The U.S. market was taken aback by the weak job growth data for
December, suggesting that the Fed might take a more cautious stance
on its plan to curb the massive stimulus program. Additionally, it
gives more ammo to the idea that the Fed may hold off on more QE
reductions for longer than initially expected. In December, the Fed
finally decided to cut its bond purchases by $10 billion starting
According to the recent report, the U.S. economy added just 74,000
jobs in December, much below the analysts' expectation of 196,000
polled by Reuters. This represents the slowest job growth rate in
Though the feeble jobs numbers took a toll on labor market recovery
and the U.S. economy, the weakness could be largely due to severe
cold weather, which is a temporary factor (read:
5 ETF Predictions for 2014
Otherwise, the slew of other economic data such as expanding
manufacturing activity, strong exports, upbeat GDP growth, solid
retail and housing data and increasing consumer confidence point to
faster growth that would translate into even more jobs. Further,
the unemployment rate dropped to a five-year low of 6.7% in
December from 7% in November.
While the disappointing December job additions pushed down bond
yields and the dollar, it benefited many corners of the market.
Below, we have highlighted some sectors which were deep in green on
the session following the report:
The biggest winners from the unexpected fall in the U.S. job growth
were definitely the mining stocks, in particular gold and silver.
This is because lower hiring raised some concern on U.S. economic
growth, thereby leading investors to turn their focus on the safe
Acting as a leveraged play on underlying metal prices, these
stocks tend to experience more profits than their bullion cousins
in the rising metal market. Though there are several ETFs that
enjoyed strong gains,
Market Vectors Junior Gold Miners ETF (
added more than 5% on the day (read:
Can Gold Mining ETFs Dazzle in 2014?
This fund tracks the Market Vectors Global Junior Gold Miners
Index. In total, the product holds about 69 securities that are
widely spread out across each security as none of these make up for
more than 4.80% of assets. Canadian firms take the lion's share at
60.1%, though Australia (20.8%) and the U.S. (9.2%), round out the
The product has amassed about $1.15 billion in its asset base while
trading in solid volume of more than 1.1 million shares a day. The
ETF charges 55 bps in fees per year from investors.
Some investors returned to emerging markets, as
weaker-than-expected job data might hinder the Fed taper plan,
boosting capital inflows into these nations. In particular, three
countries - Indonesia, India and Turkey - saw great trading on the
day, adding over 2% (see:
all the Asia-Pacific Emerging ETFs here
Among these countries, one that really soared was the
iShares MSCI Indonesia Investable Market Index Fund (
. This is the most popular ETF tracking the Indonesian market with
AUM of $324.1 million and average daily volume of nearly 585,000
The fund tracks the MSCI Indonesia Investable Market Index and
charges 61 bps in annual fees from investors (read:
3 Emerging Market ETFs to Watch for Political
Issues in 2014
Holding 113 securities, the product is concentrated across both
sectors and securities. The top two firms account for nearly
double-digit share in the basket, while from a sector look,
financial dominates the fund's return with one-third share. The ETF
gained 4.43% on the session and has a Zacks ETF Rank of 3 or 'Hold'
U.S. Treasury securities jumped on the news, sending the yields
lower with the biggest one-day drop since October. Yields on
10-year Treasuries slipped below 2.9% on the day.
Though all categories moved higher on the session, long-term
Treasury bond ETFs benefited the most from the weak jobs data
Fed Tapers Bond Purchases: 3 ETFs in Focus on the
The most popular and liquid ETF that provides exposure to the
long-term Treasury bond market is the
iShares 20+ Year Treasury Bond ETF (
. The fund follows the Barclays Capital U.S. 20+ Year Treasury Bond
Index and holds 22 securities in its basket.
The average maturity comes in at 27.34 years and the effective
duration is 16.30 years. The fund focuses on the top credit rating
bonds (AA+ and higher).
The product has AUM of $2.4 billion and sees heavy volume of
roughly 8 million shares per day. The ETF charges 0.15% in
expenses. TLT added nearly 1.2% on the session and has a decent
Zacks ETF Rank of 3 or 'Hold' rating.
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ISHARS-MS INDON (EIDO): ETF Research Reports
MKT VEC-JR GOLD (GDXJ): ETF Research Reports
ISHARS-20+YTB (TLT): ETF Research Reports
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