor Bear 3x SOXS 1.11 65.1 -29.90 -60.81 -57.91

ProShares UltraPro Short QQQ SQQQ 0.95 596.3 -36.40 -42.62 -44.15

ProShares Short VIX Short-Term Futures SVXY 1.38 403.4 -60.92 -4.98 -4.85

VelocityShares 3X Inverse Natural Gas ETN DGAZ 1.65 354.6 -91.03 -68.63 -47.27

WORDLAST

The first time I explained what an ETF was to someone was in 1995. My employer at the time, Barclays Global Investors, had just started negotiations to build a new suite of ETFs with Morgan Stanley called “WEBS.” I was working on market-ing materials and tried to explain the structure and its uses to a group of advertising folks.

I’m 100% sure I explained it incorrectly.

In the intervening 20 or so years, I’ve gotten a little better at explaining the basics: creation and redemption, premiums and dis-counts, tracking error versus track-ing difference, and so on. But I’m not going to claim mastery just yet.

One of the great truths of investing is that nothing is ever actually simple. I suspect that’s one of the reasons so many smart peo-ple are attracted to the market—not because they can master it, but because finance and investing con-tain enough complexity to keep the brain engaged for a lifetime.

ONGOING EDUCATIONHere’s a short list of the things about ETFs and investing I learned—or relearned—just in the last 12 months:

• How blockchain actually works

• Why negative interest rates aren’t only possible, but a logical conclu-sion of some investment policies

• Fractional basis point pricing is now a legitimate fee-war strategy

• The nuances of how options-based protection strategies work in a packaged product like an ETF wrapper

• How Iceland managed to engi-neer economic growth out of its banking crisis

And that’s just off the top of my head. Every week, someone in the ETF world launches a new product, cracking open a new area of the market or a new technique with some promise to investors. The learning process never stops.

AVOID COMPLACENCYEvery week, new investors and advi-sors stumble across ETFs for the first time. They have the same questions about the basics I was mis-answering in 1995. It’s easy to grow complacent and assume the market should have learned about ETFs by now, and that we, as ETF folks, have it all figured out. Neither will ever be true.

So here’s my challenge to you: If you think you’ve got ETFs pretty much figured out, go volunteer to do a half-hour talk on investing at a nearby high school. Offer to speak at your local rotary club or even hold forth at a cocktail party. There’s nothing to shine a light on the gaps in your knowledge like having to teach something.

You’ll get asked hard questions, and you may have to do a bit of digging for the answers. But in the process, I guarantee you’ll walk away having learned something.

THE

THE BATTLE IS NEVER OVER

DAVE NADIG Managing DirectorETF.com

LAST WORD By Dave Nadig

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