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Best &amp; Worst ETFs and Mutual Funds: Large Cap Blend Style

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ProShares Announces 11 Reverse Splits

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Caterpillar Earnings Preview: High Expectations

BETHESDA, Md.--(BUSINESS WIRE)-- <a href="http://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.proshares.com&amp;esheet=51579288&amp;newsitemid=20170627006181&amp;lan=en-US&amp;anchor=ProShares&amp;index=1&amp;md5=153da40af40408a86a4261b55a25a461">ProShares</a>, a premier provider of ETFs, announced today forward and reverse share splits on 10 of its ETFs. The splits will not change the total value of a shareholder&#39;s investment. Forward Splits Seven ETFs will forward split shares 2-for-1: &nbsp;&nbsp; Ticker&nbsp;ProShares ETF&nbsp;Split Ratio QLD&nbsp;<a href="http://www.proshares.com/funds/qld.html">Ultra QQQ</a>&nbsp;2:1 UDOW&nbsp;<a href="http://www.proshares.com/funds/udow.html">UltraPro Dow30</a>&nbsp;2:1 UWM&nbsp;<a href="http://www.proshares.com/funds/uwm.html">Ultra Russell2000</a>&nbsp;2:1 URE&nbsp;<a href="http://www.proshares.com/funds/ure.html">Ultra Real Estate</a>&nbsp;2:1 URTY&nbsp;<a href="http://www.proshares.com/funds/urty.html">UltraPro Russell2000</a>&nbsp;2:1 ROM&nbsp;<a href="http://www.proshares.com/funds/rom.html">Ultra Technology</a>&nbsp;2:1 SVXY&nbsp;<a href="http://www.proshares.com/funds/svxy.html">Short VIX Short-Term Futures ETF</a>&nbsp;2:1 &nbsp; All forward splits will apply to shareholders of record as of the close of the markets on July 12, 2017, payable after the close of the markets on July 14, 2017. The funds will trade at their post-split prices on July 17, 2017. The ticker symbols and CUSIP numbers for the funds will not change. The forward splits will decrease the price per share of each fund with a proportionate increase in the number of shares outstanding. For example, for the 2-for-1 splits, every pre-split share will result in the receipt of two post-split shares, which will be priced at one-half the net asset value (&ldquo;NAV&rdquo;) of a pre-split share. Illustration of a Forward Split The following table shows the effect of a hypothetical 2-for-1 split: &nbsp;&nbsp;&nbsp; Period&nbsp;# of Shares Owned&nbsp;Hypothetical NAV&nbsp;Value of Shares Pre-Split&nbsp;100&nbsp;$100.00&nbsp;$10,000.00 Post-Split&nbsp;200&nbsp;$50.00&nbsp;$10,000.00 &nbsp; Reverse Splits Three ETFs will reverse split shares at the following split ratios: &nbsp;&nbsp;&nbsp;&nbsp; Ticker&nbsp;ProShares ETF&nbsp;Split Ratio&nbsp;Old CUSIP&nbsp;New CUSIP SDS&nbsp;<a href="http://www.proshares.com/funds/sds.html">UltraShort S&amp;P500</a>&nbsp;1:4&nbsp;74347B300&nbsp;74347B383 VIXY&nbsp;<a href="http://www.proshares.com/funds/vixy.html">VIX Short-Term Futures ETF</a>&nbsp;1:4&nbsp;74347W262&nbsp;74347W171 UVXY&nbsp;<a href="http://www.proshares.com/funds/uvxy.html">Ultra VIX Short-Term Futures ETF</a>&nbsp;1:4&nbsp;74347W239&nbsp;74347W163 &nbsp; All reverse splits will be effective at the market open on July 17, 2017, when the funds will begin trading at their post-split price. The ticker symbol for the funds will not change. All funds undergoing a reverse split will be issued a new CUSIP number, listed above. The reverse splits will increase the price per share of each fund with a proportionate decrease in the number of shares outstanding. For example, for a 1-for-4 reverse split, every four pre-split shares will result in the receipt of one post-split share, which will be priced four times higher than the NAV of a pre-split share. Illustration of a Reverse Split The following table shows the effect of a hypothetical 1-for-4 reverse split: &nbsp;&nbsp;&nbsp; Period&nbsp;# of Shares Owned&nbsp;Hypothetical NAV&nbsp;Value of Shares Pre-Split&nbsp;1,000&nbsp;$10.00&nbsp;$10,000.00 Post-Split&nbsp;250&nbsp;$40.00&nbsp;$10,000.00 &nbsp; Fractional Shares from Reverse Splits For shareholders who hold quantities of shares that are not an exact multiple of the reverse split ratio (for example, not a multiple of 4 for a 1-to-4 reverse split), the reverse split will result in the creation of a fractional share. Post-reverse split fractional shares will be redeemed for cash and sent to your broker of record. This redemption may cause some shareholders to realize gains or losses, which could be a taxable event for those shareholders.

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ProShares Announces Several ETF Share Splits

The Large Cap Blend style ranks first out of the twelve fund styles as detailed in my <a href="http://blog.newconstructs.com/2012/10/11/investment-style-rankings-for-etfs-mutual-funds/">style rankings for ETFs and mutual funds</a>. It gets my Neutral rating, which is based on aggregation of ratings of 39 ETFs and 1,046 mutual funds in the Large Cap Blend style as of October 12, 2012. Prior reports on the best &amp; worst ETFs and mutual funds in every sector and style are <a href="http://www.newconstructs.com/nc/research/report/etf-and-fund-reports.htm">here</a>.

	Figures 1 and 2 show the five best and worst rated ETFs and mutual funds in the style. Not all Large Cap Blend style ETFs and mutual funds are created the same. The number of holdings varies widely (from 20 to 990), which creates drastically different investment implications and ratings. The best ETFs and mutual funds allocate more value to Attractive-or-better-rated stocks than the worst, which allocate too much value to Neutral-or-worse-rated stocks.

	To <a href="http://blog.newconstructs.com/2012/10/09/how-to-find-the-best-etfs-2/">identify the best</a> and <a href="http://blog.newconstructs.com/2012/04/05/how-to-avoid-the-worst-etfs/">avoid the worst</a> ETFs and mutual funds within the Large Cap Blend style, investors need a <a href="http://blog.newconstructs.com/2011/11/23/predictive-fund-rating-methodology/">predictive rating</a> based on (1) <a href="http://blog.newconstructs.com/2011/11/22/portfolio-management-rating-methodology/">stocks ratings</a> of the holdings and (2) the <a href="http://blog.newconstructs.com/2011/10/28/total-annual-costs-methodology/">all-in expenses</a> of each ETF and mutual fund. Investors need not rely on backward-looking ratings. My fund rating methodology is detailed <a href="http://blog.newconstructs.com/2011/11/23/predictive-fund-rating-methodology/">here</a>.

	Investors seeking exposure to the Large Cap Blend style should buy one of the Attractive-or-better rated ETFs or mutual funds from Figures 1 and 2.

	Get my ratings on all ETFs and mutual funds in this style on my free <a href="http://www.newconstructs.com/nc/fundscreener/fund-screener.htm?task=ACTION_CATEGORY_TYPE_SEARCH&amp;selectedTypes=0,1&amp;selectedCategoryIds=5d8cc7de114e11e1b62800188b533b34">mutual fund and ETF screener</a>.
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		Figure 1: ETFs with the Best &amp; Worst Ratings &ndash; Top 5

		<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig1.jpg"><img alt="" class="aligncenter size-full wp-image-4799" height="246" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig1.jpg" title="LargeCapValueFig1" width="320" /></a>*

		Best ETFs exclude ETFs with NAV&rsquo;s less than $100 million.

		Sources: New Constructs, LLC and company filings
</div>

	Russell Growth at a Reasonable Price ETF (NYSE: <a class="ticker" href="/stock/grpc#NYSE">GRPC</a>) and ProShares UltraPro Dow30 (NYSE: <a class="ticker" href="/stock/udow#NYSE">UDOW</a>) are excluded from Figure 1 because their total net assets (TNA) are below $100 million and do not meet our liquidity standards.

	Figure 2: Mutual Funds with the Best &amp; Worst Ratings &ndash; Top 5
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		<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig2.jpg"><img alt="" class="aligncenter size-full wp-image-4798" height="246" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig2.jpg" title="LargeCapValueFig2" width="320" /></a>

		* Best mutual funds exclude funds with NAV&rsquo;s less than 100 million.

		Sources: New Constructs, LLC and company filings
</div>

	PowerShares S&amp;P 500 High Quality Portfolio (NYSE: <a class="ticker" href="/stock/sphq#NYSE">SPHQ</a>) is my top-rated Large Cap Blend ETF and GMO Trust: GMO Quality Fund (NYSE: <a class="ticker" href="/stock/gqlox#NYSE">GQLOX</a>) is my top-rated Large Cap Blend mutual fund. Both earn an Attractive-or-better rating.

	PowerShares S&amp;P High Beta Portfolio (NYSE: <a class="ticker" href="/stock/sphb#NYSE">SPHB</a>) is my worst-rated Large Cap Blend ETF and ProFund: Bull ProFund (NYSE: BLPSX) is my worst-rated Large Cap Blend mutual fund. Both earn my Dangerous rating.

	Figure 3 shows that 448 out of the 1,599 stocks (over 51% of the total net assets) held by Large Cap Blend ETFs and mutual funds get an Attractive-or-better rating. However, only 2 out of 39 Large Cap Blend ETFs (less than 1% of total net assets) and 65 out of 1,046 Large Cap Blend mutual funds (less than 11% of total net assets) get an Attractive-or-better rating.

	The takeaways are: you cannot simply judge an ETF or a mutual fund by a style label or its top five holdings. ETFs and mutual funds with the same style label can have drastically different holdings that will translate into significantly different returns for your investment portfolio.
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		Figure 3: Large Cap Blend Style Landscape For ETFs, Mutual Funds &amp; Stocks
</div>
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		<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig3.jpg"><img alt="" class="aligncenter size-full wp-image-4795" height="156" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig3.jpg" title="LargeCapValueFig3" width="410" /></a>

		Sources: New Constructs, LLC and company filings
</div>

	As detailed in &ldquo;<a href="http://blog.newconstructs.com/2012/07/20/low-cost-funds-dupe-investors-2/">Cheap Funds Dupe Investors</a>&rdquo;, the fund industry offers many cheap funds but very few funds with high-quality stocks, or with what I call good <a href="http://blog.newconstructs.com/2011/11/22/portfolio-management-rating-methodology/">portfolio management</a>.

	Investors need to tread carefully when considering Large Cap Blend ETFs and mutual funds, as only 2 ETFs and 65 mutual funds in the Large Cap Blend style allocate enough value to Attractive-or-better-rated stocks to earn an Attractive rating. For example, here are two very different stocks that are both held by our worst mutual fund, ProFund: Bull ProFund (NYSE: BLPSX).

	McDonald&rsquo;s (NYSE: <a class="ticker" href="/stock/mcd#NYSE">MCD</a>) is one of my favorite stocks held by Large Cap Blend ETFs and mutual funds and earns my Very Attractive rating. MCD is a model of effective capital management with a return on invested capital (ROIC) of 16.7% in 2011. This is in the 87th percentile of all Russell 3000 companies as McDonald&rsquo;s has improved its ROIC every year for the past decade. In spite of the recession, McDonald&rsquo;s has become even more profitable and efficient with their capital in the last four years. McDonald&rsquo;s is not only a great company; it is also an attractive stock due to the market&rsquo;s pessimistic view of future cash flows. The company&rsquo;s current stock price (~$92.36) implies that after-tax profits (NOPAT) will permanently decrease by 10%. This seems unlikely given that the company has increased its profits by an average of 11% over the past decade. Low expectations and strong historical performance make McDonald&rsquo;s an excellent long candidate.

	Simon Property Group (NYSE: <a class="ticker" href="/stock/spg#NYSE">SPG</a>) is one of my least favorite stocks held by Large Cap Blend ETFs and mutual funds and earns my Very Dangerous rating. SPG has misleading earnings &ndash; its economic earnings are negative and declining while its reports accounting earnings are positive and increasing. During the 14 years in my model, the company has never generated positive economic earnings. Not only is SPG not profitable, it is also overvalued. To justify its current stock price (~$153.05), the company must increase profits by 12.3% compounded annually for 20 years. That is a lot of future value creation for a company that has never created value. Investors should avoid this stock.

	BLPSX holds shares in over 400 companies. Investors would be better off allocating their money to a stock like MCD and avoiding SPG altogether rather than naively diversifying across many stocks.

	Figures 4 and 5 show the rating landscape of all Large Cap Blend ETFs and mutual funds.

	Our <a href="http://blog.newconstructs.com/2012/10/11/investment-style-rankings-for-etfs-mutual-funds/">style rankings for ETFs and mutual funds</a> report ranks all styles and highlights those that offer the best investments.
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		Figure 4: Separating the Best ETFs From the Worst Funds
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		<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig4.jpg"><img alt="" class="aligncenter size-full wp-image-4794" height="245" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig4.jpg" title="LargeCapValueFig4" width="409" /></a>

		Sources: New Constructs, LLC and company filings
</div>
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		Figure 5: Separating the Best Mutual Funds From the Worst Funds
</div>
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		<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig5.jpg"><img alt="" class="aligncenter size-full wp-image-4793" height="245" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig5.jpg" title="LargeCapValueFig5" width="409" /></a>

		Sources: New Constructs, LLC and company filings
</div>

	Review my <a href="http://www.newconstructs.com/nc/fundscreener/fund-screener.htm?task=ACTION_CATEGORY_TYPE_SEARCH&amp;selectedTypes=0,1&amp;selectedCategoryIds=5d8cc7de114e11e1b62800188b533b34">full list</a> of ratings and rankings along with reports on all 39 ETFs and 1,046 mutual funds in the Large Cap Blend style.

	Disclosure: I receive no compensation to write about any specific stock, sector, style or&nbsp;theme.

Best & Worst ETFs and Mutual Funds: Large Cap Blend Style

Maryland-based ProShares, the largest issuer of inverse and leveraged ETFs and sixth-largest U.S. issuer overall, announced share splits for six of its funds and reverse splits for 11 of its products.

ProShares will split four of its ETFs on a 2-for-1 basis. Those funds are as follows: The ProShares Ultra QQQ (NYSE: <a class="ticker" href="/stock/qld#NYSE">QLD</a>), the double-leveraged equivalent of the PowerShares QQQ (Nasdaq: <a class="ticker" href="/stock/qqq#Nasdaq">QQQ</a>), the ProShares UltraPro QQQ (Nasdaq: <a class="ticker" href="/stock/tqqq#Nasdaq">TQQQ</a>), which is the triple-leveraged answer to QQQ, the ProShares Ultra 20+ Year Treasury (NYSE: <a class="ticker" href="/stock/ubt#NYSE">UBT</a>) and the ProShares Ultra 7-10 Year Treasury (NYSE: <a class="ticker" href="/stock/ust#NYSE">UST</a>).

The ProShares UltraPro Dow30 (NYSE: <a class="ticker" href="/stock/udow#NYSE">UDOW</a>) and the ProShares UltraShort DJ-UBS Natural Gas (NYSE: <a class="ticker" href="/stock/kold#NYSE">KOLD</a>) will be split on a 3-for-1 basis, ProShares said in the statement.

All splits will apply to shareholders of record as of the close of the markets on May 8, 2012, payable after the close of the markets on May 10, 2012, the firm said. Tickers and CUSIPs will remain the same.

Six bearish ProShares funds will be split on a 1-for-4 basis. They are as follows: The ProShares UltraShort Brazil (NYSE: <a class="ticker" href="/stock/bzq#NYSE">BZQ</a>), the ProShares UltraShort Dow30 (NYSE: <a class="ticker" href="/stock/dxd#NYSE">DXD</a>), the ProShares UltraPro Short QQQ (Nasdaq: <a class="ticker" href="/stock/sqqq#Nasdaq">SQQQ</a>), the ProShares UltraPro Short MidCap400 (NYSE: <a class="ticker" href="/stock/smdd#NYSE">SMDD</a>), the ProShares UltraShort Consumer Services (NYSE: <a class="ticker" href="/stock/scc#NYSE">SCC</a>) and the ProShares UltraShort Russell1000 Growth (NYSE: <a class="ticker" href="/stock/sfk#NYSE">SFK</a>).

The following five funds will be split on a 1-for-5 basis: The ProShares UltraPro Short S&amp;P500 (NYSE: <a class="ticker" href="/stock/spxu#NYSE">SPXU</a>), the ProShares UltraShort Silver (NYSE: <a class="ticker" href="/stock/zsl#NYSE">ZSL</a>), the ProShares UltraPro Short Russell2000 (NYSE: <a class="ticker" href="/stock/srty#NYSE">SRTY</a>), the ProShares Ultra DJ-UBS Natural Gas (NYSE: <a class="ticker" href="/stock/boil#NYSE">BOIL</a>) and the ProShares UltraShort Russell3000 (NYSE: <a class="ticker" href="/stock/twq#NYSE">TWQ</a>). 

In the case of BOIL, that product has plunged more than 69% year-to-date and more than 83% in the past six months amid slumping natural gas prices.

All reverse splits will apply to shareholders of record as of the close of the markets on May 10, 2012. The funds will trade at their post-split prices on May 11, 2012, ProShares said in the statement. Tickers and CUSIPS will remain the same.

ProShares had over $23.5 billion in assets under management at the end of March, according to data from the ETF Industry Association.

Caterpillar (NYSE: <a class="ticker" href="/stock/cat#NYSE">CAT</a>) is scheduled to report fourth-quarter 2011 results tomorrow, January 26, before the markets open. The heavy equipment maker reported strong third-quarter results driven by increased demand due continued economic growth. And the company's cash flow was at an all-time high. Investors will be hoping for more of the same this time around.

Analysts are looking for the company to report that its per-share earnings rose to $1.73 for the quarter and that revenue totaled $16.1 billion. That is up from $1.47 per share on $12.8 billion in the same period of last year. Note that the EPS estimate is up a penny from 60 days ago. And Caterpillar's per-share earnings have topped consensus estimates in five of the past six quarters.

For the full year, the consensus estimate calls for $6.81 per share earnings, an increase of 39.1% from the previous year. That EPS estimate has risen two cents over the past 60 days. And Caterpillar's revenues are expected to have increased 37.5% year over year to $58.6 billion.

The Company

This Peoria-based manufacturer of construction and mining equipment operates through three lines of businesses: Machinery, Engines and Financial Products. The Engines division produces diesel and natural gas engines and industrial turbines. The Financial Products division offers financing and insurance on its other products. The company was founded in 1925 and now is an S&amp;P 500 component with a market cap of $68.7 billion.

During the three months that ended in December, the company completed acquisition of engine maker MWM, opened a manufacturing plant in Winston-Salem, invested $210 million in expansion in India, and appointed a new chief information officer.

Performance

Caterpillar has a long-term earnings per share growth forecast of 23.0%. Its PEG ratio is less than the industry average, and its operating margin is better than the industry average. It has a return on equity of 36.2% and dividend yield of 1.8%. Short interest is 2.4% of the float. Sixteen of 24 analysts who follow the stock rate it a Buy or Strong Buy; none recommend selling. Their mean price target on shares is 8.7% higher than the current share price.

The share price has jumped 16.5% in the past month to $106.29, and the 50-day moving average crossed above the 200-day moving average yesterday. The 52-week range is $67.54 and $166.55. The stock has outperformed competitors Deere &amp; Co. (NYSE: <a class="ticker" href="/stock/de#NYSE">DE</a>) and CNH Global (NYSE: <a class="ticker" href="/stock/cnh#NYSE">CNH</a>) and the broader markets over the past year.

See also: <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/01/2256621/4-global-industrial-etfs-to-consider-now">Four Global Industrial ETFs to Consider Now</a>.

<div id="action-items">ACTION ITEMS:

Bullish: Investors interested in exchange traded funds invested in Caterpillar might want to consider the following trades:

<ul><li>ProShares UltraPro Dow30 (NYSE: <a class="ticker" href="/stock/udow#NYSE">UDOW</a>) is about 77% higher than the 52-week low.</li>
<li>Industrial Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xli#NYSE">XLI</a>) is more than 31% higher than the 52-week low.</li>
<li>Vanguard Industrials ETF (NYSE: <a class="ticker" href="/stock/vis#NYSE">VIS</a>) is about 30% higher than the 52-week low.</li>
<li>SPDR Dow Jones Industrial Average (NYSE: <a class="ticker" href="/stock/dia#NYSE">DIA</a>) is more than 27% higher than the 52-week low.</li>
</ul>Bearish: Traders may prefer to consider these alternative positions in the same sector:

<ul><li>Manitowoc (NYSE: <a class="ticker" href="/stock/mtw#NYSE">MTW</a>) is up more than 117% from the 52-week low.</li>
<li>Terex (NYSE: <a class="ticker" href="/stock/tex#NYSE">TEX</a>) is up more than 107% from the 52-week low.</li>
<li>AGCO (NYSE: <a class="ticker" href="/stock/agco#NYSE">AGCO</a>) is up more than 70% from the 52-week low.</li>
</ul>Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.</div>

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BETHESDA, Md.--(BUSINESS WIRE)-- <a href="http://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.proshares.com&amp;esheet=51579288&amp;newsitemid=20170627006181&amp;lan=en-US&amp;anchor=ProShares&amp;index=1&amp;md5=153da40af40408a86a4261b55a25a461">ProShares</a>, a premier provider of ETFs, announced today forward and reverse share splits on 10 of its ETFs. The splits will not change the total value of a shareholder&#39;s investment. Forward Splits Seven ETFs will forward split shares 2-for-1: &nbsp;&nbsp; Ticker&nbsp;ProShares ETF&nbsp;Split Ratio QLD&nbsp;<a href="http://www.proshares.com/funds/qld.html">Ultra QQQ</a>&nbsp;2:1 UDOW&nbsp;<a href="http://www.proshares.com/funds/udow.html">UltraPro Dow30</a>&nbsp;2:1 UWM&nbsp;<a href="http://www.proshares.com/funds/uwm.html">Ultra Russell2000</a>&nbsp;2:1 URE&nbsp;<a href="http://www.proshares.com/funds/ure.html">Ultra Real Estate</a>&nbsp;2:1 URTY&nbsp;<a href="http://www.proshares.com/funds/urty.html">UltraPro Russell2000</a>&nbsp;2:1 ROM&nbsp;<a href="http://www.proshares.com/funds/rom.html">Ultra Technology</a>&nbsp;2:1 SVXY&nbsp;<a href="http://www.proshares.com/funds/svxy.html">Short VIX Short-Term Futures ETF</a>&nbsp;2:1 &nbsp; All forward splits will apply to shareholders of record as of the close of the markets on July 12, 2017, payable after the close of the markets on July 14, 2017. The funds will trade at their post-split prices on July 17, 2017. The ticker symbols and CUSIP numbers for the funds will not change. The forward splits will decrease the price per share of each fund with a proportionate increase in the number of shares outstanding. For example, for the 2-for-1 splits, every pre-split share will result in the receipt of two post-split shares, which will be priced at one-half the net asset value (&ldquo;NAV&rdquo;) of a pre-split share. Illustration of a Forward Split The following table shows the effect of a hypothetical 2-for-1 split: &nbsp;&nbsp;&nbsp; Period&nbsp;# of Shares Owned&nbsp;Hypothetical NAV&nbsp;Value of Shares Pre-Split&nbsp;100&nbsp;$100.00&nbsp;$10,000.00 Post-Split&nbsp;200&nbsp;$50.00&nbsp;$10,000.00 &nbsp; Reverse Splits Three ETFs will reverse split shares at the following split ratios: &nbsp;&nbsp;&nbsp;&nbsp; Ticker&nbsp;ProShares ETF&nbsp;Split Ratio&nbsp;Old CUSIP&nbsp;New CUSIP SDS&nbsp;<a href="http://www.proshares.com/funds/sds.html">UltraShort S&amp;P500</a>&nbsp;1:4&nbsp;74347B300&nbsp;74347B383 VIXY&nbsp;<a href="http://www.proshares.com/funds/vixy.html">VIX Short-Term Futures ETF</a>&nbsp;1:4&nbsp;74347W262&nbsp;74347W171 UVXY&nbsp;<a href="http://www.proshares.com/funds/uvxy.html">Ultra VIX Short-Term Futures ETF</a>&nbsp;1:4&nbsp;74347W239&nbsp;74347W163 &nbsp; All reverse splits will be effective at the market open on July 17, 2017, when the funds will begin trading at their post-split price. The ticker symbol for the funds will not change. All funds undergoing a reverse split will be issued a new CUSIP number, listed above. The reverse splits will increase the price per share of each fund with a proportionate decrease in the number of shares outstanding. For example, for a 1-for-4 reverse split, every four pre-split shares will result in the receipt of one post-split share, which will be priced four times higher than the NAV of a pre-split share. Illustration of a Reverse Split The following table shows the effect of a hypothetical 1-for-4 reverse split: &nbsp;&nbsp;&nbsp; Period&nbsp;# of Shares Owned&nbsp;Hypothetical NAV&nbsp;Value of Shares Pre-Split&nbsp;1,000&nbsp;$10.00&nbsp;$10,000.00 Post-Split&nbsp;250&nbsp;$40.00&nbsp;$10,000.00 &nbsp; Fractional Shares from Reverse Splits For shareholders who hold quantities of shares that are not an exact multiple of the reverse split ratio (for example, not a multiple of 4 for a 1-to-4 reverse split), the reverse split will result in the creation of a fractional share. Post-reverse split fractional shares will be redeemed for cash and sent to your broker of record. This redemption may cause some shareholders to realize gains or losses, which could be a taxable event for those shareholders.

The Large Cap Blend style ranks first out of the twelve fund styles as detailed in my <a href="http://blog.newconstructs.com/2012/10/11/investment-style-rankings-for-etfs-mutual-funds/">style rankings for ETFs and mutual funds</a>. It gets my Neutral rating, which is based on aggregation of ratings of 39 ETFs and 1,046 mutual funds in the Large Cap Blend style as of October 12, 2012. Prior reports on the best &amp; worst ETFs and mutual funds in every sector and style are <a href="http://www.newconstructs.com/nc/research/report/etf-and-fund-reports.htm">here</a>.

	Figures 1 and 2 show the five best and worst rated ETFs and mutual funds in the style. Not all Large Cap Blend style ETFs and mutual funds are created the same. The number of holdings varies widely (from 20 to 990), which creates drastically different investment implications and ratings. The best ETFs and mutual funds allocate more value to Attractive-or-better-rated stocks than the worst, which allocate too much value to Neutral-or-worse-rated stocks.

	To <a href="http://blog.newconstructs.com/2012/10/09/how-to-find-the-best-etfs-2/">identify the best</a> and <a href="http://blog.newconstructs.com/2012/04/05/how-to-avoid-the-worst-etfs/">avoid the worst</a> ETFs and mutual funds within the Large Cap Blend style, investors need a <a href="http://blog.newconstructs.com/2011/11/23/predictive-fund-rating-methodology/">predictive rating</a> based on (1) <a href="http://blog.newconstructs.com/2011/11/22/portfolio-management-rating-methodology/">stocks ratings</a> of the holdings and (2) the <a href="http://blog.newconstructs.com/2011/10/28/total-annual-costs-methodology/">all-in expenses</a> of each ETF and mutual fund. Investors need not rely on backward-looking ratings. My fund rating methodology is detailed <a href="http://blog.newconstructs.com/2011/11/23/predictive-fund-rating-methodology/">here</a>.

	Investors seeking exposure to the Large Cap Blend style should buy one of the Attractive-or-better rated ETFs or mutual funds from Figures 1 and 2.

	Get my ratings on all ETFs and mutual funds in this style on my free <a href="http://www.newconstructs.com/nc/fundscreener/fund-screener.htm?task=ACTION_CATEGORY_TYPE_SEARCH&amp;selectedTypes=0,1&amp;selectedCategoryIds=5d8cc7de114e11e1b62800188b533b34">mutual fund and ETF screener</a>.
<div>
	
		Figure 1: ETFs with the Best &amp; Worst Ratings &ndash; Top 5
	
		<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig1.jpg"><img alt="" class="aligncenter size-full wp-image-4799" height="246" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig1.jpg" title="LargeCapValueFig1" width="320" /></a>*
	
		Best ETFs exclude ETFs with NAV&rsquo;s less than $100 million.
	
		Sources: New Constructs, LLC and company filings
</div>

	Russell Growth at a Reasonable Price ETF (NYSE: <a class="ticker" href="/stock/grpc#NYSE">GRPC</a>) and ProShares UltraPro Dow30 (NYSE: <a class="ticker" href="/stock/udow#NYSE">UDOW</a>) are excluded from Figure 1 because their total net assets (TNA) are below $100 million and do not meet our liquidity standards.

	Figure 2: Mutual Funds with the Best &amp; Worst Ratings &ndash; Top 5
<div>
	
		<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig2.jpg"><img alt="" class="aligncenter size-full wp-image-4798" height="246" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig2.jpg" title="LargeCapValueFig2" width="320" /></a>
	
		* Best mutual funds exclude funds with NAV&rsquo;s less than 100 million.
	
		Sources: New Constructs, LLC and company filings
</div>

	PowerShares S&amp;P 500 High Quality Portfolio (NYSE: <a class="ticker" href="/stock/sphq#NYSE">SPHQ</a>) is my top-rated Large Cap Blend ETF and GMO Trust: GMO Quality Fund (NYSE: <a class="ticker" href="/stock/gqlox#NYSE">GQLOX</a>) is my top-rated Large Cap Blend mutual fund. Both earn an Attractive-or-better rating.

	PowerShares S&amp;P High Beta Portfolio (NYSE: <a class="ticker" href="/stock/sphb#NYSE">SPHB</a>) is my worst-rated Large Cap Blend ETF and ProFund: Bull ProFund (NYSE: BLPSX) is my worst-rated Large Cap Blend mutual fund. Both earn my Dangerous rating.

	Figure 3 shows that 448 out of the 1,599 stocks (over 51% of the total net assets) held by Large Cap Blend ETFs and mutual funds get an Attractive-or-better rating. However, only 2 out of 39 Large Cap Blend ETFs (less than 1% of total net assets) and 65 out of 1,046 Large Cap Blend mutual funds (less than 11% of total net assets) get an Attractive-or-better rating.

	The takeaways are: you cannot simply judge an ETF or a mutual fund by a style label or its top five holdings. ETFs and mutual funds with the same style label can have drastically different holdings that will translate into significantly different returns for your investment portfolio.
<div>
	
		Figure 3: Large Cap Blend Style Landscape For ETFs, Mutual Funds &amp; Stocks
</div>
<div>
	
		<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig3.jpg"><img alt="" class="aligncenter size-full wp-image-4795" height="156" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig3.jpg" title="LargeCapValueFig3" width="410" /></a>
	
		Sources: New Constructs, LLC and company filings
</div>

	As detailed in &ldquo;<a href="http://blog.newconstructs.com/2012/07/20/low-cost-funds-dupe-investors-2/">Cheap Funds Dupe Investors</a>&rdquo;, the fund industry offers many cheap funds but very few funds with high-quality stocks, or with what I call good <a href="http://blog.newconstructs.com/2011/11/22/portfolio-management-rating-methodology/">portfolio management</a>.

	Investors need to tread carefully when considering Large Cap Blend ETFs and mutual funds, as only 2 ETFs and 65 mutual funds in the Large Cap Blend style allocate enough value to Attractive-or-better-rated stocks to earn an Attractive rating. For example, here are two very different stocks that are both held by our worst mutual fund, ProFund: Bull ProFund (NYSE: BLPSX).

	McDonald&rsquo;s (NYSE: <a class="ticker" href="/stock/mcd#NYSE">MCD</a>) is one of my favorite stocks held by Large Cap Blend ETFs and mutual funds and earns my Very Attractive rating. MCD is a model of effective capital management with a return on invested capital (ROIC) of 16.7% in 2011. This is in the 87th percentile of all Russell 3000 companies as McDonald&rsquo;s has improved its ROIC every year for the past decade. In spite of the recession, McDonald&rsquo;s has become even more profitable and efficient with their capital in the last four years. McDonald&rsquo;s is not only a great company; it is also an attractive stock due to the market&rsquo;s pessimistic view of future cash flows. The company&rsquo;s current stock price (~$92.36) implies that after-tax profits (NOPAT) will permanently decrease by 10%. This seems unlikely given that the company has increased its profits by an average of 11% over the past decade. Low expectations and strong historical performance make McDonald&rsquo;s an excellent long candidate.

	Simon Property Group (NYSE: <a class="ticker" href="/stock/spg#NYSE">SPG</a>) is one of my least favorite stocks held by Large Cap Blend ETFs and mutual funds and earns my Very Dangerous rating. SPG has misleading earnings &ndash; its economic earnings are negative and declining while its reports accounting earnings are positive and increasing. During the 14 years in my model, the company has never generated positive economic earnings. Not only is SPG not profitable, it is also overvalued. To justify its current stock price (~$153.05), the company must increase profits by 12.3% compounded annually for 20 years. That is a lot of future value creation for a company that has never created value. Investors should avoid this stock.

	BLPSX holds shares in over 400 companies. Investors would be better off allocating their money to a stock like MCD and avoiding SPG altogether rather than naively diversifying across many stocks.

	Figures 4 and 5 show the rating landscape of all Large Cap Blend ETFs and mutual funds.

	Our <a href="http://blog.newconstructs.com/2012/10/11/investment-style-rankings-for-etfs-mutual-funds/">style rankings for ETFs and mutual funds</a> report ranks all styles and highlights those that offer the best investments.
<div>
	
		Figure 4: Separating the Best ETFs From the Worst Funds
</div>
<div>
	
		<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig4.jpg"><img alt="" class="aligncenter size-full wp-image-4794" height="245" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig4.jpg" title="LargeCapValueFig4" width="409" /></a>
	
		Sources: New Constructs, LLC and company filings
</div>
<div>
	
		Figure 5: Separating the Best Mutual Funds From the Worst Funds
</div>
<div>
	
		<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig5.jpg"><img alt="" class="aligncenter size-full wp-image-4793" height="245" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/LargeCapValueFig5.jpg" title="LargeCapValueFig5" width="409" /></a>
	
		Sources: New Constructs, LLC and company filings
</div>

	Review my <a href="http://www.newconstructs.com/nc/fundscreener/fund-screener.htm?task=ACTION_CATEGORY_TYPE_SEARCH&amp;selectedTypes=0,1&amp;selectedCategoryIds=5d8cc7de114e11e1b62800188b533b34">full list</a> of ratings and rankings along with reports on all 39 ETFs and 1,046 mutual funds in the Large Cap Blend style.

	Disclosure: I receive no compensation to write about any specific stock, sector, style or&nbsp;theme.

Maryland-based ProShares, the largest issuer of inverse and leveraged ETFs and sixth-largest U.S. issuer overall, announced share splits for six of its funds and reverse splits for 11 of its products.

ProShares will split four of its ETFs on a 2-for-1 basis. Those funds are as follows: The ProShares Ultra QQQ (NYSE: <a class="ticker" href="/stock/qld#NYSE">QLD</a>), the double-leveraged equivalent of the PowerShares QQQ (Nasdaq: <a class="ticker" href="/stock/qqq#Nasdaq">QQQ</a>), the ProShares UltraPro QQQ (Nasdaq: <a class="ticker" href="/stock/tqqq#Nasdaq">TQQQ</a>), which is the triple-leveraged answer to QQQ, the ProShares Ultra 20+ Year Treasury (NYSE: <a class="ticker" href="/stock/ubt#NYSE">UBT</a>) and the ProShares Ultra 7-10 Year Treasury (NYSE: <a class="ticker" href="/stock/ust#NYSE">UST</a>).

The ProShares UltraPro Dow30 (NYSE: <a class="ticker" href="/stock/udow#NYSE">UDOW</a>) and the ProShares UltraShort DJ-UBS Natural Gas (NYSE: <a class="ticker" href="/stock/kold#NYSE">KOLD</a>) will be split on a 3-for-1 basis, ProShares said in the statement.

All splits will apply to shareholders of record as of the close of the markets on May 8, 2012, payable after the close of the markets on May 10, 2012, the firm said. Tickers and CUSIPs will remain the same.

Six bearish ProShares funds will be split on a 1-for-4 basis. They are as follows: The ProShares UltraShort Brazil (NYSE: <a class="ticker" href="/stock/bzq#NYSE">BZQ</a>), the ProShares UltraShort Dow30 (NYSE: <a class="ticker" href="/stock/dxd#NYSE">DXD</a>), the ProShares UltraPro Short QQQ (Nasdaq: <a class="ticker" href="/stock/sqqq#Nasdaq">SQQQ</a>), the ProShares UltraPro Short MidCap400 (NYSE: <a class="ticker" href="/stock/smdd#NYSE">SMDD</a>), the ProShares UltraShort Consumer Services (NYSE: <a class="ticker" href="/stock/scc#NYSE">SCC</a>) and the ProShares UltraShort Russell1000 Growth (NYSE: <a class="ticker" href="/stock/sfk#NYSE">SFK</a>).

The following five funds will be split on a 1-for-5 basis: The ProShares UltraPro Short S&P500 (NYSE: <a class="ticker" href="/stock/spxu#NYSE">SPXU</a>), the ProShares UltraShort Silver (NYSE: <a class="ticker" href="/stock/zsl#NYSE">ZSL</a>), the ProShares UltraPro Short Russell2000 (NYSE: <a class="ticker" href="/stock/srty#NYSE">SRTY</a>), the ProShares Ultra DJ-UBS Natural Gas (NYSE: <a class="ticker" href="/stock/boil#NYSE">BOIL</a>) and the ProShares UltraShort Russell3000 (NYSE: <a class="ticker" href="/stock/twq#NYSE">TWQ</a>). 

In the case of BOIL, that product has plunged more than 69% year-to-date and more than 83% in the past six months amid slumping natural gas prices.

All reverse splits will apply to shareholders of record as of the close of the markets on May 10, 2012. The funds will trade at their post-split prices on May 11, 2012, ProShares said in the statement. Tickers and CUSIPS will remain the same.

ProShares had over $23.5 billion in assets under management at the end of March, according to data from the ETF Industry Association.

Caterpillar (NYSE: <a class="ticker" href="/stock/cat#NYSE">CAT</a>) is scheduled to report fourth-quarter 2011 results tomorrow, January 26, before the markets open. The heavy equipment maker reported strong third-quarter results driven by increased demand due continued economic growth. And the company's cash flow was at an all-time high. Investors will be hoping for more of the same this time around.

Analysts are looking for the company to report that its per-share earnings rose to $1.73 for the quarter and that revenue totaled $16.1 billion. That is up from $1.47 per share on $12.8 billion in the same period of last year. Note that the EPS estimate is up a penny from 60 days ago. And Caterpillar's per-share earnings have topped consensus estimates in five of the past six quarters.

For the full year, the consensus estimate calls for $6.81 per share earnings, an increase of 39.1% from the previous year. That EPS estimate has risen two cents over the past 60 days. And Caterpillar's revenues are expected to have increased 37.5% year over year to $58.6 billion.

The Company

This Peoria-based manufacturer of construction and mining equipment operates through three lines of businesses: Machinery, Engines and Financial Products. The Engines division produces diesel and natural gas engines and industrial turbines. The Financial Products division offers financing and insurance on its other products. The company was founded in 1925 and now is an S&P 500 component with a market cap of $68.7 billion.

During the three months that ended in December, the company completed acquisition of engine maker MWM, opened a manufacturing plant in Winston-Salem, invested $210 million in expansion in India, and appointed a new chief information officer.

Performance

Caterpillar has a long-term earnings per share growth forecast of 23.0%. Its PEG ratio is less than the industry average, and its operating margin is better than the industry average. It has a return on equity of 36.2% and dividend yield of 1.8%. Short interest is 2.4% of the float. Sixteen of 24 analysts who follow the stock rate it a Buy or Strong Buy; none recommend selling. Their mean price target on shares is 8.7% higher than the current share price.

The share price has jumped 16.5% in the past month to $106.29, and the 50-day moving average crossed above the 200-day moving average yesterday. The 52-week range is $67.54 and $166.55. The stock has outperformed competitors Deere & Co. (NYSE: <a class="ticker" href="/stock/de#NYSE">DE</a>) and CNH Global (NYSE: <a class="ticker" href="/stock/cnh#NYSE">CNH</a>) and the broader markets over the past year.

See also: <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/01/2256621/4-global-industrial-etfs-to-consider-now">Four Global Industrial ETFs to Consider Now</a>.

<div id="action-items">ACTION ITEMS:

Bullish: Investors interested in exchange traded funds invested in Caterpillar might want to consider the following trades:

<ul>
<li>ProShares UltraPro Dow30 (NYSE: <a class="ticker" href="/stock/udow#NYSE">UDOW</a>) is about 77% higher than the 52-week low.</li>
<li>Industrial Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xli#NYSE">XLI</a>) is more than 31% higher than the 52-week low.</li>
<li>Vanguard Industrials ETF (NYSE: <a class="ticker" href="/stock/vis#NYSE">VIS</a>) is about 30% higher than the 52-week low.</li>
<li>SPDR Dow Jones Industrial Average (NYSE: <a class="ticker" href="/stock/dia#NYSE">DIA</a>) is more than 27% higher than the 52-week low.</li>
</ul>

Bearish: Traders may prefer to consider these alternative positions in the same sector:

<ul>
<li>Manitowoc (NYSE: <a class="ticker" href="/stock/mtw#NYSE">MTW</a>) is up more than 117% from the 52-week low.</li>
<li>Terex (NYSE: <a class="ticker" href="/stock/tex#NYSE">TEX</a>) is up more than 107% from the 52-week low.</li>
<li>AGCO (NYSE: <a class="ticker" href="/stock/agco#NYSE">AGCO</a>) is up more than 70% from the 52-week low.</li>
</ul>

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.</div>

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