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The Zacks Analyst Blog Highlights: ELEMENTS Spectrum Large Cap U.S. Sector Momentum Index ETN, db X-trackers Harvest CSI 500 China-A Shares Small Cap, MSCI Qatar Capped ETF, AbbVie and Bristol-Myers Squibb

Zacks Equity Research

For Immediate Release
 
Chicago, IL – October 02, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the ELEMENTS Spectrum Large Cap U.S. Sector Momentum Index ETN (EEH-Free Report), db X-trackers Harvest CSI 500 China-A Shares Small Cap Fund (ASHS-Free Report), MSCI Qatar Capped ETF (QAT-Free Report), AbbVie (ABBV-Free Report) and Bristol-Myers Squibb Company (BMY-Free Report).
 
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Here are highlights from Wednesday’s Analyst Blog:

3 Best-Performing ETFs of the 3rd Quarter

The third quarter started off on a strong footing, but eventually succumbed to a bout of volatility. The Fed reiterated its take on the QE wrap-up procedure with October likely being the last month to see artificial liquidity injection. The Fed has also indicated that it will keep the short-term interest rates low for a ‘considerable period’, or more clearly, for as long as the economy needs backing.

However, with the U.S. economy appearing on track to regain its lost ground, the investment world is expecting the Fed’s first rate hike mid next year.  As a result, while the stock markets are hovering at multi-year highs, a potential rise in rates next year might bring in a volatile trading period over the next few months (read: Endure Market Volatility with These ETFs).

Still, the global markets performed decently in the third quarter, with U.S. stocks rising reasonably. Foreign markets delivered a mixed-bag performance, as emerging countries staged an impressive comeback, with the broad developed markets like Europe seeing strength at the end of the quarter thanks to stimulus hopes.

In such a situation, a look at the top-performing ETFs of the quarter is warranted. Below, we highlight a few of these winners, which may be worth keeping an eye on in the fourth quarter to see if these can keep up their winning ways heading into 2015 (read: Best ETF Strategies for the Fourth Quarter):  
 
ELEMENTS Spectrum Large Cap U.S. Sector Momentum Index ETN (EEH-Free Report) – 94%

Investors had a bullish call over the U.S. large cap products following stunning gains in the broader market indices. Both the S&P and Dow Jones Industrial Average added more than 1% in the quarter. Large-caps offer both stability and capital appreciation in a booming market.

As a result, EEH was crowned the best performer in the third quarter, gaining as much as 94%. The ETN capitalizes on a unique momentum strategy that seeks to increase exposure to the sub-indices that outperform the S&P 500 and reduce allocation for the underperformers.

The ETN charges a higher 75 bps in fees per year. This ETN is unpopular and illiquid with just $1.7 million in AUM and average daily volume of about 10,000 shares.

Furthermore, it is important to note that this product trades at a significant premium to NAV so its huge return is largely due to varying premium levels over the past quarter. It is currently trading at a premium of 46% so before investors think this a top performer and a great pick, consider this major issue first.

db X-trackers Harvest CSI 500 China-A Shares Small Cap Fund (ASHS-Free Report)  – 33%

China A-Shares ETFs witnessed substantial investor attention lately. Though Chinese economy is presently going through a rough stretch, interestingly, bad news has become good news for the nation. The more the nation is coming up with sluggish numbers, the higher is the speculation for larger monetary stimulus (read: 3 China ETFs Surging Higher).

The central bank’s recent cut of the re-lending rates for agricultural loans by 100 basis points, sanctions of a 20 billion yuan ($3.3 billion) re-lending quota to shore up agriculture and the relaxation of home buying rules in Hangzhou ─ a Chinese city buckling under pressure from increased supplies of homes ─ give cues of further easing.
Moreover, China has been extremely proactive in shoring up its small companies and rural projects. Prior to this, China planned a mini-stimulus package mainly targeted at railways and other construction investment as well as to provide tax relief for small enterprises.

As a result, ASHS Chinese small cap ETF surged 33% in Q3. The fund is also an overlooked choice with just about $7 million in assets and about 10,000 shares of trading volume. The fund charges about 82 bps in fees, but once again, investors should note the premium issues here, as the fund trades at roughly a 4.65% premium to NAV.

MSCI Qatar Capped ETF (QAT-Free Report) – 20%

The Middle East space had a stupendous third quarter with nations like Qatar and United Arab Emirates deserving special mention. These two markets qualified for the emerging market status per the benchmark of the index provider MSCI Inc. from May 2014. Moreover, property market and financial activities have been robust in recent times.

Furthermore, in late May, Qatar announced a hike in foreign ownership limits in its sole exchange from 25% to 49%, spurring another round of optimism among investors about Qatar. All these have led QAT to soar about 20% in Q3. 

The fund provides exposure to 27 Qatari stocks. QAT too is an unpopular choice with only $37 million in assets. The fund also trades in a paltry trading volume. It charges about 62 bps in fees, though it definitely had a great quarter (read: Behind the Recent Surge in Middle East ETFs).

AbbVie Announces Positive Results from Oncology Candidate

Pipeline updates are highly awaited events in the pharma/biotech sector as they play an important role in deciding whether or not to invest in a particular company. These updates provide information on experimental drugs and at times give an insight into the commercial potential of the candidate once it is successfully developed and commercialized.

Last week, AbbVie (ABBV-Free Report) announced positive results from early and mid-stage studies on its oncology candidate, veliparib. Results from the studies were presented at the Annual Congress of the European Society for Medical Oncology (:ESMO).

AbbVie announced interim results from a phase II study on veliparib plus Bristol-Myers Squibb Company’s (BMY-Free Report) Paraplatin (carboplatin) and Taxol (paclitaxel) chemotherapeutic medicines in patients with previously untreated metastatic or advanced non-small cell lung cancer (:NSCLC). Data revealed that a 35% improvement in progression-free survival and a 30% improvement in overall survival were observed in patients under the veliparib arm. Earlier this year, AbbVie started a phase III study on veliparib in patients suffering from squamous NSCLC.

AbbVie also presented data from a phase I study on veliparib plus Paraplatin and Taxol in Japanese patients suffering from NSCLC. Results revealed that an overall response rate of 54.5% was observed in the veliparib arm.

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