LONDON, May 12 (Reuters) - Investors have bet more than twice as much money on rising oil prices via Exchanged Traded Commodities (ETCs) this year than in the whole of 2008, pushing holdings to an all-time high, ETF Securities said on Tuesday.
Inflows into London-based ETF Securities' oil ETCs increased by $954 million between January and April as investors bet on a rebound in oil prices from near 5-year lows hit at the end of December.
Total bets on prices rising overshadowed bets on further falls by $1.5 billion.
U.S. crude prices CLc1 hit a 6-month high above $60 a barrel on Tuesday, having risen from a low of $32.40 a barrel in December. Prices remain well below the all-time high of $147.27 a barrel hit in July 2008 before the economic crisis cut demand around the world.
Full Story: http://www.reuters.com/article/etfNews/idUSLC32973220090512 ETF Securities long oil ETC holdings surge to record
LONDON, May 12 (Reuters) - Investors have bet more than twice as much money on rising oil prices via Exchanged Traded Commodities (ETCs) this year than in the whole of 2008, pushing holdings to an all-time high, ETF Securities said on Tuesday.
Inflows into London-based ETF Securities' oil ETCs increased by $954 million between January and April as investors bet on a rebound in oil prices from near 5-year lows hit at the end of December.
Total bets on prices rising overshadowed bets on further falls by $1.5 billion.
U.S. crude prices CLc1 hit a 6-month high above $60 a barrel on Tuesday, having risen from a low of $32.40 a barrel in December. Prices remain well below the all-time high of $147.27 a barrel hit in July 2008 before the economic crisis cut demand around the world.
Full Story: http://www.reuters.com/article/etfNews/idUSLC32973220090512 Hedging Tips for ETF Traders
Fans of exchange-traded funds are, by and large, a pretty risk-averse group. By using ETFs, they're buying bigger chunks of the market, enjoying low fees, and generally riding Wall Street's larger, more stable waves rather than less predictable ripples in individual stocks. More and more, though, active traders are using ETFs to jump in and out of the market. They're also adopting some of Wall Street's tried-and-true risk management strategies to hedge against the market's wilder swings. Below, we look at a few popular hedging strategies that fit nicely with ETFs, including tools like options, sector funds, and one popular and unique instrument, the leveraged ETF.
Let's start with options. Today, options are available on only about 40 percent of exchange-traded funds and exchange-traded notes, although the percentage is higher for most popular equity indexes. Aside from limited availability, options on ETFs operate in much the same way as stocks. A word of caution: Options aren't for everyone. If you're unfamiliar with the concepts, check out options basics from Investopedia, including definitions of some key terms like call options and put options.
Options 1: "Covered call" or buy/write strategies. Among the most common options strategies used by ETF traders, the buy/write strategy works like this: You buy shares of an ETF and then sell (or write) "call options" on the same shares at a higher price (as with stocks, one option is sold in blocks of 100 shares).
Full Story: http://www.usnews.com/articles/business/investing/2009/05/12/hedging-tips-for-etf-traders.html Claymore Files To Launch 1st Active Commodity ETFs
Claymore Securities has filed a request with the Securities and Exchange Commission to launch three new exchange-traded funds, each of which would be actively managed.
The proposed ETFs would be advised by Claymore Advisors and subadvised by Huntington Beach, Calif.-based Delta Global Advisors. Rather than following an index and using a quantitative type of stock picking process, the portfolios would be created using more traditional actively managed styles similar to how mutual funds now operate.
Depending on the ETF, Delta Global would implement a bottom-up fundamental approach or rely on more technical analysis to evaluate companies included in the funds. In some cases, both methodologies would be used to select stocks.
The ETFs in which Claymore is asking regulators to approve are the:
•Claymore Delta Global Infrastructure ETF.
•Claymore Delta Global Hard Assets ETF.
•Claymore Delta Global Agribusiness ETF.
Delta Global's indexing arm has already created the benchmark that's used for the Claymore/Delta Global Shipping ETF (NYSE: SEA).
Play On Infrastructure In Emerging Markets
The new infrastructure ETF would include stocks its managers believe are best-positioned to benefit from growth of infrastructure projects in emerging markets. As explained in the filing, those would include: utilities, ports, airports, roads, railroads, water infrastructure and telecom build-outs. The portfolio would also invest in expansion relating to rising demand for basic materials and general engineering projects along more general infrastructure levels.
Full Story: http://www.indexuniverse.com/sections/newsinfocus/5815-claymore-files-for-3-new-active-stock-etfs.html Five ETFs Most Investors Don’t Understand
The majority of ETFs on the market follow the traditional ETF model - tracking an underlying equity or bond index. But as the benefits of the ETF structure become more widely accepted, inflows from increasingly sophisticated investors have created a demand for increasingly complex funds. Here are 5 of the more complex ETFs available to investors today. Read the full story for explanations of their objectives and strategies.
- PowerShares S&P 500 BuyWrite Portfolio (PBP):
- S&P Developed Ex-U.S. Property Index Fund (WPS):
- SPDR Barclays Capital Mortgage Backed Bond ETF (MBG):
- iPath Optimized Currency Carry ETN (ICI):
- MacroShares $100 Oil Up (UOY) and $100 Oil Down (DOY):
CEW ETF Goes Deeper Into Emerging Markets
The WisdomTree Dreyfus Emerging Currency Fund(CEW Quote), WisdomTree's newest exchange-traded fund, may help investors outperform markets more than some stock-and-bond mutual funds.
WisdomTree sells seven single-currency funds. WisdomTree Dreyfus Emerging Currency Fund is a basket of currencies equally weighted to the Mexican peso, Brazilian real, Chilean peso, South African rand, Polish zloty, Israeli shekel, Turkish new lira, Chinese yuan, South Korean won, Taiwan dollar and the Indian rupee. The fund rebalances quarterly.
The fund's function is to provide access to the currency fluctuation of a diversified emerging market basket along with money market yields from those countries. It will have small positions in the requisite currencies via swaps contracts, which will be collateralized by U.S.-denominated money market instruments. The swaps will provide the foreign exchange exposure.
Emerging market currencies is a relatively new asset class for access in a brokerage account. Currencies typically don't offer the potential growth of individual stocks, but, used properly and in moderation, offer excellent diversification by reducing a portfolio's correlation to the broader market and enhancing performance.
Full Story: http://www.thestreet.com/_aol/story/10498583/1/etf-goes-deeper-into-emerging-markets.html?cm_ven=AOL&cm_cat=Free&cm_pla=Feed&cm_ite=Feed
See our previous story: http://etfdailynews.com/blog/?p=2006 ETF Traps For Short-Term Investors
......Thinly Traded Funds. One of the most important things to check before taking a flyer on an ETF is the average daily trading volume. The well-known SPDR, which tracks the S&P 500 index, recently has been trading 280 million shares a day. Buy into the SPDR, and you'll be able to unload your shares throughout the day with a miniscule bid-ask spread.
Then there are funds like First Trust Global Wind Energy, which goes by the cutesy ticker FAN. It's bad enough that the fund tucks carbon-belchers like Royal Dutch Shell into its portfolio. It's also hard to get out of once you buy in. The fund has had average daily volume of 97,000 over the past 10 days, according to Charles Schwab. If the fund's value drops quickly, there may not be someone willing to buy it from you at a price you think fairly reflects the underlying market.
FAN has lost 65% since its inception, which leaves little surprise as to why some investors have given up on it. But because the shares aren't actively traded, the bid/ask spread has crept above 1%, meaning you'll pay a premium to get out.
Other ETFs that have low trading volumes include the SPDR S&P Emerging Markets Small Cap fund, which has daily turnover of only 12,000 shares, and the iShares FTSE NAREIT Ind/Off Capp, an ETF that tracks the industrial and office real estate sector and trades a skinny 5,000 shares a day.
Full Story: http://www.forbes.com/2009/05/11/etf-traps-trader-personal-finance-etfs_print.html ETF Securities silver holdings up 3.9 pct to record
The company's Physical Silver ETC (PHAU.L) added more than 700,000 ounces to its holdings on Monday, which now stand at a record 18.702 million ounces. This silver-backed exchange traded commodity rose more than 3.9 percent to a new all-time high on May 11.
Full Story: http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSLC17620420090512 Coal Fields Merger Creates Big Player (ANR, FCL, CLF, KOL)
Today’s announcement of a merger between Alpha Natural Resources, Inc. (NYSE: ANR) and Foundation Coal Holdings, Inc. (NYSE: FCL) creates the third-largest coal producer in the US. The all-stock deal is worth about $2 billion including $530 million in Foundation debt, with Alpha issuing 1.084 shares for each Foundation share at a value of $32.73/share, a 37% premium to Foundation’s closing price on May 8, 2009.
Foundation shareholders will own about 41% of the new company, while Alpha shareholders will own 59%. The merged company, which will retain the Alpha name, will have a market cap of about $3.5 billion and reserves of more than 2.3 billion tons of coal.
Full Story: http://247wallst.com/2009/05/12/coal-fields-merger-creates-big-player-anr-fcl-clf-kol/ Hong Kong ETF (EWH): ‘Set to soar’
"While the U.S. markets are rising, Asian stock markets are on fire," says global specialist Nicholas Vardy.
In his The Global Bull Market Alert, he suggests, "Our latest bet is s China play; we are recommending the iShares MSCI Hong Kong Index (NYSE: EWH). Here, he explains why he believes that Hong Kong's stock market is "set to soar over the coming months."
"First, although it is thousands of miles away, the Hong Kong stock market is directly subject to the whims of U.S. interest rate policy.
"As you know, the Fed has cut interest rates to essentially zero in the U.S. What you may not know is that Hong Kong's monetary policy is closely tied to the U.S. dollar.
"For the last 25 years, the Hong Kong dollar has been worth about $7.80, a level ensured through an interest rate policy implemented by a currency board.
"As a result, Hong Kong's stock market is subject to wild "booms and busts" for reasons that have nothing to do with its own economic prospects.
"Every time the Fed cuts real interest rates to zero -- as it did in 1992-1993, and again in 2003-2005, the Hong Kong stock market has at least doubled.
Full Story: http://www.bloggingstocks.com/2009/05/11/hong-kong-etf-ewh-set-to-soar/ Getting More Income From Your ETF Bond Investments
These are trying times for income oriented investors. Interest rates are still stuck at record low levels which means lower income generated from bonds and other fixed income investments.
U.S. Treasuries with a 10-year maturity are yielding just 3.20%, which isn’t much over the lifetime of the investment, especially after deducting the cost of taxes and any potential for re-inflation. The interest rates being paid by bank certificates of deposit (CDs) is also down. According to BankRate.com, today’s national average 1-year rate for bank CDs is just 2.20%.What can bond investors do?
Bonds, like stocks, come in many different varieties. Government bonds are issued by U.S. or foreign governments, municipal bonds are issued by cities, states and local governments, corporate bonds are issued by companies and there are also asset-backed securities, mortgage backed securities and convertible bonds along with Treasury Inflation Protected Securities (TIPS). Diversifying your bond portfolio is one strategy to gain more income and to reduce market risk.
Let’s briefly evaluate 5 bond ETFs that can help you to generate more income from your bond investments.
iShares Barclays Aggregate Bond Index Fund (NYSEArca: AGG)
The performance and yield of AGG are linked to the widely followed Barclays U.S. Aggregate Bond Index. The index measures the U.S. investment grade bond market, which includes investment grade U.S. Government bonds, investment grade corporate bonds, mortgage pass-through securities and asset-backed securities. With almost $10 billion in assets, AGG is the largest bond ETF and it carries a yield in the vicinity of 4.5%. Year-to-date, AGG has declined 2.09%*. In 2008, AGG gained 5.88% and the fund’s annual expense ratio is 0.24%.
iShares iBoxx $ High Yield Corporate Bond Fund (NYSEArca: HYG)
HYG is benchmarked to the iBoxx $ Liquid High Yield Index, which is designed to provide a balanced representation of the U.S. dollar-denominated high yield corporate bond market through some of the most liquid high yield corporate bonds available. The number of bond issues within HYG is typically 50, although this may change from time to time. The fund has close to $2.13 billion in assets and carries a juicy yield of 11.56%. Year-to-date, HYG has increased by 5.35%. In 2008, HYG fallen 23.86% and the fund’s annual expense ratio is 0.50%.
Full Story: http://www.etfguide.com/commentary/544/Getting-More-Income-from-Your-Bond-Investments/ Barclays iShares bidder search success
LONDON (Reuters) - Barclays Plc's (BARC.L) efforts to find more bidders for its iShares funds arm seem to have paid off, showing that prize assets can draw plenty of interest even in crisis-stricken markets.
Barclays said on Sunday it had received new interest from both trade and private equity buyers for iShares, after a report in the Sunday Times newspaper said buy-out house BC Partners might top a 3 billion pound ($4.56 billion) deal with CVC Capital Partners, agreed in April......
......In addition, any blow to CVC would be softened because of a $175 million break-up fee, payable if Barclays finds a new buyer.
"If they walk away, they'll (CVC) earn a nice bit of money for a few weeks work," one banker said, asking not to be named, because he was not involved in the sales process.
BC Partners and CVC declined to comment......
......RARE COMMODITY
Any estimates of what iShares is worth can only have gone up given that Barclays shares have roughly doubled since it announced the deal -- and almost quintupled since a trough in March -- giving it bigger clout in the talks.
The "go-shop" clause, in effect until June 18, could therefore result in a fresh offer from CVC.
"Don't underestimate CVC's interest in iShares ... they've got their bid in first and they do have the ability to raise the offer if they want to," another banker said.
Any buyer picking up iShares, which offers exchange traded funds (ETF), will get access to a rare commodity with strong growth potential now that investors favor the conservative asset class.
Full Story: http://www.reuters.com/article/euDealsNews/idUSTRE54A3RE20090511?pageNumber=2&virtualBrandChannel=0&sp=true
See our previous story: http://etfdailynews.com/blog/?p=2154 ETFs: What New Trends Mean for Investors
Even after a two-month stock market rally, market volatility remains high. Simply put, investors are worried, not only over the timing of an economic recovery, but also by the possibility that the recent surge in equities may be little more than another bear market rally. The uncertainty bodes well for the popularity of low-cost exchange-traded funds (ETFs) that allow investors to jump into and out of positions with great agility throughout the trading day.
Total ETF assets increased by $49 billion, or 10.2%, for the month, to $531 billion at the end of April, according to State Street Global Advisors' (STT) April ETF Snapshot report. Since 2002, assets have increased more than fivefold, as the number of ETFs has grown more than eightfold.
The ongoing net flows of money out of open-end mutual funds and into ETFs is mainly the result of the drop in the stock market in the last few months of 2008 which "freed up the tax handcuffs" among investors, says Noel Archard, managing director for product research and development at iShares. Archard points out that investors stood to incur a much smaller tax bill, if any, from pulling money out of conventional mutual funds after the market downdraft. The poor performance by many mutual funds, coupled with the capital gains distributions they had to pay out, only added to investors' eagerness to shift into tax-efficient ETFs, he adds. He estimates that roughly $170 billion in assets migrated from mutual funds to ETFs last year.
Full Story: http://www.businessweek.com/investor/content/may2009/pi2009058_328608.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis Coal ETF On Fire (KOL)
Last summer, I wrote about the prospects for getting into the coal market. At the time, I pointed out that "just because coal is up 140% does not mean that Joe's Coal Mine is all of a sudden 140% more profitable." And indeed, like so many bull markets of that halcyon summer, the bull market in coal came to a crashing halt, and brought down with it coal stocks, as well as the only coal-focused exchange-traded fund in town at the time, the Van Eck Market Vectors Coal (KOL).
The story has been pretty straightforward and painfully familiar: The global economy tanked, including China, and thus energy and steel demand for coal dried up. At least, that's what happened to the demand for the spot coal that shows up on charts. The reality from the coal company's perspective is that long-term contracts drive the bottom line, and those long-term contracts are negotiated based on real supply and demand - how many boatloads of the stuff go from point A to point B, and on what schedule.
Full Story: http://www.istockanalyst.com/article/viewarticle/articleid/3226149 Bank shares fall on capital-raising plans (ETF: XLF)
BOSTON (MarketWatch) -- The U.S. financial sector opened to the downside Monday after several banks announced common-stock offerings designed to help pay back the funds they've borrowed from the government under its rescue plan.
The Financial Select Sector SPDR Fund (XLF), a widely followed barometer of financial stocks, was down 3% in early trading.
Also weighing on the sector Monday was a report that several banks won concessions from the Federal Reserve during the government's stress tests, the results of which were released last week
Full Story: http://www.marketwatch.com/news/story/banks-plans-sell-stock-hurt/story.aspx?guid=%7BD56E2362%2D6E94%2D4FD7%2D840C%2D0F70B259EB87%7D&siteid=yhoof Don’t Buy This New Investment
You can always find promising ways to invest. But your portfolio can live without this particular new investment vehicle, even though many have anticipated it for years.
Earlier this month, a relatively small fund company, Grail Advisors, launched an actively managed exchange-traded fund named Grail American Beacon Large Cap Value ETF.
Unlike previous active ETFs, which have investment objectives that require them to follow quantitative models without room for subjective thought, Grail's offering gives its managers latitude to buy whatever stocks they believe will help the ETF outperform the Russell 1000 Value index of large-cap value stocks.
Hey! It's just another fund!
The endless hype about ETFs amuses me. It seems like anytime a new ETF comes out, many investors hold their breath, hoping that they've stumbled onto the next great innovation in investing -- and will somehow capitalize by getting in on the ground floor.
Full Story: http://www.fool.com/investing/etf/2009/05/11/dont-buy-this-new-investment.aspx 
