ETF Professor Competing in iShares Fund Frenzy
Alright, so this is a bit of shameless self-promotion on a Friday afternoon, but I was fortunate enough to have been invited by BlackRock (NYSE: BLK) to compete in the fifth edition of iShares Fund Frenzy, basically March Madness with ETFs instead of college hoops teams.
Kudos to my colleague Jason Kephart at InvestmentNews for being the first to turn his Fund Frenzy picks into a nifty little story, which ran Thursday.
The bracket, as you can see, is set up just like a regular NCAA Tournament bracket with four divisions comprised entirely of iShares ETFs. The divisions are country, domestic, income and international. Not only does the winner get bragging rights, but $20,000 to the charity of his or her choice.
After mulling it over with Mrs. Professor, should I win, the fine folks at BlackRock will not be donating $20,000 to Mrs. Professor's Nordstrom budget. However, since we are the proud owners of a 19-month old black lab, I decided to play for Guide Dogs of the Desert. Call me altruistic, but I like the idea of helping people AND dogs.
Again, my picks are visible in the image included with this story, but here my Final Four: The iShares MSCI USA Minimum Volatility Index Fund (NYSE: USMV) out of the Domestic Division, the iShares Core MSCI Total International Stock ETF (NYSE: IXUS) out of the International Division, the iShares B - Ca Rated Corporate Bond Fund (NYSE: QLTC) out of the Income Division and the iShares MSCI Frontier 100 Index Fund (NYSE: FM) out of the Country Division.
My championship game is USMV against FM with USMV emerging as the winner. The Final Four pick that worries me the most is IXUS, because although the allocations are small, iShares India and Russia ETFs comprise two of IXUS' top three holdings and those are beaten up markets at the moment.
Interestingly, three of my Final Four picks – FM, IXUS and QLTC – currently have less than $100 million in assets under management. Admittedly, I will need junk bonds to remain sturdy to help QLTC, though it should be noted this ETF has a 30-day SEC yield of almost 5.7 percent and an effective duration of just 3.7 years.
Overall, I like my championship match up. USMV has outpaced the S&P 500 by over 300 basis points year-to-date and if U.S. stocks start to decline, the lower correlations offered by frontier markets should help FM advance.
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