To call the triple-leverage financial ETF of the Direxion Financial Bull 3X Shares (NYSE: FAS) volatile would be perhaps the understatement of the year. It has become the day trading instrument of choice for those who trade financial stocks because it has such a low share price and because its triple-leverage adds that much more volatility. What is interesting is that this ETF is not just a bank ETF as it tracks the Russell 1000 Financial Services Index. While it aims to diversify to all financial firms in that index with more than 200 components last year, it looks like the four top dogs of JP MORGAN CHASE & CO. (NYSE: JPM), BANK OF AMERICA CORP. (NYSE: BAC), GOLDMAN SACHS GROUP (NYSE: GS), and WELLS FARGO & CO (NYSE: WFC) may now more than 20% of the weighting.
We won’t hang a hat on a firm numbers because this changes and because there have been many questions over how the triple-leverage is calculated throughout the day, particularly when you account for the ETF counterpart of the Direxion Financial Bear 3X Shares (NYSE: FAZ). READ OUR STORY: How does a 3x ETF gain 3 times the index performance But the ETF put in a new multi-month high today. It was only two months ago that this was on the verge of being perhaps the first ETF to see a reverse stock split because the price went so low. This was under consideration as the price had dipped under $3.00 per share.
Full Story: http://247wallst.com/2009/05/06/financials-direxion-3x-bulls-recent-highs-fas-faz-jpm-bac-gs-wfc/#more-33402 Financials & Direxion 3X Bulls, Recent Highs (FAS, FAZ, JPM, BAC, GS, WFC)
To call the triple-leverage financial ETF of the Direxion Financial Bull 3X Shares (NYSE: FAS) volatile would be perhaps the understatement of the year. It has become the day trading instrument of choice for those who trade financial stocks because it has such a low share price and because its triple-leverage adds that much more volatility. What is interesting is that this ETF is not just a bank ETF as it tracks the Russell 1000 Financial Services Index. While it aims to diversify to all financial firms in that index with more than 200 components last year, it looks like the four top dogs of JP MORGAN CHASE & CO. (NYSE: JPM), BANK OF AMERICA CORP. (NYSE: BAC), GOLDMAN SACHS GROUP (NYSE: GS), and WELLS FARGO & CO (NYSE: WFC) may now more than 20% of the weighting.
We won’t hang a hat on a firm numbers because this changes and because there have been many questions over how the triple-leverage is calculated throughout the day, particularly when you account for the ETF counterpart of the Direxion Financial Bear 3X Shares (NYSE: FAZ). READ OUR STORY: How does a 3x ETF gain 3 times the index performance But the ETF put in a new multi-month high today. It was only two months ago that this was on the verge of being perhaps the first ETF to see a reverse stock split because the price went so low. This was under consideration as the price had dipped under $3.00 per share.
Full Story: http://247wallst.com/2009/05/06/financials-direxion-3x-bulls-recent-highs-fas-faz-jpm-bac-gs-wfc/#more-33402 Online Service Helps Anyone Use ETFs to Invest Like the Pro’s
DANVILLE, Calif.--(BUSINESS WIRE)--MarketRiders, Inc. (www.marketriders.com), an online investment services company, announces the release of E.Adviser, an easy-to use online service that allows anyone to now join the Exchange Traded Fund (ETF) revolution using strategies previously only available to elite investors and large endowments like Yale and Harvard. For $9.95 per month and 30 minutes each quarter, anyone can build and manage their own ETF portfolio and grow their money like the world's smartest investors.
Most people still believe that paying for trusted advice from investment advisers, brokers, and mutual funds is the best way to manage their money. But for years, sophisticated families and elite institutions have achieved superior returns with a very different method of investing that was developed by Economics and Finance Nobel Laureates and some of the world’s most prominent investors like David Swensen of Yale, John Bogle who founded Vanguard, Burton Malkiel of Princeton and Dr. William Sharpe of Stanford. Their secret involves using ETFs to implement sophisticated asset allocation strategies and rebalancing their portfolios as markets ebb and flow.
Mitch Tuchman, a Harvard MBA with 25 years as a successful Silicon Valley entrepreneur and hedge fund manager, began MarketRiders to bring these methods to everyone. Tuchman partnered with co-founder Stephen Beck to make MarketRiders a unique investment company that would level the playing field for all investors, using the internet and technology. Beck, an early internet pioneer and software entrepreneur, co-founded and sold C2B Technologies to Inktomi (and later to Yahoo) and then became a founding investor and board member of Baidu, the Google of China.
“If you talk to someone managing money for an endowment or a wealthy family, they speak a completely different language than what most people hear on CNBC or from their brokers. Stanford and Harvard endowments aren’t worried about picking stocks or timing the market. They’re focused on three key activities: structuring the right asset allocation targets, keeping investment fees to a minimum, and maintaining these targets through rebalancing,” said Tuchman.
Full Story: http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20090506005447&newsLang=en Investors Pour Into Inverse ETF’s At The Wrong Time!
In April, the 'smart money' looked pretty dumb.
With the S&P 500 up some 9.6% in the month, net inflows into exchange-traded funds topped $8.1 billion as assets swelled to nearly $535.3 billion, according to data compiled by the National Stock Exchange on Tuesday.
The overwhelming favorites in April were funds that take short positions on different indexes. Almost $8.8 billion inflow went into such so-called inverse ETFs. And most of those flows concentrated on ETFs shorting large-caps as well as a few select sectors. Chief among those were inverse ETFs focusing on financials.
The bulk of that trading probably came from institutional pros such as hedge fund managers and large corporate investors, says Michael Traynor, the NSX's chief strategy officer.
He noted the old adage that historically investors have shown an uncanny ability to pick the worst times to make their moves. As such, fund flows over time have become considered as contrarian investment indicators.
"April seemed to be an indication of that bad timing again," said Traynor with a laugh.
Full Story: http://www.indexuniverse.com/sections/newsinfocus/5804-nsx.html Big banks rally, lifting broader sector; (XLF, KRE, KBE)
It looks like Bank of America will not be taken over by the government. The bank says it does not need any new capital despite prior rumors that it would need an additional $35B in government money... It will instead convert preferred stock to common, and liquidate assets amongst to other creative options to raise the capital necessary. This is boosting confidence in the market spurring positive trading in the financial sector. (ETF Daily News)
Bank of America (BAC) shares rose after reports that the company probably has enough government investment in hand to cover about $34 billion of capital needs prescribed by a recent stress test.
Those gains helped lift the Financial Select Sector SPDR (XLF), which tracks the financial stocks in the S&P 500, by 3.6%.
The KBW Banking ETF (KBE) rose 5.4% and the KBW Regional Bank ETF (KRE) rose 2.2%.
Full Story: http://www.marketwatch.com/news/story/big-banks-rally-lifting-broader/story.aspx?guid=%7B43EEE862%2D041A%2D408D%2D9650%2D041BC8D74963%7D&siteid=yhoof Schwab Cuts Fees on 24 Mutual Funds, Plans ETFs
Schwab told investors last month it expects to lose as much as $200 million in revenue this year from reducing fees on money market funds because of a drop in interest rates. Those fees may be reinstated once the Federal Reserve raises interest rates from their current near-zero level, Merk said.
Schwab lost 15 cents today to $18.58 at 5 p.m. in composite trading on the Nasdaq Stock Market. The shares have gained 15 percent this year, compared with a 17 percent advance in the KBW Capital Markets Index.
Schwab is awaiting approval from the U.S. Securities and Exchange Commission to introduce its own line of exchange-traded funds. Schwab clients represent about a fifth of all retail investor assets in ETFs, giving the company a base of clients that may help fuel growth of the new funds, said Merk.
“We want to be a bigger player in the ETFs than we have been,” he said. “This will be a multiyear effort.”
Full Story: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aEfLbp36xV0c WisdomTree and Dreyfus Launch Emerging Currency Fund (CEW)
NEW YORK--(BUSINESS WIRE)--WisdomTree (Pink Sheets: WSDT), a leading ETF sponsor and index developer, and The Dreyfus Corporation, part of BNY Mellon Asset Management, announced today the listing of the WisdomTree Dreyfus Emerging Currency Fund (CEW) on the NYSE Arca with an expense ratio of 0.55%.
Bruce Lavine, WisdomTree President & COO commented, “Our new Emerging Currency fund fills an important void in the ETF landscape by giving investors the first currency basket product delivered in the 1940 Act fund structure. CEW should be attractive to investors interested in diversifying outside the U.S. Dollar or accessing a less correlated asset class.
“The ETF provides investors exposure to both money market rates across 11 Emerging Market countries, as well as movements in these currencies relative to the U.S. Dollar. Our clients asked us for a basket strategy to complement our individual country currency income funds and we are happy to deliver that today.”
Constituent currencies at launch: Mexican Peso, Brazilian Real, Chilean Peso, South African Rand, Polish Zloty, Israeli Shekel, Turkish New Lira, Chinese Yuan, South Korean Won, Taiwanese Dollar, and Indian Rupee.
Although the Fund invests in very short-term, investment grade instruments, the Fund is not a "money market" fund and it is not the objective of the Fund to maintain a constant share price.
There are risks associated with investing including possible loss of principal. In addition to the normal risks of investing, foreign investing involves special risks, such as risk of loss from currency fluctuation or political or economic uncertainty. The fund focuses its investments in specific regions or countries, thereby increasing the impact of events and developments associated with the region or country which can adversely affect performance. Investments in emerging markets are generally less liquid and less efficient than developed markets. Investments in currency involve additional special risks, such as credit risk, interest rate fluctuations, derivative investment risk and the effect of varied economic conditions. As the fund can have a high concentration in some issuers the fund can be adversely impacted by changes affecting issuers. Unlike typical exchange-traded funds, there are no indexes that the fund attempts to track or replicate. Thus, the ability of the fund to achieve its objectives will depend on the effectiveness of the portfolio manager. Please read the fund’s prospectus for specific details regarding the fund’s risk profile.
Investors should consider the objectives, risks, charges and expenses of the Funds carefully before investing. A prospectus containing this and other information is available at www.wisdomtree.com. Please read the prospectus carefully before investing.
Full Story: http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20090506005682&newsLang=en What The Bank Bailouts Mean For Preferred Financial ETF
What impact has the government’s purchase of preferred financial shares in the country’s major banks had on the financial preferred exchange traded fund (ETF)?
Preferred stock was purchased by the government to the tune of $100 billion when the Troubled Asset Relief Plan was unveiled late last year. Preferred shares are a higher class of stock, and holders of preferred shares don’t have voting rights, but they get paid dividends before common shareholders.
Now the government has been talking about making the conversion to common stock, which could be beneficial to taxpayers if it takes place. Why? If these banks have a little extra common stock cushion, it could make them less likely to take bad bets that cost tax-paying citizens dearly. But it still will mean more risk, because there’s no way of knowing what those shares are going to be worth when it comes time to sell, and America could be on the losing end.
The reason for the conversion is, in essence, to make the TARP money go a little further. Converting those loans to common shares would turn the federal aid into available capital for a bank — and give the government a large ownership stake in return, reports Edmund L. Andrews for The New York Times. Additionally, it would provide additional capital to major banks at no additional cost.
Invesco PowerShares’ Senior Vice President of Portfolios Strategies Ed McRedmond said the PowerShares Financial Preferred (PGF) saw some benefit as Americans grew more concerned about the health of the nation’s banks.
Full Story: http://www.etftrends.com/2009/05/what-bank-bailouts-mean-preferred-financial-etf.html Gold Stocks Marching to Their Own Drummer (GLD, GDX)
The gold/gold stock ratio scored an interim low Monday as the broader equities indexes made large gains.
Bullion, represented by the SPDR Gold Shares Trust (NYSE: GLD), just couldn't keep up with the stocks comprising the Market Vectors Gold Miners Index ETF (NYSE: GDX). GDX shares shot up 6% by Monday's close, while the GLD trust ended the day with less than a 2% gain
With its 3.4% gain, the broad-based S&P 500 stock index covered only half the ground taken by miners. That's not surprising when you think about it. After all, there are a lot more stocks in the blue-chip index; only 28 issues make up the GDX portfolio.
Despite the apparent outsized volatility of gold stocks Monday, miners have actually been less risky than the broader market this year. Compare the performance of the miners ETF to the S&P 500-tracking S&P Depository Receipts (NYSE: SPY): SPDRs only turned positive for the year on Monday's action, eking out a 0.7% gain. Year-to-date, GDX is up 3.4%, and has at one point been up as much as 14%.
Those gains have been realized with vastly disparate risks. The standard deviation of daily returns for the S&P tracker is one and a half times greater than the gold stock ETF's.
Full Story: http://www.greenfaucet.com/precious-metals/gold-stocks-marching-to-their-own-drummer/39007 SSgA Files For A Third Preferred Stock ETF; The SSgA ETF would compete head-to-head against two others already on the market.
State Street Global Advisors has filed to launch an exchange-traded fund that would invest in nonconvertible preferred stocks.
It would trade on the NYSE Arca and seek to replicate the Wells Fargo Hybrid and Preferred Securities Aggregate Index. No cost information was supplied in the filing.
Full Story: http://www.indexuniverse.com/sections/newsinfocus/5803-ssga-files-for-another-preferred-stock-etf-.html ETF’s Make It Easy To Invest In Gold And Silver!
It has been investment that has been driving silver in 2009, and so, once again, silver's behaviour has been more like that of gold. How do these flows compare?
According to The Silver Book, an investment research from V M Group, supporting both gold and silver has been great demand from the exchange-traded funds (ETFs) and the futures market at Comex in New York.
There are three silver ETFs: the market-leading Barclays Global Investors (BGI), which is based in New York; and two in Europe, ETF Securities in London and ZKB in Zurich. By late April these had 8,413t, 534t and 1,422t respectively, totalling 10,394t. This is 2,140t more than at the end of 2008, a year when 2,325t were added in total.
How do these flows compare to those into gold ETFs? In late April 2009 the 15 gold ETFs held 1,643t, up 454t in the year, much more than the 321t taken in the whole of 2008. Total holdings of silver ETFs are thus 6.3 times that of gold, while inflows this year so far have been a smaller 4.7 times the size of gold's.
Drilling down further, whereas in January they were 8.1 times gold, in February they were just 3.2 times and in March just 1.7. However April saw inflows into silver, but a net outflow for gold.
Full Story: http://www.commodityonline.com/news/ETFs-support-gold--silver-demand-at-Comex-17465-3-1.html 3 Ways To Earn Your Future Back
......Take a moment to visualize the pervasive atmosphere of 2007. Predominantly good news and overly optimistic news coverage made the future look bright. The Dow Jones (NYSEArca: DIA - News) crossed 14,000 for the first time ever, producing the general consent that the bull market was here to stay.
Rather than giving the stock market credit for executing the bait-and switch game to perfection, it would be more accurate to point out that investors simply have not figured out how to interpret the signals of their peers. How so?
Broad market indexes such as the S&P 500 (NYSEArca: SPY - News) serve as a composite barometer of investors perception. In fact, the stock market is the most accurate reflection of perceived value. Any stock is only worth as much as investors are willing to pay - the perceived value.
The perceived value rises along with positive news and declines along with negative news. News-induced buying/selling further intensifies price extremes. Perceived value is always highest at the top and lowest at the bottom.
$100/share for a dot.com company with no earnings - which drove the Nasdaq (Nasdaq: QQQQ - News) and Technology Select Sector SPDRs (NYSEArca: XLK - News) to all-time highs - might be just as inappropriate as $5/share for GE (NYSE: GE - News), the oldest and only original DJIA component. Nevertheless, that's where supply and demand met to determine the price.
Investor's perception is driven by investor sentiment and news. Investor sentiment is probably the most treacherous force on Wall Street as it is the stock market's closest ally in bait-and-switching investors out of their money. Optimistic sentiment often signals a top while pessimistic sentiment can be indicative of a bottom.
Case in point: According to Hewitt Associates, stocks made up 69% of 401(k) assets at the market's all-time high in 2007. As the stock market bottomed in March 2009, stocks took a back seat to bonds and cash for the first time ever. Only 48% of 401(k) funds were allocated to stocks in February '09.
Full Story: http://finance.yahoo.com/news/3-Ways-To-Earn-Your-Future-etfguide-15135263.html?.v=1 Are ETF’s Scaring Investors?
Large investors like hedge funds and pension funds have embraced ETFs, and Wall Street is now wondering if that’s good for business.
Since the credit crisis sent the stock market on its wild ride, ETFs — baskets of stocks that trade on exchanges — have grabbed a bigger and bigger share of overall stock trading volume. Today, they represent about one-third of daily volume, up from 14% in 2006, according to Barclays PLC’s iShares unit.
Big trading desks have been slow to react, for reasons ranging from the dire climate at investment banks to worries ETFs aren’t as profitable for these firms as other securities such as single stocks or options.
“It’s a problem we all created for ourselves. (ETFs) are a product with great liquidity and low margins, but we’d all rather have investors buying single names,” says a head trader at a Wall Street trading firm.
In interviews with nearly a dozen trading Wall Street firms, only one had hired more ETF market makers or traders in the last six months. Most have just moved around personnel and resources from other departments into their ETF trading operations.
Some question whether ETF volume can stay as high as it is right now. Large investors jumped at the chance to trade baskets of stocks last year when the market was at its most volatile and single stocks were perceived as too risky. One family of ETFs popular with hedge funds and other rapid-fire traders, the Select Sector SPDRs, now trades about 300 million shares a day, 10 times what they did several years ago, according to product manager Dan Dolan.
Full Story: http://blogs.wsj.com/marketbeat/2009/05/05/whos-afraid-of-etfs/ Four ETF’s That Capture Big Opportunities In Small Caps
Finding the next Apple or Microsoft is like looking for a needle in a haystack. And even though most people will never find either, none of it keeps them from trying.
Take for example, America’s mutual fund managers. They’re charged with the responsibility of discovering tomorrow’s blue chip stocks. Yet, according to Standard & Poor’s research, over the past five years an astonishing 79.1% and 85.8% of mid and small company stock funds were outperformed by dull mid and small cap stock indexes. Put another way, professional money managers have been buying the wrong stocks!
What about individual investors? It seems like they too are having difficulty in making the right investment decisions.
In its 15th annual survey of investor behavior Dalbar found that 58% of investors bought and sold their investments at the wrong time last year. As a result, many of these same investors experienced substantially worse performance of their investments compared to stock index funds.
The mistake of buying the wrong stocks could’ve easily been avoided if investors just trusted in the indexes and the financial products following them instead of the fund managers that try to beat them and fail.
Let’s evaluate 4 exchange-traded funds or ETFs that can help you to capture the big opportunities in small stocks.
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iShares Russell 2000 Index Fund (NYSEArca: IWM)
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SPDR Dow Jones Small Cap ETF (NYSEArca: DSC)
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Vanguard Extended Market ETF (NYSEArca: VXF)
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WisdomTree Small Cap Dividend Fund (NYSEArca: DES)
Full Story: http://www.etfguide.com/commentary/540/4-Ways-to-Capture-the-Big-Opportunities-in-Small-Stocks/
ANALYSIS-Commodity markets cautiously shift strategy
LONDON, May 5 (Reuters) - A credit crunch, economic downturn and now swine flu have knocked down expectations of a swift return to a commodities super-cycle, but signs have emerged of more adventurous trading strategies.
As proof of investor interest, flows of new money into commodities in the first quarter have been estimated at record levels as cheaper markets provided buying opportunities. (For related factbox, please click on)
London Metal Exchange copper has risen by around 50 percent so far this year and U.S. benchmark crude futures have gained 22 percent.
The most investment in the first quarter went into single-commodity exchange-traded funds (ETFs), also known as exchange-traded products, which allow investors to buy a share in raw materials in a similar way to acquiring an equity stake in companies.
Daniel Wills of ETF Securities, an ETF specialist, said investors had become bolder after a period of carefully focusing on individual commodities.
"What we've seen more recently is investors starting to broaden their exposure and come out of their shell a little bit," he said.
Full Story: http://www.forbes.com/feeds/reuters/2009/05/05/2009-05-05T130732Z_01_L4850781_RTRIDST_0_COMMODITIES-PRICE-ANALYSIS.html Is Your ETF On DEATHROW?
The number of exchange-traded products on Deathwatch decreased for the second month in a row. It would be premature to declare that the peak is now behind us, because I would not be surprised to see additional recession-related declines in trading activity for some ETFs in the months ahead. This month’s list contains 155 names, down from 162 last month and down from the record high of 171 for the March list. The current list consists of 114 ETFs and 41 ETNs that are at least six months old and failed to have an Average Daily Value Traded (ADVT) of at least $100,000 during April.
Elements Ben Graham Large Cap Value ETN (BVL) heads up the list this month with a pathetic 38 shares traded per day - an ADVT of just $242. Closer inspection reveals that BVL only traded on five separate days in April, and its highest-volume day was just 200 shares. The two other Elements Ben Graham products are on the list as well. The second entry on the list is Barclays GEMS Asia 8 ETN (AYT) which only traded one day last month. A grand total of 400 shares traded hands, all on April 7.
PowerShares has the largest number of products on the list with 37 (30 ETFs, 6 ETNs, and 1 BLDR), or nearly 24% of the list. PowerShares took a step last Friday to improve their standing by announcing the closure of 19 ETFs. However, only ten of those funds are on ETF Deathwatch. That means that after the closures, there will still be 26 PowerShares products on ETF Deathwatch plus one BLDR, which is now sponsored by PowerShares.
Clearly, more than just trading activity goes into the decision of whether or not to close an ETF. One potentially better gauge is assets under management (AUM) for the fund. However, getting AUM data in a timely manner is tough, and then one would need to determine what percentage is “real investor” money versus “seed money” from the sponsor. Nearly every fund on this list is composed primarily of the original seed money. I have found that ADVT does a great job of pointing out where the problems are.
Full Story: http://investwithanedge.com/etf-deathwatch-may-2009 
