EXCHANGE TRADED FUNDS

Group 18:Andy Voong, Mengyuan Tang, Hossein Goudarzi

• Tracks with an underlying index

• Common stock

• High Daily Liquidity

• Low Fees

• Diversification

• Market Exposure (Track with an Index)

• No minimum investment (usually)

• Trade flexibility

• Ideal for non-institutional investors

United States

Europe

Africa and Asia-Pacific

Other Americas

0 10 20 30 40 50 60 70 80

73%

16%

8%

3%

Global ETF Market Distribution (%)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

500

1000

1500

2000

2500

US Net ETF Assets (USD, Trillions)

1411 ETFs

Almost $2Trillion

WHAT INDUSTRIES ARE PERFORMING WELL RIGHT NOW?

Sector 1 Day 1 Week 1 Month 3 Month 6 Month 1 Year YTD

Technology -0.3 -1.4 4.6 1.7 0.6 5.9 6.3

Healthcare -0.9 -2.8 2 -9.4 -7.3 4.2 2.9

Consumer Goods -1 -2.8 1 -1.6 -4.4 3.2 2.9

Services -0.8 -1.8 3 -1.7 -2.9 3.7 0.4

Industrial Goods -1.2 -1.8 4 -0.7 -5.2 -0.4 -0.3

Financial -1.3 -1.6 2.9 -4.7 -6.1 -2 -3.2

Utilities -1.1 -2.9 -3.1 -5.1 -6.7 -6.5 -9.1

Conglomerates -2.3 -4.7 -2.6 -3.1 -12.9 -17.9 -16.3

Basic Materials -2 -5.9 -6.6 -9.3 -25.3 -27.8 -21.2

Performs Well• Technology

• Consumer GoodsCost

Effective

US

Powershares QQQ Trust

Series 1

Total Return (%) 1m 3m YTD 1yr 3yr 5yr

Average 7.88 -0.33 8.2 10.98 23.15 18.49

XNDX 6.64 3.30 11.04 13.23 23.29 17.84

QQQ US 6.61 3.21 10.77 12.99 23.04 17.58

IBB US 7.14 -10.33 8.99 13.96 36.63 30.63

QQQE US 3.27 -1.03 2.63 6.23 21.88 -

QQXT US 2.01 -3.73 3.04 6.98 20.92 16.00

PNQI US 7.66 4.31 18.65 19.13 27.04 17.82

QQEW US 3.15 -1.16 2.24 5.79 21.54 14.57

SPY US 3.35 0.59 2.72 4.40 16.98 13.62

Ticker Expense Ratio (%)Average Bid Ask

Spread (%) Premium (%)52 Week Average

Premium (%)Average 0.42 0.08 -0.01 0.00

QQQ 0.20 0.01 -0.03 0.00IBB 0.48 0.10 -0.08 0.01

QQQE 0.35 0.06 -0.08 0.00QQXT 0.60 0.20 0.02 0.04PNQI 0.60 0.16 0.05 -0.03

QQEW 0.60 0.06 0.07 0.01SPY 0.09 0.00 0.01 0.00

Communications34%

Consumer, Cyclical9%

Consumer, Non-cyclical19%

Industrial1%

Technology37%

QQQ US Equity Market Breakdown

12.86

8

5.524.62

4.38

4.04

3.01

2.97

2.712.45 Top 10 Holdings (%)

APPLE INCMICROSOFT CORPAMAZON.COM INCALPHABET INC-CL CFACEBOOK INC-AALPHABET INC-CL AINTEL CORPGILEAD SCIENCES INCCISCO SYSTEMS INCCOMCAST CORP-CLASS A

Janua

ry

Febru

aryMarc

hAp

ril May June Jul

yAu

gust

Septe

mber

Octobe

r

Novem

ber*

Decem

ber*

-1

0

1

2

3

4

5

6 Monthly Average Total Return (%)QQQ US Equity Average

Total Return (%)

RISKS?

• Sector Concentration (Technology, Communications and Consumer Goods)

• Company Concentration (Apple, Microsoft, Amazon)

• Macro Risk (interest rate change?)• Currency Risk

RISK

CURRENCY RISK

If Interest rates

USD will appreciate

BUT… WHAT ABOUT TECHNICAL ANALYSIS?

859095

100105110115120 MA

QQQ US Equity 20 Day 50 Day 100 Day 200 Day

0102030405060708090 RSI

QQQ US Equity RSIQQQ US Equity Overbought Line

-2.5

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5MACD

QQQ US Equity MACD Dif -ferenceQQQ US Equity MACD

Oct 2015 Jan 2016 May 2016 Aug 2016 Nov 2016110

115

120

125

130

135

140Monte Carlo Simulation

85

90

95

100

105

110

115

120 Bollinger Bands

20 Day Moving Average Upper BollingerLower Bollinger QQQ US Equity

Nov 2010 Nov 2011 Nov 2012 Nov 2013 Nov 2014 Nov 201540

50

60

70

80

90

100

110

120 Fibonacci Retracement115.0

2

99.68

Recommendations:

52 Week High: 115.4752 Week Low: 84.74

Support Level 1: 100.0026Support Level 2: 99.6824Resistance Level 1: 115.02Resistance Level 2: 115.47Target Buy Price: between 100 and 110Target Sell Price: 130

TO CONCLUDE…

Strong Returns

Diversification

Low Tracking

Error

Low Expense

Ratio