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Value Line ETFs
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About Value Line ETFs |
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Value Line ETFs Overview and forecast
Value Line ETFs try to pick stocks which they consider will outperform the index. Investors could be forgiven for thinking, when looking at the holdings, that the differences in funds tend to emphasize their similarities. These ETFs have followed the indices with a sort of predictability which would irritate any serious analyst. Their performances have been pretty similar.
There are two main players in the Value Line ETFs, Powershares and First Trust. The Value Line ETFs are a bit older than most other ETFs, and in their early days, they followed the "purist" ETF model, a spread of stocks, doing reasonably well in terms of prices.
The Value Line ETFs own model ran out of steam when the crash happened. In the bull market, their performance was quite respectable. They made money, their prices went up. Given a total meltdown, however, finding "better value"
in a market which was almost completely out of ideas couldn't have been easy.
The clueless market did nothing for the Value Line ETFs. They had their own nosedive, and their subsequent recovery was almost exactly in line with the markets. Their returns have picked up a bit, but nobody could say they ever escaped the machinery through their strategies.
Short term (6 months)
The basic charts for the Value Line ETFs make interesting reading. Some of these ETFs have seem to have conspicuous hot and cold zones in their trading, with volumes quite drastically variable at times. That may relate to specific big purchases, but these purchases are notably out of character.
The Value Line ETFs aren't giants, by any standards, as traders, but their price moves in the second quarter of 2009 would have definitely made some money for someone. That seems to be a feature of ETFs, they do more as traders in their lower price ranges. In the short term, if the US has now purged itself of the shocks to the markets of recent times, they look positive.
Medium term (2 years)
They don't, however, look too convincing in the medium term. There are plenty of other investments around, and the Value Line ETFs aren't showing much differentiation. They're not particularly big capital funds, either, and that tends to reduce the ability to achieve big capital volumes.
If the market hasn't been going nuts over the Value Line ETFs, it would be because the perception of Value Line as a strategy hasn't particularly made an impact in terms of performance. For a market trying to claw back some money after the asteroid strike of 2008-9, that's not a selling point. Add to that low returns, and there's not a lot to like. You'd need to be convinced of upside value in these funds to be enthusiastic as an investor.
Long term (5 years)
If this analysis has seemed rather short on enthusiasm, it's because the Value Line ETFs don't do much, relative to their indices, and do it much too often. In theory, they are capable of achieving good solid returns, and some of the older Value Line ETFs have done that in the past. In the new investment market, which has been temporarily stymied by the crash, they just don't look like winners.
Any evaluation of the long term for the Value Line ETFs, with their investment strategy, has to ask where they intend to go in terms of their own market strategy. They can be given some tolerance for surviving the crash, but just following the indices around and producing quite minor returns isn't good enough. That approach has to change, to make the long term view of the Value Line ETFs even interesting.
Qualifiers to projections
Their past performance, pre crash, was OK, but not spectacular. They will need to sell to the markets a much more dynamic image of themselves. Their presence could be improved by more capital and more basic grunt in their
strategy. The global market is a highly fluid, neurotic, creature, and its attention is easily distracted, with money moving very rapidly in and out of a range of markets. That means the purely long view, as a strategy, is a moot vehicle, in terms of value assessment. If that sounds like the Value Line ETFs could become far more active, it's a pretty obvious evolution. It might work, though, as a selling point, and boost the Value Line ETFs considerably.
If they evolve, and develop the ability to operate on the value line principle on short term ranges, they'll be better suited to a resurgent market. If they don't, they'll be a Moms and Pops operation, with all the thin coverage that concept conveys. It also means their appeal to traders will be lower. Prices matter, and being first on the chopping block when capital moves doesn't improve their prospects.
So far they've proven that their prices can rebound, and that traders can work with them on their lower ranges. This is a new world, however, for the markets, and it's unlikely that just doing more of the same will appeal enough to boost their prices. The Value Line ETFs should consider their own values the same way they assess others.
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Last Updated on: 2010-01-14 02:03:40 |
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