General Electric, whose shares have climbed 17% in the past three months, is still down by more than half over the past year, suggesting there's plenty of room to rise. GE, United Technologies and 3M are the three-largest holdings of the Dow Jones U.S. Industrial Sector Index Fund(IYJ), which jumped 18% in April alone.
The most attractive industrial ETF, based on its holdings' price-to-earnings ratio, is the PowerShares Dynamic Industrials Sector Portfolio (PRN), which owns only U.S. stocks. The fund's 60 members trade at an average of 11 times earnings. (Inverse and leveraged funds have been excluded from this review.)
Holdings of PowerShares Dynamic Industrials Sector Portfolio include GT Solar International(SOLR), Chart Industries(GTLS), EnerSys(ENS), Flowserve(FLS) and Goodrich(GR).
PowerShares Dynamic Industrials Sector Portfolio has fallen 0.6% so far this year, lagging behind some of its peers. First Trust Industrials/Producer Durables AlphaDEX Fund(FXR) has risen 5.6% over the same period, but is now potentially overvalued with a price-to-earnings ratio that's twice as high at 22.
The best-performing international industrial ETFs this year are the SPDR S&P International Industrials Sector ETF(IPN), up 6.8%, and WisdomTree International Industrial Sector Fund(DDI), up 3.1%.
Full Story: http://www.thestreet.com/story/10500433/1/industrial-etfs-ride-the-economic-rebound.html?puc=_tscrss Industrial ETFs Ride the Economic Rebound
General Electric, whose shares have climbed 17% in the past three months, is still down by more than half over the past year, suggesting there's plenty of room to rise. GE, United Technologies and 3M are the three-largest holdings of the Dow Jones U.S. Industrial Sector Index Fund(IYJ), which jumped 18% in April alone.
The most attractive industrial ETF, based on its holdings' price-to-earnings ratio, is the PowerShares Dynamic Industrials Sector Portfolio (PRN), which owns only U.S. stocks. The fund's 60 members trade at an average of 11 times earnings. (Inverse and leveraged funds have been excluded from this review.)
Holdings of PowerShares Dynamic Industrials Sector Portfolio include GT Solar International(SOLR), Chart Industries(GTLS), EnerSys(ENS), Flowserve(FLS) and Goodrich(GR).
PowerShares Dynamic Industrials Sector Portfolio has fallen 0.6% so far this year, lagging behind some of its peers. First Trust Industrials/Producer Durables AlphaDEX Fund(FXR) has risen 5.6% over the same period, but is now potentially overvalued with a price-to-earnings ratio that's twice as high at 22.
The best-performing international industrial ETFs this year are the SPDR S&P International Industrials Sector ETF(IPN), up 6.8%, and WisdomTree International Industrial Sector Fund(DDI), up 3.1%.
Full Story: http://www.thestreet.com/story/10500433/1/industrial-etfs-ride-the-economic-rebound.html?puc=_tscrss Harvard Buys Korea, Brazil ETFs as Emerging Markets Beat U.S
May 14 (Bloomberg) -- Harvard University, the richest U.S. college, raised its holdings of exchange-traded funds that track stocks in Brazil, China and Mexico in the first quarter as emerging markets outperformed U.S. equities.
The biggest new purchase reported by Harvard Management Co., which oversees the school’s $28.8 billion endowment, was 1.74 million shares of iShares MSCI South Korea Index Fund valued at $49 million, according to a filing yesterday with the U.S. Securities and Exchange Commission. Its largest stake was 8.28 million shares of iShares MSCI Emerging Markets Index valued at $205 million.
The quarterly 13F filing, which doesn’t reflect all of Harvard’s equities, offers a glimpse of how the Cambridge, Massachusetts, school is navigating the worst financial crisis since the Great Depression. The MSCI Emerging Market Index rose 0.52 percent in the quarter, while the Standard & Poor’s 500 Index, a benchmark of U.S. stocks, fell 12 percent......
......Vanguard Emerging Markets
Harvard added to its ETF holdings in the quarter by buying 2.27 million shares of Vanguard Emerging Markets, as well as 1.5 million shares of iShares MSCI Brazil Index Fund and 1.14 million iShares FTSE/Xinhua China 25 Index Fund.
Full Story: http://www.bloomberg.com/apps/news?pid=20601014&sid=ataZfeXWHGcU Barclays Files To Launch Two Actively Managed ETFs
Barclays Global Investors' iShares group is apparently moving forward with plans to launch actively managed exchange-traded funds.
In a filing dated May 4, BGI is requesting approval from the Securities and Exchange Commission to open two broad-based active ETFs. One would focus on stocks and the other on bonds.
The exemption request was actually made on the behalf of two subsidiaries—Barclays Global Fund Advisors and iShares Inc. A third outside party, SEI Investments, would serve as distributor.
The proposed ETFs would be:
•The iShares Active Equity Fund. It would invest at least 80% of its assets in large-cap U.S. stocks.
No specifics are given on where the remaining 20% can go, but a section of the document does describe how the fund can use American Depository Receipts, or ADRs, with foreign-based companies.
While not holding to any index, the ETF's adviser will select from the 1,000 largest stocks traded on domestic exchanges. "BGFA will utilize a portfolio construction and optimization process to select stocks in the initial equity fund which incorporates proprietary investment insights," the filing stated.
But here's the real interesting part: "BGFA will seek to weight the securities in a transparent quantitative manner. The weighting of the securities will be consistent with research suggesting that equal weighted approaches to stock selection may provide superior risk adjusted returns."
The fund would also be permitted to invest in futures contracts, options and other derivative instruments. Those could include among others: convertible securities; floating rate securities; credit-linked notes and preferred stock.
It could also make short sales "to enhance returns as part of an overall investment strategy or to offset a potential decline in the value of other holdings," the filing added.
Full Story: http://www.indexuniverse.com/component/content/article/10-news-in-focus/5832.html?Itemid=19 Concerns UNG ETF gas fund driving price may be overblown
NEW YORK, May 13 (Reuters) - Recent concerns that growth in the United States Natural Gas Fund (UNG.P) (UNG) has been the primary driver behind the strong gas price run-up this month may be overblown, some industry analysts said.
Some analysts have estimated UNG could hold as much as 80 percent of New York Mercantile Exchange June natural gas open interest, stirring concerns that such a huge share could impact price volatility.
But some said the share was probably a lot lower.
"There's been a lot of attention paid to the growing open interest held by UNG, but it's completely disingenuous to say that it currently represents 80 percent of the futures market. That completely overstates the case," said Addison Armstrong, director of market research at Tradition Energy in Connecticut.
Armstrong noted that data from May 12 showed UNG held the June futures equivalent of about 42,000 contracts, or only about a quarter of the NYMEX June gas open interest, which includes both swaps and futures contracts.
UNG is an exchange-traded fund, or ETF, that tracks the price of natural gas futures on the New York Mercantile Exchange. It's one way for smaller players to invest in commodities like gas by buying shares in the fund without worrying about margin calls if their bet goes wrong.
Full Story: http://www.reuters.com/article/marketsNews/idUSN1341396420090513 Stocks Downshift After Steep Run Higher; FAZ up 14%
Stocks tumbled, led lower by the Nasdaq, which fell -3.0%, or -52 points, to 1,664. The Dow dipped -184 points to 8,285, while the S&P dropped -24 points to 884. Oil slipped -83 cents to $57.88 a barrel, while gold climbed $2.00 to $925.90 an ounce.
Topping the economic headlines, the Commerce Department announced that total retail sales dipped -0.4% in April, and -0.5% excluding autos. Economists were looking for April retail sales to be flat and up 2.0% excluding autos.
The Leveraged ETFs Index was the top performing tickerspy Index on the day, led by Direxion Daily Financial Bear 3x Shares (NYSE: FAZ - News) with a 14% gain.
Full Story: http://finance.yahoo.com/news/Stocks-Downshift-After-Steep-indie-15235839.html?.v=1 Going Beyond Big Oil to Profit from the Rise in Crude: XOM, AGU, POT, USO
(La Jolla CA) With the price of petroleum hitting a six month high, stocks and sectors other than Big Oil are also prospering. There are other benefits to owning shares in these companies or ETFs, as they are not as exposed as an Exxon (NYSE: XOM ) or a British Petroleum (NYSE: BP) to the fluctuations in the price of crude. These stocks and sectors bring diversity and downside protection to a portfolio while still gaining when the cost of oil increases.
Canadian energy income trusts offer investors high yields, a currency hedge and a play on the price of oil. Penn West Energy Trust (NYSE: PWE), Baytex Energy Trust (NYSE: BTE), Pengrowth Energy Trust (NYSE: PGH) and Enerplus Resources Fund (NYSE: ERF) have to pay out earnings to shareholders. As a result, yields are often double digit: Penn West at 12.33% and Pengrowth Energy Trust at 12.96%, for example. As the price of oil climbs, so do the share prices. Canadian Energy Trusts also increase in value when the Canadian dollar is stronger against the US dollar. With the economic outlook indicating an increase in the price of oil along with a decline in the US dollar, Canadian energy trusts offer an upside potential on several fronts.
Fertilizer stocks such as Agrium (NYSE: AGU), Potash (NYSE: POT) rise with the price of oil, as petroleum is used in production. Over the past 18 months, these stocks have outperformed the main oil ETF (NYSE: USO).
Full Story: http://www.stocktradersdaily.com/News%20Release/News_release_TA_000020009000512yatescrude.htm 4 ETF Portfolio Strategies to Grow Your Money
Even though the stock market has rebounded from its March lows, millions of individual investors are still stuck in the mud. They’re lost, scared, disillusioned, and confused, which means they’re probably still losing money. Only the best investors adjust their investment strategies to avoid financial catastrophe. And what about the worst investors? They just keep repeating their mistakes, perfecting them until they can stand no more.
Let’s analyze four basic strategies to help you get your investment portfolio on track. If your money is already on track, these strategies will reinforce the rightness of your way.
Stop Betting on the Wrong Horses Around 85% of all mutual fund assets are invested with fund managers that propose to beat the market, while the remaining portion is in index funds and index ETFs that propose to match the market. Even though most fund investors are betting that fund managers will lead them to the Promised Land of outperformance, look at what the numbers say.
Over the past 5 years, Standard & Poor’s reports 71.9% of active large cap funds failed to beat the S&P 500 index (NYSEArca: SPY), 79.1% of active mid cap funds failed to beat the S&P MidCap 400 index (NYSEArca: MDY) and 85.5% of active small cap funds failed to beat the S&P SmallCap 600 index (NYSEArca: IJR). What does all of this mean?
The financial lesson you can take from this, is not that investors need to pick their mutual fund managers more carefully as those that suffer from data misinterpretation deficit (a form of financial puberty) would conclude. Here’s the real lesson: Trust the indexes and the financial products tracking them, not the portfolio managers that try to beat them and fail. Translation: Align your money with winners not losers.
Full Story: http://www.etfguide.com/commentary/545/4-Portfolio-Strategies-to-Grow-Your-Money/
The Other Shoe; Commercial Real Estate (IYR)
AMERICANS IN THE PAST TWO YEARS have been closely watching residential real estate, as TV commentators breathlessly relate each downward tick in home prices and upward move in foreclosures. But all the while, another important part of the real-estate market has been quietly cratering, all but ignored by the general press. Since peaking in early 2007, the value of the nation's commercial property has fallen an estimated 30% to 40%.
You can get a good idea of the pain being suffered by looking at an index of real-estate investment trusts, the publicly traded entities that investors use to play the commercial real-estate sector. The MSCI REIT Index fell 77% from a high of 1233 in February 2007 to the low of 287 hit in March. Since then, it has rebounded 45%, to 420, as investors seek opportunities and the economy seems to be improving.
But the commercial-property sector remains fraught with peril. Some REITs will be strong enough to snap up buildings at bargain prices, while other REITs may go bust or need to raise gobs of new equity to bolster their debt-heavy balance sheets. The commercial real-estate problem has become a focus of federal regulators in recent weeks as they stress-tested the 19 largest U.S. banks to see where losses could pop up if the economy, rather than recovering, worsens.
Why has the value of REITs tumbled an average of 65%, while the value of their properties has slid more like 35%? REITs tend to rely on borrowed money. That boosted profits in the good times, from 2002 to 2007, but has magnified problems ever since.
Full Story: http://online.barrons.com/article/SB124121810527378775.html?ru=yahoo&mod=yahoobarrons Data, and dilution weigh on financial sector (XLF, KRE, KBE)
NEW YORK (MarketWatch) -- Shares of U.S. financial stocks fell on Wednesday as the latest data from the government showed that consumer spending continues to fall. Analysts had expected a small boost in consumer spending in April.
Retail sales dropped a seasonally adjusted 0.4%, the eighth decline in the past 10 months, the Commerce Department estimated Wednesday.
The Financial Select Sector SPDR (XLF) shed 3.5% on Wednesday morning.
Rising home foreclosures and a report that the government is looking to take a more active role in regulating financial services firms also spooked investors who have driven up financial stock prices sharply over the last six weeks.
And, a flood of new bank shares headed to the market after the recently concluded stress tests also weighed on the sector.
The KBW Bank ETF (KBE) and the KBW Regional Banking ETF (KRE) both fell.
U.S. foreclosure filings in April rose to a record, affecting one in every 374 housing units, and bank repossessions in particular may spike in the next few months, RealtyTrac reported.
Foreclosure filings -- defined as default notices, auction-sale notices, and bank repossessions -- were reported on 342,038 U.S. properties in April, up less than 1% from March and up 32% from April 2008, the Irvine, Calif., real-state consulting firm reported.
RealtyTrac began issuing its report on foreclosures in January 2005
Full Story: http://www.marketwatch.com/story/data-and-dilution-weigh-on-sector?siteid=yhoof Tech Funds: What the Pros Are Buying Now
Although financial services stocks have taken much of the credit for the broad-based market rally that began more than two months ago, technology names may be the safer bet for all kinds of economic scenarios that might lie ahead. After all, banks and other financial names still have a host of unresolved issues around capital levels and distressed assets -- and remain vulnerable to another batch of grim economic data.
All 15 broad technology sector exchange-traded funds, as well as 17 subsector ETFs, are trading between 25% and 40% higher since the Standard & Poor's 500-stock index hit its bear-market low on Mar. 9. But the gains by tech stocks aren't merely tracking the rally in the broader equities market. In fact, they have significantly outpaced the Nasdaq composite index, known for its tech-heavy focus, since the year began.
Safe from Collapse, Tech Thrives
Indeed, technology stocks reached their lows in November. The rebound in the sector has been driven less by fundamental considerations than by the realization that the worst-case scenarios involving the collapse of the financial system were not going to come to fruition, says Ryan Jacob, manager of the $30 million Jacob Internet Fund (JAMFX).
Once the federal government decided to throw its full support behind the financial services industry, most of those scary scenarios came off the table, and Jacobs says he can't imagine the market returning to that extreme level of fear again, whatever may happen in the economy.
What's made tech stocks so attractive over the past four to five months? The fact that most of these companies still have an opportunity to show growth within their industries even if there's no growth in the economy as a whole, according to Jacob. With so much cash and minimal or no debt on their balance sheets, these companies have the means to continue investing in internal growth initiatives and acquisitions, which is important since access to capital is likely to remain tight for the rest of this year and possibly longer, he adds.
Full Story: http://www.msnbc.msn.com/id/30723441/ Where Next For Leveraged ETFs?
Hartmut Graf, head of the index team at the German stock exchange in Frankfurt, gave a fascinating talk on the performance of leveraged indices at yesterday's "Investing in ETFs" conference.
Graf started his presentation by recalling the basic fact about these indices - that they do not track the "equivalent" multiple of the underlying index return if held over long periods. Why? Because the simple effect of compounding and rebalancing on a daily basis leads to significant tracking error.
There are several good explanations on the internet of how this occurs, but one of the first and best was given by Tristan Yates and Lye Kok, here.
Essentially, what is called the "constant leverage trap" forces the fund to buy high and sell low, a strategy that goes against common sense. The higher the volatility of the underlying market, the more likely that leveraged indices will lose ground, as well. Furthermore, there's absolutely no way of telling, given a certain period return on the underlying index, what the leveraged, or leveraged index's return will be. What these derivative indices actually produce as a return is path-dependent; how you get to the end point is more important than what start and end levels of the "base" index actually are.
Graf reminded the audience that the expected ultimate value of an index that maintains constant leverage through daily or monthly rebalancing is zero. And the higher the underlying market volatility, the sooner you eat up all your capital.
Essentially, holders of leveraged and leveraged index ETFs are the ultimate gamblers. While these funds can deliver outsize returns for investors who get their market timing right, they are still playing a form of Russian roulette.
Full Story: http://www.indexuniverse.com/blog/5831-where-next-for-leveraged-etfs.html ETF Billion Dollar Club For May 2009
The ETF Billion Dollar Club shrank this month. This exclusive club, consisting of ETFs and ETNs with more than $1 billion of Average Daily Value Traded (ADVT), now has only 15 members based on the most recent month’s trading, down from 19 for the prior month.
The four members on last month’s list that didn’t make the cut were SPDR Select Sector Energy (XLE), iShares FTSE/Xinhua China 25 (FXI), HOLDRS Oil Services (OIH), and ProShares UltraShort QQQ (QID). There were no new members this month.
ETF trading declined more than 20% in April from the prior month, as only $1.59 trillion worth of ETFs and ETNs changed hands - down from more than $2 trillion in March. April ETF trading averaged $75.9 billion per day.
The 15 members of this club, just 1.8% of the ETF population, accounted for 71.4% of the ETF trading in April. With so few funds grabbing the lion’s share of the action, there are valid concerns about the other end of the spectrum - the funds on ETF Deathwatch. These include many products with severe liquidity issues such as days with zero volume and/or outrageous bid/ask spreads. See full story for list.
Full Story: http://investwithanedge.com/etf-billion-dollar-club-may-2009 Claymore Introduces Three Actively Managed Commodity ETFs
Claymore Advisors has filed a request with the SEC to introduce three new ETFs, each of which would be actively managed. Among the proposed funds is the Claymore Delta Global Hard Assets ETF, which would be the first actively-managed commodity ETF.
The filing with the SEC states that the Hard Assets ETF will invest in "securities that derive their revenues from the mining, processing and sale of hard commodities." While this will likely include the usual suspects - gold, silver, platinum, copper, zinc, etc. - the fund will also invest in stocks of companies representing various commodities from three broad categories: industrials, material, and energy.
Full Story: http://seekingalpha.com/article/137412-claymore-introduces-three-actively-managed-commodity-etfs A Dividend ETF Disappoints
The case for owning high-yielding stocks during hard times runs something like this: Consistent dividend payers are, by definition, financially stable or they wouldn't be able to sustain their payouts. Plus, owning high yielders means you get paid while you wait for better times to return. But over the past year and a half, the lure of dividends proved to be a siren song. The main problem: Financial stocks represented a disproportionately large percentage of big dividend payers.
Nothing better exemplifies the pitfalls of a payout-oriented strategy than iShares Dow Jones Select Dividend Index (symbol DVY). The exchange-traded fund tracks an index of the 100 highest-yielding U.S. companies that have maintained or boosted their dividend over the past five years. In addition, eligible companies cannot have paid out more than 60% of their profits, on average, over the previous five years.
DVY, which we labeled the best ETF in our November 2006 "Best of Everything" issue, dived headfirst into financials from the outset. At its inception, in late 2003, the fund allocated 43% of its assets to financial stocks. Going into 2008, by which time storm clouds had already gathered over the financial sector, the allocation had risen to 49%. That outsize stake in financials played a major role in the fund's crummy performance of late; it lost 46% over the 12 months ended April 9, trailing Standard & Poor's 500-stock index by six percentage points.
Full Story: http://www.kiplinger.com/magazine/archives/2009/06/dividend-etf.html Oil and Gas ETFs Are Jumping, But Why?
Have we somehow traveled back in time to this time last year? Rising gas and oil prices are the talk of the town, and related exchange traded funds (ETFs) are moving skyward. What’s going on? Oil has hit $60 a barrel for the first time in six months. While that’s a far cry from the record $147.27 hit last July 8, the price spike is getting attention because inventories are still very high.
The prices are also rising in part because of the U.S. dollar, which has been weak, Reuters says. China also plays a part - the country is the world’s second-largest energy user. They said that crude imports in April rose to their second-highest daily rate on record.
Full Story: http://www.etftrends.com/2009/05/oil-and-gas-etfs-are-jumping-but-why.html 
