The Market is a Zoo and March was a Lion!

April 11, 2016

By: Efram Slen, Global Index Product Development Manager, Nasdaq

March certainly roared like a lion this year following two difficult months at the start of 2016. Major U.S. indexes gained more than 6% each during the month of March:

Nasdaq-100 |+6.7%

S&P 500 |+6.6%

Dow Jones Industrial Average |+7.0%

During the month, Federal Reserve Chair, Janet Yellen, said the central bank will move cautiously as it weighs interest rate hikes in light of a weak global economy and stubbornly low inflation, raising questions about whether policymakers will make a rate move this spring.

Perhaps one of the more interesting stories of the month was the resilient comeback of Emerging Markets. Monetary easing by major central banks, as well as a firming of oil prices and other commodities during much of the quarter, powered emerging market stocks higher.

Nasdaq Emerging Markets Index | +12.7%

Figure A

 

Commodities also witnessed a surge:

Nasdaq Commodity Crude Oil ER Index |+8.2%

The Federal Reserve’s cautious stance on future tightening has dampened the U.S. Dollar, aiding a boost to broader commodities.

The Nasdaq Dividend and Income Family were also beneficiaries as yields on 10-Year U.S. Treasuries dropped sharply since mid-March, pushing investors to look elsewhere for yield.

 

Index BBG Ticker Name 1-Month Performance
DVG DVG NASDAQ US Dividend Achievers Select 6.0%
DAA DAAX NASDAQ US Broad Dividend Achievers 6.2%
DAY DAY NASDAQ US Dividend Achievers 50 7.9%
DAT DAT NASDAQ International Dividend Achievers 9.8%
NQMAUS NQMAUS NASDAQ US Multi-Asset Diversified Income 5.7%
NQ96DIVUS NQ96DVU NASDAQ Technology Dividend 9.4%

 

For more information, please click here and a member of our team will contact you directly.

Nasdaq has consolidated performance data for our top 50 most-watched indexes. View the full report here.

 

 

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GOLD GETS ITS SHINE BACK

March 18, 2016

GOLD GETS ITS SHINE BACK

By Efram Slen / Product Development Manager, Nasdaq Global Information Services

In light of the market volatility over the first two months of 2016, there have been some real winners as of late. Gold is one of them. In the month of February, gold stocks, as represented by the PHLX Gold/Silver Sector Index were up north of 39%. During that same period, the price of Gold increased from $1,116/oz to $1,234/oz, which is more than a 10.5% return. It is not surprising and highly natural to see investors flock to the asset that is seen as an alternative to cash in highly volatile markets.

Beyond physical ownership, there are many ways to gain exposure to the gold market through the use of equities, futures and options, each of which have been assembled and delivered to investors through indexes.

Equities-Based Gold Indexes

Equities-based gold indexes typically include companies that are involved in the mining or processing of gold. For example, the Nasdaq OMX Global Gold & Precious Metals Index (Ticker: QGLD) is designed to track the performance of the largest and most liquid companies engaged in the gold, silver, and other precious metals mining industries. This index had 47 securities as of February 29, 2016, the largest of which were Barrick Gold Corp, Newmont Mining Corp, and Newmont Mining Corp. Also, theNasdaq Global Index family offers ICB subsector indexes, one of which is based on the subsector Gold Mining in the U.S. The Nasdaq U.S. Benchmark Gold Mining Index (Ticker: NQUSB1777) had just 3 securities as of February 29, 2016. Further, the PHLX Gold/Silver Sector Index (Ticker: XAU) is a specialized index that tracks 30 securities that are involved in gold and silver mining. Launched in 1979, it is among the first sector indexes to be focused on this market. The previous month’s performance of the PHLX Gold/Silver Sector Index ranks among one of the strongest performing months in history. Over the last 30 years, the performance in February 2016 ranks second, only outpaced by a 53.39% monthly gain in September of 1998.

graph 1

The one-year index performance for these indexes, along with the spot price of gold, is shown in Figure 1.

 

FIGURE 1: EQUITY-BASED GOLD INDEXES

figure2

 

Futures-Based Gold Indexes

The Nasdaq Commodity Index incorporates 32 different futures contracts listed in the U.S. or U.K. The Nasdaq Commodity Gold Index is based on gold futures contracts traded on the COMEX and rolls from one contract to another based on a predetermined schedule. This index very closely and consistently tracks the price of gold over time, as shown in Figure 2.

FIGURE 2: FUTURES-BASED GOLD INDEXES

fig3

 

Options-Based Gold Indexes

ETFs have become a very popular vehicle for gaining exposure to gold. To mitigate some of the risk associated with that exposure, the Credit Suisse Nasdaq Gold FLOWS 103 Total Return Index (Ticker: QGLDITR) was designed to track a portfolio consisting of a long position in SPDR Gold Shares (Ticker: GLD), which is the largest and most liquid of the gold ETFs, and a monthly rolling short position in call options against that same ETF. This indexed “buy-write” approach typically results in lower volatility than GLD itself, and converts some of the option premium into a payout stream. Figure 3 illustrates the downside protection afforded by the index against the price of gold.

ETFs have become a very popular vehicle for gaining exposure to gold. To mitigate some of the risk associated with that exposure, the Credit Suisse Nasdaq Gold FLOWS 103 Total Return Index (Ticker: QGLDITR) was designed to track a portfolio consisting of a long position in SPDR Gold Shares (Ticker: GLD), which is the largest and most liquid of the gold ETFs, and a monthly rolling short position in call options against that same ETF. This indexed “buy-write” approach typically results in lower volatility than GLD itself, and converts some of the option premium into a payout stream. Figure 3 illustrates the downside protection afforded by the index against the price of gold.

FIGURE 3: OPTIONS-BASED GOLD INDEXES

fig3

For more information, please click here and a member of our team will contact you directly.

 

Source: Nasdaq Global Indexes Research. Bloomberg. FactSet.

Nasdaq® is a registered trademark of Nasdaq, Inc. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither Nasdaq, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding Nasdaq-listed companies or Nasdaq proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.

 

 

 

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