Top ETF Review

for
Investing in Asia
Index Fund Performance for
DBJP, DXJ and CQQQ
Versus Mature and Emerging Markets

A Market Brief
by

Steven Kim

MintKit Investing
www.mintkit.com

Disclaimer This brief is provided as a resource for information and education.

The contents reflect personal views and should not be construed as
recommendations to any investor in particular. Each investor has to conduct
due diligence and design an agenda tailored to individual circumstances.

2015 MintKit.com

Summary
A review of the top picks in the exchange traded fund (ETF) category is a prudent
approach to investing in Asia. On the whole, the stock markets in the budding regions of
the world have a way of soaring and plunging far more than their peers in the mature
countries. This hallmark applies to the bourses of Asia as much as anywhere else.
Unfortunately, the emerging regions as a whole have fared a lot worse than the U.S.
market in recent years. Amid the widespread funk, however, Japan and China have turned
into a couple of hotspots on the global stage.
Over the past three years, the best performance was turned in by the MSCI Japan US
Dollar Hedged Index fund, which trades in the U.S. under the ticker symbol of DBJP. The
total return for the dynamo, given by the sum of capital gain plus dividend yield, came out
to an annual gain of 28.15% on average over a 3-year period ending in spring 2015.
During the same timespan, the runner-up was the WisdomTree Japan Hedged Equity ETF.
The index fund, which runs under the banner of DXJ, racked up 26.54% a year on
average.
Meanwhile the third slot was nabbed by the Guggenheim China Technology ETF, which
sports the call sign of CQQQ. The tracking vehicle scored an average gain of 25.92% a
year.
By way of comparison, the flagship fund within the mature economies takes the form of
SPY. The beacon chalked up an advance of 18.11% a year over the same interval.
Meanwhile the heavyweight for the emerging markets lies in VWO, which eked out a mere
4.94% per annum.
From a different slant, a graphic survey of the price action over a longer time frame
provides a wholesome view of the markets. For this purpose, a fitting window is a span of
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half a decade, which is long enough to cover the crash of the stock market in the autumn
of 2011 as well as the recovery in the years to follow.
The visual plot serves to highlight the advantage of SPY in terms of ample growth coupled
with muted risk over the entire stretch. More precisely, the flagship ETF turned in an
admirable showing compared to its rivals in terms of risk-adjusted growth over the course
of half a decade.

* * *

Keywords:
Asia, ETF, Exchange Traded Funds, Index, Fund, Top, Risk, Return, Stocks, Market,
Japan, China, Volatility, DBJP, DXJ, CQQQ. SPY, VWO

* * *

A review of the top peformers in the field of exchange traded funds paves the way for
investing in Asia. From a larger stance, this type of asset represents a robust and handy
vehicle for gaining exposure to disparate markets ranging from bonds and equities to
currencies and commodities.
Whatever the target domain, the worldly investor ought to start by culling the best
candidates in terms of growth as well as risk. For a balanced view of performance, the
window of evaluation should cover a timespan in which the market has experienced a
boom as well as a bust. The prime candidates can then be compared in terms of the return
on investment tempered by the scope of volatility.
From a pragmatic pose, another crucial issue lies in the level of liquidity required for the
investor to enter and exit the market in a timely fashion. That is, the volume of transactions
should be high enough to enable the nimble player to buy and sell shares without affecting
the price in an adverse fashion by a gross amount.
As a backdrop, the vale of exchange traded funds has enjoyed explosive growth since the
turn of the millennium. Amid the ferment, the landscape abounds with newcomers that
have made their debut only in recent years. In that case, insisting on a lengthy history has
the dour effect of eliminating a lot of entrants from further consideration.
On one hand, a long track record provides a wealth of data for a thorough survey of
performance. On the other hand, the turnout in recent years is likely to pose a better guide
to the prospects going forward than the record of the distant past. Given the mashup of
concerns, a window of three years seems like a fitting compromise between the opposing
factors of plentiful data versus high relevance.

As with the budding regions of the world in general, the bourses of Asia are wont to thrash
around a lot more than their brethren in America. For this reason, the instability of the
markets in the lusty region plays an even larger role in sizing up an ETF than is the case
for a mature economy such as the U.S.
On the whole, the benchmarks for the emerging nations have been unable to recover fully
from the pounding they received during the financial crisis of 2008 and its aftermath. As a
result, the bulk of the jejune markets have lagged behind the U.S. bourse for years on end.
Despite the poor showing of the nascent countries as a whole, however, there are a few
bright spots within the drab picture. In particular, a number of Asian bourses have
outpaced their rivals elsewhere despite the inevitable chain of setbacks that afflict any
market from time to time. A showcase on the downside cropped up with the smashup of
the emerging regions sparked by the crash of the American bourse in the autumn of 2011.
As we noted earlier, the adept investor has to consider the erratic motion of the vehicles
along the way as well as the overall advance over the entire stretch. For this purpose, a
graphic display of the price action provides an intuitive sense of the turmoil in the
marketplace. Furthermore, a concurrent plot of the vessels serves to highlight their
respective drawcards and drawbacks.
In brief, a meaningful tally of performance requires a track record that covers an ample
timespan. In that case, a period of three years is especially apt for the litter of exchange
traded funds that have come to life of late. The duration represents a tradeoff between the
rich lode of a long history and the close relevance of the recent past.
For a rounded view of performance, however, the window of evaluation ought to cover an
upsurge as well as a smackdown of the market. More precisely, a stretch of half a decade
is enough in our case to cover a crash of the bourse as well as its subsequent recovery.
In profiling the candidates, a graphic scan of the price action can yield a visceral grasp of
the markets. For this reason, a standard tool of the serious investor is a prismatic chart
that lays out the relative performance of the assets under consideration.
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Selection Criteria
As a prelude to investing in any type of asset, the wise investor has to balance the payoff
in due course against the risk along the way. For this purpose, the decision maker has
scant choice but to look in the opposite direction; that is, the experience of the past. In
digesting the historical record, a plain metric lies in the total return on investment by way of
capital gains plus dividend payouts.
A second measure of merit deals with the flightiness of the assets during the swells and
swoons in the marketplace. In this context, an apt yardstick lies in the extent of the price
swings for each entrant in comparison to the stock market at large.
In general, the two types of criteria namely, payoff and wobble are closely intertwined.
An increase in the former usually goes hand in hand with an upturn in the latter. In that
case, the mindful player has to strike a balance between the two traits in light of personal
circumstances ranging from financial moxie to risk tolerance.

Impact of Overhead on Fund Performance

From a different angle, the burden of maintenance fees plays a vital role in the
performance of a communal pool. Other things being equal, a lean vessel that requires
only a small outlay for overhead is wont to outpace a lumbering tub weighed down by a big
load.
In practice, though, the millstone of administrative charges may be ignored in an initial
screening by the busy investor pressed for time. The main reason for giving short shrift to
the expense stems from the fact that the drain of maintenance fees is already reflected in
the overall performance of the index fund.
More precisely, the overhead required to run a communal pool shows up as a reduction in
the level of capital gains, dividend payouts, or both. In this way, the total return on
investment already takes into account the grind of maintenance fees.

As a result, the overhead can be viewed as a secondary trait in gauging the performance
of the fund. In that case, the maintenance charge may be treated as a tie-breaker in
weighing the prospects for the future amongst two or more candidates of otherwise similar
mettle. To sum up: whatever the payoff might have been in the past, an index fund
hampered by a hefty load is more likely than not to lag behind a rival flaunting a leaner
setup.
In the early stages of the vetting process, then, the savvy investor has more meaty issues
to consider. For this reason, the prober can gloss over the issue of maintenance fees
during the initial phase of sizing up an index fund.

Matchup of Risk and Return

Since the purpose of an investment is to earn a profit, a prospective asset ought to be

fruitful as well as hardy. These generic features apply to tangible goods as well as virtual
wares. An example of the former lies in commodities or real estate, while an instance of
the latter involves currencies or index funds.
In order to pick the best vehicle for a zesty portfolio, the first step is to identify the frontrunners in the derby. In scoring the candidates, the key criteria include the return on
investment along with the volatility in price.
As we noted earlier, the duo of properties are interlinked rather than independent. To wit,
an index fund on a growth streak is prone to be more flighty than a plodding rig in the slow
lane.
In sorting out the entwined traits, a straightforward tack is to begin with the leading vessels
in terms of growth. Then the other factors such as risk and liquidity can be brought to bear
on the appraisal.
Since the eve of the millennium, the field of exchange traded funds has grown at a furious
rate. Along with the upthrow, a host of entrants have shown up only within the past few
years. For this reason, the saplings have little to offer by way of track records.
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On one hand, a large trove of data can serve as the fodder for a comprehensive survey of
the market. On the other hand, an investor who insists on a long history will thereby
exclude scores of fledgling funds.
Given this background, the mindful player has to trade off the amount of data against the
number of candidates. In that case, a track record of three years appears to be a suitable
compromise between the conflicting factors.

Transaction Volume

In picking the best assets for investment, a second constraint involves the liquidity of the
market. A sluggish niche marked by low turnover is a turnoff for the nimble investor who
wants to enter and exit the market in a timely fashion. As a defensive measure, a volume
of 10,000 shares a day seems like a suitable threshold on the low side.

Bane of Leverage

A third restraint concerns the use of leverage, or lack of such. On a positive note, a levered
scheme can snag an outsize gain when the market is on a roll. On the flip side, though, a
high level of gearing results in a crushing loss during the downstroke that duly follows any
upcast.
As a practical matter, the uptake of leverage opens up a can of worms that is anathema to
the genuine investor bent on building up a nest egg over the long haul. The bogeys at
hand include obvious threats as well as obscure snags.
To begin with, a bugbear of modest size involves the usual notion of risk in the financial
forum. The use of leverage gives rise to wild swings to the upside as well as downside.
The thrashing of prices shows up in all time frames, from less than a week to more than a
decade. The manic flailing due to a jacked-up position is a headache that the sober
investor does not need to put up with.

From a larger stance, though, the spasm of prices is a minor nuisance compared to the
specter of a wipeout. Yet the prospect of utter ruin is ignored by the mass of players in the
marketplace. The careless folks who brush aside the lethal threat run the gamut from
casual amateurs to gung-ho professionals.
For their part, the victims of a blowup rarely manage to recognize the true cause of the
mishap even after the fact. In most cases, the stunned souls walk around in a daze and
chalk up the fiasco to a wanton act of providence. In reality, though, such a knockout is the
inevitable outgrowth of a reckless wager.
For this reason, the embrace of leverage is a suicidal move that ends up in grief sooner or
later. In some cases, the gearing results in the shrinkage of wealth in slow motion. A good
example involves a communal pool in which the operators purchase a series of stock
options in a flaky effort to magnify the impact of a rise in price in the target market.
In practice, however, the bulk of options expire in due course without yielding any kind of
payout to the buyers. More generally, the purchase of turbocharged gizmos is a losing
game for myriads of players in the potlatch of finance.
The foul turnout is a universal fate that befalls all manner of gamesters in the arena. A
common example involves the purchase of call options in order to crank up the returns on
a stock index. Sadly, though, the punters in search of quick profits are headed for the
poorhouse sooner rather than later.
Depending on the context, the operator of a communal fund may opt to take up leverage in
other ways. An example lies in a customized loan from a commercial bank, or a
standardized contract in the futures market. On the bum side, though, the levered ploy is
sure to end up in tears before long.
The threat of a total wipeout is far greater than most people reckon. To underscore the
scope of the problem, we turn to the financial flap of 2008 along with its aftershock. In the
throes of the calamity, every major benchmark of the stock market lost more than half the
value it had reached upon its prior peak.

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In that case, a modicum of leverage by a mere factor of two resulted in the obliteration of
the entire principal from the outset, and then some. In certain fields such as the futures
market, a ramp-up by a factor of 10 is par for the course. Meanwhile other domains such
as currency trading allow the gamblers to take up leverage by a factor of 50, or in some
cases 100 or even higher. As we have seen, though, even a modest amount of gearing is
the path to certain doom.
From a larger stance, a glut of risk is the main cause of the incessant hail of blowups in the
financial tract. A fine example involves the swarm of hedge funds that flit around the
marketplace. In this patch, even the elite outfits namely, the lucky bettors that have
managed to squirm their way into the top tier of heavyweights are destined to fall flat and
die off in droves.
In fact a series of rigorous and impartial studies have shown that the top tier of hedge
funds as a group perform the astounding feat of losing money over time. Moreover, the
shoddy record does not even take into account the shrinkage of capital due to the custom
of profit sharing by the custodians whenever the holdings are carried higher by the
spurious spurts that arise amid the endless squalls in the marketplace (Kim, 2011). To put
things simply, the gross return on investment let alone the net profit trails behind the
performance of a wad of cash stuffed under a mattress.
Given the hazards both blatant and subtle, taking up leverage is an assured way to lose
out over the long range. For this reason, we will exclude any vehicle that resorts to gearing
in a rash attempt to pump up the returns on investment. In other words, the proper gigs for
a sound program of investment rely on the honest tack of tracking the target market in a
forthright way without bulking up on the steroids of leverage.

Benchmarks for ETF Comparison

Whatever the target domain may be, an exchange traded fund happens to be a security
listed on the bourse. For this reason, a sensible move for the canny investor is to compare
any type of equity fund against the performance of the stock market at large.

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In the equity market, the benchmark of choice lies in a yardstick compiled by a financial
advisory named Standard & Poors Corporation, an outfit which also goes by the nickname
of S&P. The yardstick of 500 heavyweights happens to be the most popular proxy amongst
the professionals in the field, be they active practitioners or passive researchers.
The S&P index is a hypothetical construct that represents the average price of the
constituent stocks, after weighting each datum by the relative size of the equitys valuation
on the bourse. The flagship benchmark serves as a virtual yardstick for gauging the status
of the stock market rather than posing as a tangible vehicle for investing any moola.
On the upside, though, the chief index has given rise to pragmatic offerings in the form of
communal pools. The paragon in the field is the exchange traded fund which trades on the
U.S. bourse under the ticker symbol of SPY.
The companies covered by the S&P index are giant concerns in the real economy. Given
the size and hardiness of the constituent firms, the stocks within the benchmark are wont
to be more demure than most of their brethren on the bourse.
As a consequence, the composite index of the big fish also tends to be more sedate than
its lesser rivals in the form of the junior yardsticks trained on the small fry. The samples in
the latter category span the rainbow from technology ventures to emerging markets.
Despite their listing on the U.S. bourse, however, the firms within the S&P benchmark
have been raking in a growing fraction of their profits from the blooming markets of the
world for decades on end. For this reason, the touchstone reflects to some extent the
fortunes of the emerging countries as well.
In line with its usual behavior, SPY turned out to be the least jerky amongst the vehicles
examined here. In particular, the flagship fund in recent years tramped higher at a steady
pace while suffering only a sputter of minor setbacks.
Another beacon for comparison is found in a benchmark of the emerging markets. For this
purpose, a stalwart lies in the Vanguard Emerging Markets fund which trades in the U.S.
under the handle of VWO.
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Unfortunately, the latter fund has turned in a crummy showing in recent years. The lagger
wallowed in the doldrums and made scarcely any progress over the entire stretch of half a
decade.

Top 3 Index Funds for Asia

In the world of communal pools, a venerable resource lies in an information provider
named Morningstar. At the Web site maintained by the market watcher, one feature is a
basic list of exchange traded funds. The rundown of the entrants includes the total return
over the past few years as well as a measure of popularity in terms of the volume of
trading.
Over the course of three years ending in spring 2015, the best score was turned in by the
MSCI Japan US Dollar Hedged Index. The index fund trades in the U.S. under the ticker
symbol of DBJP. The total return, given by the sum of capital gain and dividend yield, came
out to 28.15% per annum.
The goal of the underlying index is to match the performance of the local bourse while
neutralizing the impact of the currency market. That is, the benchmark tracks the stocks
but counters the movements of the Japanese yen against the U.S. dollar. In this way, the
yardstick maintains a hedge against the fluctuations in the value of the local currency vis-vis the greenback.
We should note here that the purpose of the countermeasure is to combat the convulsion
of exchange rates. Since the objective is to fend off the risk due to turbulence in the
currency market, the term "hedge" happens to be an upright and valid use of the word.
The usage here stands in stark contrast to a shady practice in the circus of finance, where
the same epithet serves as a euphemism that conveys precisely the opposite meaning.
Behind the seemingly innocent label, a hedged scheme is usually nothing more than a
risky bet.

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The dangers in store for the unwary investor are thrown into sharp relief by the cream of
the crop in the hedge fund game. The custom of the dippy pools is to make waves for a
while by latching onto the latest fad fancied by the madding crowd. When the currents in
the marketplace flip around, as they always do at some point, the rabid speculators lose
gobs of money and bite the dust at the awesome rate of one-half of their number every
couple of years (Kim, 2011).
Meanwhile the full force of the blowout is borne by the hapless clients while the hustlers in
charge of the pools get away scot-free, taking with them the spoils they snatched along the
way in the name of perfomance fees, at times to the tune of billions of dollars a year per
operator. In a flurry of razzmatazz and legerdemain, the cash cows in the form of betting
pools funded by the patrons are thus squeezed and snarfed until they croak.
To return to our main theme, the runner-up in the race during the 3-year span was the
WisdomTree Japan Hedged Equity ETF. The tracking fund trades in the U.S. under the
ticker symbol of DXJ.
The goal of the vehicle is to replicate the performance of the WisdomTree Japan Hedged
Equity Index (WisdomTree, 2015). The underlying yardstick covers a bunch of dividendpaying firms listed on the Tokyo exchange which draw 20% or more of their revenues from
overseas markets. In this way, the benchmark deals with businesses that boast at least a
modicum of engagement with foreign markets.
As with the previous fund, a notable feature of DXJ is the mission of tracking the Japanese
bourse while squelching the churn of the currency market. That is, the gig hedges against
the prance of the Japanese yen relative to the U.S. dollar. The namesake fund racked up a
gain of 26.54% a year on average.
To move on, the bronze medal was bagged by the Guggenheim China Technology ETF,
which features the byname of CQQQ. The tracking fund seeks to match the performance,
before the cutout of fees and expenses, of the AlphaShares China Technology Index.
The underlying benchmark tracks the stocks of the public companies within the information
technology sector which are based in mainland China as well as Hong Kong and Macau.
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The index fund invests at least 80% of its capital in common stock including the securities
in the form of depositary receipts that trade on the U.S. bourse. The return on investment
for CQQQ was 25.92% a year on average.
By way of comparison, the flagship benchmark in the form of SPY chalked up an advance
of 18.11% a year over the same period. Unfortunately, the corresponding figure for the
emerging markets as embodied by VWO was a meager gain of 4.94% per annum
(Morningstar, 2015).
As we have seen, a numeric score provides a direct and compact way to summarize the
performance of the contestants. On the other hand, a graphic display of the price action
provides the savvy investor with further insights on the fiber of the markets.

Graphic View of Performance

A financial market does not move in a straight line. For this reason, a lucid survey of any
asset has to consider the trajectory over an ample stretch that includes an upthrow as well
as a breakdown of the market.
In the modern era, a watershed cropped up with the financial bust of 2008 and its
aftermath. Given this backdrop, the behavior of motley assets during and after the shocker
provides a telling portrait of performance.
To grok a market of any sort, a good point of departure lies in the price action in graphic
form. Furthermore, a simultaneous plot of the assets in play serves to highlight the relative
merits of the contestants.
In line with these precepts, the chart below has been sourced from Yahoo Finance, the
most popular site for investors. The exhibit spans a window of 5 years ending on 8 May
2015 (uk.finance.yahoo.com).
As the legend on the chart explains, the blue curve depicts the path of VWO throughout
the interval. Moreover, the portion of the image below this line is shaded in light blue.
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The trail of the index fund shows that the emerging markets bounced around over the past
half-decade without making much headway. In the real economy, the budding countries
generate the lions share of growth in the world economy. On the other hand, the paltry
advance of the equity market in the budding regions reflects the jitters of international
investors throughout the entire stretch.

Meanwhile the green arc portrays the course of the SPY fund over the same timespan. On
the left side of the chart, the slump of the tracking fund mirrors the crash of the stock
market as a whole in the autumn of 2011.
The American pacer endured another upset of a milder sort in spring 2012. After that
mishap, though, SPY trudged higher with remarkable consistency. Partly as a result, the
standard bearer chalked up an admirable return of roughly 80% over the entire span of five
years.
Moving on, the purple arc denotes the path of DXJ throughout the interval. The index fund
struggled during the first half of the period covered by the chart above. The initial flailing
was followed by a big spurt starting at the end of 2012 and lasting half a year. After the

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uplift, the tracking fund floundered for more than a year before pressing ahead by a
modest amount over the past year.
The patchy performance of DXJ highlights the import of a graphic view of the price action.
As an example, the jaunty turnout of the index fund over the past 3 years can be explained
in large part by its zippy recovery after a dismal streak over the preceding couple of years.
From a different stance, the equities of technology firms tend to be more flighty than the
bourse as a whole. For this reason, the tech-laden pool in the form of CQQQ faced a
rougher ride than the DXJ fund whose ambit covers diverse sectors of the economy.
As we can see from the tan curve, CQQQ surged for a year at the beginning of the 5-year
span. Then the go-getter broke down and flailed around for a year until the summer of
2012.
After forming a trough, the tech fund powered higher in the years to follow. In due course,
the comeback kid notched up a capital gain in excess of 60% over the entire stretch of half
a decade.
We turn at last to the red squiggle that depicts the path of DBJP following its inception in
June 2011. Since the fund is less than 5 years old, its track record does not span the entire
stretch covered by the chart above. For ease of comparison, though, the trace for DBJP
upon its rollout begins at the same spot on the foregoing display as the mark for VWO on
that date.
For the most part, DBJP moved in sync with its compatriot in the form of DXJ. If the
younger fund had made its debut on the bourse during or before spring 2010, its overall
performance may well have been similar to that of its older rival.
Due to a late start, however, DBJP escaped the whomping that it would have encountered
for about a year beginning in spring 2010 in the same way as DXJ did during that grueling
spell. As we saw in the previous section, however, the youngling did manage to edge out
the elder by a small margin over the last three years.

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In these ways, a graphic spread of the price action can provide a gut feeling for the
marketplace. For this reason, an indispensable tool for the decision maker lies in a
chromatic chart that portrays the relative motion of the assets under consideration over a
judicious timespan.

Roundup of Top Index Funds for Asia

The stock markets in the budding regions have a way of soaring and diving to a greater
extent than their counterparts in the mature countries. This property applies to the bourses
of Asia as much as any other locale.
Where the mature regions are concerned, the role of the S&P index is to track the stocks
of 500 titans listed on the U.S. bourse. The companies within the pantheon are stalwarts of
the real economy. Due to the size and robustness of the firms, their equities tend to be
more demure than the rest of the entries in the stock market.
Given the relative stability of the gigantic stocks covered by the flagship index, the
yardstick as a whole tends to be more restrained than its counterparts in other countries.
Naturally, the same pattern of relative shakiness shows up in the communal pools that
track their respective benchmarks.
In the modern era, the companies within the S&P yardstick earn a growing share of their
profits from the booming markets of the world. For this reason, the chief benchmark
reflects in part the lot of the emerging regions. In other words, the American icon does not
reflect only the goings-on in the U.S. economy.
Based on an eyeball scan of the graphic chart, SPY was clearly the least volatile of the
vehicles examined here. By contrast, the touchstone for the emerging markets in the form
of VWO wallowed in the doldrums and made scarcely any progress over the entire stretch
of half a decade.

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On the other hand, DXJ bounced around a great deal but managed to sprint higher during
the last three years. Meanwhile, CQQQ thrashed around even more then turned in a
rousing performance after the summer of 2012.
On the other hand, DPXJ was a special case due to its bounded history following its rollout
in June 2011. Since its launch, the newcomer moved largely in tune with DXJ but was able
to rack up a slightly better score than its older peer during the last three years.
In summary, there is much to be said for a graphic survey of the price action over a longish
spell as a complement to a numeric tally of performance. For this purpose, a fitting
timespan is a window of half a decade which is long enough to cover the crash of the stock
market in autumn 2011 followed by its recovery in the years to follow.
The graphic display over the longer stretch reveals the advantage of SPY in terms of
ample growth coupled with modest risk during the entire interval. Compared to its frisky
rivals, the flagship ETF turned in a laudable performance in terms of risk-adjusted growth
over the full stretch of half a decade.

Tips and Caveats

A fundamental issue that lies beyond the scope of this report concerns the lack of a
panacea for the investor. Given the absence of a cure-all, each player has to size up the
potential assets in light of their own circumstances.
An example of the latter lies in the level of tolerance for risk. Another sample involves the
way in which a prospective widget serves to complement the other holdings within a given
portfolio.
Amid the diversity of needs and wants amongst investors, the best choice for one person
could well be a lousy pick for someone else. To bring up a counterpoint, a particular player
might decide that a lively rate of growth is not worth the headache brought on by the
severe thresh of prices.

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From a different angle, the heedful investor has to consult multiple sources of information
in order to obtain a robust and rounded view of any asset under consideration. A case in
point is a confirmation of historical data as well as the current status of a communal pool.
Another instance is the long-range outlook for the target market tracked by an index fund.
The field of exchange traded funds is still in its infancy. Due to the callow state of affairs,
the information available on the Web including the data proffered by renowned portals
such as Yahoo Finance is often beset by a raft of flaws. A case in point is a batch of
performance figures which turns out to be incorrect, inconsistent and/or misleading.

Further Information
In sizing up an asset for investment in any field, the prospective gain has to be weighed
against the attendant risk. The key factors for consideration are surveyed in a primer titled
Financial Risk (Mintkit Core, 2015b).
Another resource examines the tradeoff between risk and return in the context of a
practical application. The case study deals with the evaluation of the top 10 exchange
traded funds slated for growth in the global economy (Mintkit Hub, 2011).
In an effort to pump up the returns on investment, myriads of souls turn to managed pools
such as mutual funds and hedge funds. In the aggregate, however, the experience of the
hopefuls has been disappointing and even ruinous.
From a broader view, it makes scant difference whether the investors choose to trade for
their own account or hand over their savings to the professionals: the payoff for the mass
of players has a way of lagging the benchmarks of the market. The crummy turnout
springs from a host of factors ranging from the biased nature of the yardsticks to the
counterproductive moves of the gamesters.
On the upside, though, theres a simple way to surpass the bulk of actors in the stock
market. In fact, the gainful objective is far from daunting or even taxing.

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The name of the game is to earn more by doing less. By turning to an index fund that stays
clear of excess risk including the uptake of leverage, the wily investor can outpace the
competition without breaking a sweat. A primer titled How to Beat the Investment Funds
gives the lowdown on growth and risk for index funds in general and exchange traded
funds in particular (Mintkit Core, 2015c).
To revisit a related topic, the field of exchange traded funds has enjoyed explosive growth
since the eve of the millennium. Amid the pother, the information on the communal pools
can be problematic at times.
To bring up an example, the data may be inconsistent due to the existence of alternative
definitions within the financial community. A hoary sample lies in a measure of risk known
as the Sharpe ratio, which underwent some modification during the second half of the 20 th
century (Wikipedia, 2015).
Another source of confusion stems from a dearth of explanation concerning the
terminology bandied about. For instance, the phrase return on investment could refer to
the capital gain for an asset, or the total return given by the sum of the capital gain plus
dividend yield. In that case, an independent confirmation may be the only way to sort out
the ambiguity.

Example of Consistent Data

To bring up a concrete example, we return to the best vehicle identified in this report.
According to Morningstar (2015), the DBJP fund racked up a profit of 28.15% over the
course of 3 years ending on Friday, 8 May 2015.
We can compare the datum against the information given by Yahoo Finance, the most
popular portal amongst the investing public. For this purpose, we will calculate two types of
payoff based on the historical data provided by the Web site.
To begin with, we are told that the closing price of DBJP on 8 May 2012 was $23.50 per
share (Yahoo Finance, 2015a). Three years later, the corresponding value was $43.11.
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Based on the last two figures, we can infer that the price of the stock rose by a mite over
83.4% over the span of three years. In that case, the compound rate of return was 22.4%
a year on average.
On the other hand, what happens if we take into account the stream of dividends thrown
off by the stock? For starters, we know that the actual price of the equity at the end of the
period was $43.11.
The same portal also presents the corresponding price in the past when the payout of
dividends has been considered. Thanks to this feature, we learn that the adjusted price
at the beginning of the timespan after accounting for the dividend stream as well as the
capital gain was equivalent to $20.44 on 8 May 2012.
Based on the last two paragraphs, we infer that the total return amounted to some 110.9%
over the entire stretch. From the latter figure, we deduce that the compound rate of annual
growth came out to 28.2% a year on average.
The latter value happens to be compatible with the figure of 28.15% proclaimed by
Morningstar. Fortunately, the data from the two sources happen to be consistent in this
particular case. Furthermore, we may conclude that the factoid from Morningstar, labeled
simply as the 3-year return, in fact refers to the total return rather than just the capital
gain during the evaluation window of three years.

Showcase of Clashing Information

In line with earlier remarks, the information from one or more sources may be inconsistent.
A case in point is the disparity between the graphic output and the numeric data for the
leading ETF on the bourse over the span of five years.
We begin by noting the value of the SPY fund at the end of the evaluation window.
According to Yahoo Finance, the closing price for the pacesetter on 8 May 2015 was
$211.62.

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As it happens, the same day five years earlier fell on a Saturday. In that case, the
prevailing price at that point was the closing price on the previous day; namely, 7 May
2010. According to the portal, the value of SPY at the end of that trading week was
$111.26. Moreover, the adjusted price of the stock at that point was $100.49 (Yahoo
Finance, 2015b).
In that case, the expansion factor over the entire stretch based on the actual values of the
price level on the bourse is given by $211.62/$111.26; the quotient comes out to 1.902.
That is, the capital gain for SPY over the entire stretch was 90.2%.
By comparison, the total return is given by the terminal price divided by the adjusted price
at the outset; that is, $211.62/$100.49, which amounts to some 2.106. Put another way,
the total return for SPY over the same timespan was 110.6%.
Unhappily, though, neither of the foregoing returns on investment corresponds to the
outcome on the 5-year chart presented earlier in this report. From the graphic image, we
would infer that the payoff for SPY over the 5-year window was around 80%, plus or minus
1 or 2 percent. The latter result differs by a significant amount from the capital gain of
90.2% that we calculated a couple of paragraphs earlier. The gap is of course even bigger
in the case of the total return of 110.6% that we reckoned for the same timespan.
This cameo spotlights the fact that the results from a single portal can be incompatible with
each other. It goes without saying, then, that the problem is even worse when it comes to
the consistency or lack of such of the information supplied by a multiplicity of sources.
One would surmise that the dope would be consistent at least in the case of SPY, the big
kahuna within the entire realm of index funds. Yet even this primo is subject to mishandling
and misrepresentation in the zany world of exchange traded funds.
To recap, the data available on exchange traded funds is often patchy, faulty and/or
misleading. These sinkholes are examined further in an article on Cruddy Information on
Exchange Traded Funds (Mintkit Core, 2015a).

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The same survey provides a battery of defensive moves for the adroit investor. A solid
grasp of the pitfalls and safeguards lays the foundation for building up a robust program of
investment in order to tap into the top markets of Asia or any other region.

References
Kim, S. H. Wildcats of Finance. MintKit Press: MintKit.com, 2011.
http://www.mintkit.com/Wildcats-of-Finance tapped 2015/5/9.
MintKit Core. Cruddy Information on Exchange Traded Funds.
http://www.mintkit.com/cruddy-information-exchange-traded-funds tapped 2015a/5/22.
MintKit Core. Financial Risk. http://www.mintkit.com/risk tapped 2015b/5/22.
MintKit Core. How to Beat the Investment Funds. http://www.mintkit.com/beatinvestment-funds tapped 2015c/5/22.
MintKit Hub. Top 10 ETF List for Growth Performance, Risk and Cost. 2011.
http://w.mintkit.com/2011/02/top-10-etf-list-for-growth-performance.html tapped
2015/5/11.
Morningstar. ETF Returns. Data through 2015/5/8.
http://news.morningstar.com/etf/Lists/ETFReturns.html tapped 2015/5/10.
Yahoo Finance. Deutsche X-trackers MSCI Japan Hedged Eq (DBJP) Historical Prices.
Data from 2012/5/8 to 2015/5/8. http://finance.yahoo.com/q/hp?
s=DBJP&a=04&b=8&c=2012&d=04&e=8&f=2015&g=d tapped 2015a/5/12.
Yahoo Finance. SPDR S&P 500 ETF (SPY) Historical Prices. Data from 2012/5/8 to
2015/5/8. https://uk.finance.yahoo.com/q/hp?
s=SPY&b=7&a=02&c=2010&e=8&d=04&f=2015&g=d tapped 2015b/5/12.
Wikipedia. Sharpe Ratio. http://en.wikipedia.org/wiki/Sharpe_ratio tapped 2015/5/11.
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