All ETF Daily News Articles

Led by the iShares exchange traded fund group, exchange traded funds are poised to break the stranglehold that mutual funds have on 401(k) retirement plans

401kThe San Francisco-based unit of Barclays Global Investors launched the “iShares in 401(k)” program last month to help financial advisers use ETFs as investment options within 401(k) retirement plans. The program identifies administrative providers and networks that offer access to ETFs in 401(k) accounts, making it easier for advisers to provide the funds in clients' retirement programs alongside traditional mutual funds. The timing seems right. The massive losses in 401(k) plans — losses that can be attributed to mutual funds that in many cases are more expensive than ETFs — work to the advantage of ETFs, said Darek Wojnar, head of product research and strategy at iShares. And more 401(k) administrators and networks have cleared the technical hurdles of buying and selling ETFs and are making room for the products. “The record keepers have figured out ETFs are coming and they need to accommodate them,” said Bruce Levine, president of ETF provider WisdomTree Investments of New York. WisdomTree rolled out its own ETF 401(k) platform in 2007. With assets of $25 million spread among 10 plans, Mr. Levine admitted that it has been “slow going.” Industrywide, ETFs account for less than 5% of the assets in 401(k) plans, Mr. Wojnar said. Full Story:
ETF BASIC NEWS May 10, 2009 10:04am

BC Partners enters a 3.5 billion pound bid for iShares

breakingnewsiShares are units of families of exchange-traded funds (ETFs) managed by Barclays Global Investors. LONDON (Reuters) - Barclays Plc (BARC.L) said on Sunday it has received new interest from both trade and private equity buyers for its iShares funds business, responding to a media report that said BC Partners might trump last month's agreed bid from CVC Capital Partners.  A Barclays spokesman said there had been "tremendous" interest in iShares from "both strategic and private equity" since April 9, when Barclays agreed to sell the asset management firm to private equity company CVC for 3 billion pounds ($4.4 billion) but kept the right to hunt for a better deal until June 18.  The spokesman said it was "way too early to speculate if there will be a better offer and from whom."  The Sunday Times newspaper said that buyout firm BC Partners has lodged a 3.5 billion pound bid for iShares.  The newspaper said it was not clear whether CVC would be willing to match the higher offer from BC Partners, which it said was being advised by Perella Weinberg.  The Daily Telegraph said on its website on Sunday that Barclays has got at least two counter-offers for iShares, with private equity groups Apax, BC Partners and Hellman & Friedman all having been looking at trumping the CVC offer. Full Story:
ETF BASIC NEWS May 10, 2009 9:46am

Why Solar, ETFs Are Gaining More Power

solar-homesSolar panels are one of the easiest modern conveniences for hose who prefer green energy, particularly solar power. A plan to have utilities purchase power from homeowners could jump-start the industry and related exchange traded funds (ETFs).Installing small solar panels in your home is a great way to use the natural energy supplied by the sun, as well as saving on energy and utility costs down the line. Many times, the homeowner does not use the full amount of energy generated by the sun, so can utility companies tap into the leftover energy and supply the grid with extra power? Jennifer Collins for MarketPlace reports that there is another twist: imagine if the utilities had to buy any extra power you generated! As of now, any extra energy that a household generates and does not use goes back to the power company - free. Full Story:
ETF BASIC NEWS May 9, 2009 6:54pm

Rallying For Real

safeAfter two months of stocks heading higher with lagging economic data still predictably bad, it's time to admit we're in a recovery. There can be no doubt the bears are back on their heels for the moment, as markets have experienced recovery at a breakneck pace. Not only is the S&P SPDR (SPY) up well more than 30% above its March 6 lows, but other areas like the iShares Dow Jones Transportation Average (IYT), up 55% off its bottom, and the beleaguered Financial Sector (XLF), up nearly 100%, have participated. The super-cyclical Consumer Discretionary Sector SPDR (XLY) is up 47%, while the supposedly nuclear-waste-laden S&P Homebuilder Index (XHB) is up an astonishing 69% from its low. For those investors who sold at the pinnacle of panic dates--Oct. 10, 2008, Nov. 20, 2008, and March 6, 2009--the new owners of your shares thank you. While I can't speak for the likes of Mr. Buffett, I surmise his next annual report will unveil his willingness to profit from hysterical emotion-driven selling of great assets at low prices. Full Story:
ETF BASIC NEWS May 9, 2009 11:11am

Forget The Analysis, Just Buy Everything

buy-nowLast year, shareholders everywhere simply lost faith in stocks, selling off both undervalued and overvalued ones. You could tap computer keyboards, pore over balance sheets and examine price charts to identify superb companies in which to invest, only to see your "bargain" stock become an even bigger one as your fellow shareholders dumped their shares, convinced the world was ending. Hence the theory: If all stocks move in lockstep based on investors' general attitude toward owning equities, you might as well forget the analysis and buy everything -- specifically, an exchange-traded fund (ETF) that holds hundreds of stocks from all over the world. All broad-based ETFs have tracked the same path as the markets, bubbling along nicely until last summer, then plunging and hitting a multiyear low on March 9. True to form, all have since roared back with the markets over the past two months. Investors who want to own everything in a single ETF should consider the Vanguard Total World Stock Index Fund (VT/NYSE), said Norman Rothery, founder of The fund's management expense ratio of 25 basis points "is a bit high," he said, noting a lower MER can be achieved by combining a fund that tracks the U. S. market -- the Vanguard Total Stock Market ETF (VTI/NYSE), which has an MER of 0.07% -- with something like the Vanguard Europe Pacific ETF (VEA/NYSE), with an MER of 0.15%, "so it can be a cheaper approach, but if you're looking for total simplicity, you can get it down to one fund." Our online search found that most "global" exchange-traded funds are dominated by the same handful of U.S. giants: Exxon Mobil Corp., Microsoft Corp., AT&T Corp., Johnson & Johnson, Procter & Gamble Co., Chevron Corp., General Electric Co. and IBM Corp. Although these companies have international operations, the ETFs that hold them seem more American than global. Similarly, MSN's Moneycentral site (moneycentral. lists 17 ETFs under the category of "world stock," but many represent plays on individual sectors -- industrials, consumer staples, agriculture, gaming, luxury goods, shipping and so on. If you buy such a sector ETF, even one diversified geographically, your hunch about the industry must be correct for your investment to outperform the overall index. If you are not an industry insider, you're just guessing. So, again, you might as well buy everything. The Yahoo Finance site's ETF browser (finance. lists 19 funds under the category of "foreign-large blend," referring to funds that hold large-cap stocks from developed countries outside the United States. The largest is the US$29.62-billion iShares MSCI EAFE Index Fund (EFA/NYSE), which indeed owns everything, with 838 large-cap stocks. Its 10 largest holdings each account for less than 2% of the fund: Nestle SA, BP PLC, Total SA, Roche Holding AG, Vodafone Group PLC, Novartis AG, Toyota Motor Corp., Telefonica SA, GlaxoSmithKline PLC, Royal Dutch Shell PLC, BHP Billiton PLC and HSBC Holdings PLC. Full Story:
NYSE:EFA May 9, 2009 9:51am

Closing Of Unloved ETFs Could Start A Trend

closedInvestors in exchange-traded funds are learning that you’d rather be in "what sticks" than what falls by the wayside. Invesco PowerShares Capital Management announced last week that it would close 19 ETFs on May 18, the single biggest mass killing of exchange-traded funds in the history of the business and the continuation of a small trend that started in 2008 involving the liquidation of tiny funds that can’t attract enough market share. "After carefully evaluating numerous factors including shareholder considerations, length of time on the market, asset levels and the potential for future growth, we proposed closing certain portfolios that have not gained sufficient acceptance with investors," Bruce Bond, president and chief executive of Invesco PowerShares, said in a statement. "We remain fully committed to the ETF industry and expect to offer new, exciting products in the months ahead." And therein lies part of the problem. The exchange-traded fund business is in the rapid-growth phase where every idea, no matter how scatterbrained, gets a tryout. Fund companies are so eager for market share that they’re throwing every concept at the wall to see what sticks. In the PowerShares case, the funds that have fallen are a rogue’s gallery of the uninspired and unloved. While the 19 funds represent nearly 15 percent of the PowerShares lineup, their $122 million amounted to less than 0.5 percent of the company’s assets under management. Among the motley crew are PowerShares Dynamic Aggressive Growth, Dynamic Hardware & Consumer Electronics, FTSE RAFI Asia Pacific ex-Japan Small-Mid Cap, High Growth Rate Dividend Achievers and sector funds covering everything from utilities, telecommunications and technology, international real estate, healthcare, consumer goods and more. Full Story:
ETF BASIC NEWS May 9, 2009 9:22am

The Economic Data Is Better, But The Bears Are Patiently Waiting On The Sidelines!

bear-sittingFirst, April was not nearly as good as the bulls made it to be. Yes, the Dow Jones Industrial Average ($DJI) surged 5.5% during the first half of the month. But, in the second half, momentum slowed with the average rising just 1.7%. Even then, the statistics don't tell the whole story. From the Apr 16 close to the Apr 30 close, the Dow gained a mere 43 points, or 0.5%. That's a big difference in return for someone who bought the Dow Diamonds ETF (DIA) on Apr 16 instead of just a couple of weeks earlier. (DIA is an ETF that tracks the performance of the Dow.) Secondly, volume is not signaling a lot of conviction on the part of buyers. Throughout March, the SPDR S&P 500 ETF (SPY) experienced average volume of 400 million shares per day. In April, daily volume declined to 287 million shares. Yet, during this entire time, stocks have risen. And the higher they go, the more the rally is losing steam. That's not good. Thirdly, I'm worried about the banks. Yes, everyone passed the stress test, but it was a questionable test to begin with. Plus, Bank of America (BAC) and 9 others have lots of time to raise funds. But, foreclosures are still rising, credit card defaults will get worse and, despite all of the analysis, nobody still knows how to value the toxic assets. The government might keep the large banks afloat, but their stock prices and earnings could still suffer. And that alone would cause problems for the stock market. Not to mention that financial stocks (and related ETFs such as Financial Select Sector SPDR (XLF)) are overdue for a pullback based on technical analysis alone. Fourthly, as earnings season comes to an end, we should see fewer positive revisions to profit forecasts. The ratio of positive to negative revisions typically falls after earnings season, even during good times. I don't see any reason for this to change. A drop in positive revisions would be one less catalyst for stocks to go higher. Finally, the General Motors (GM) situation remains unresolved. If bankruptcy proceedings turn messy, it will cause a big disruption across the entire automotive industry. This, in turn, could create problems for the market. Full Story:,+But...
NYSE:DIA May 8, 2009 4:57pm

Huge flows into emerging-market funds in past week: Brazil’s second-biggest inflow ever; China, Taiwan, India and Russia also benefit

emergingmarketsNEW YORK (MarketWatch) -- Emerging-market equity funds saw inflows of $4 billion in the week ended May 6, the largest weekly inflow since early December and the eighth largest on record, Merrill Lynch said Friday. Buying of exchange-traded funds was mostly responsible, but investing in funds that take long-only positions also saw strong inflows, Merrill said. Long-only funds represent one-way bets from investors ready to embrace more risk. Both the iShares MSCI Emerging Markets Index (EEM) and the Vanguard Emerging Markets Stock ETF (VWO) have rallied impressively, up 8% over the past week. That compares with a 5% weekly gain for the S&P 500 index (SPX). Brazil, in particular, saw very large flows, garnering its second-largest weekly inflows on record, while China, Taiwan, India and Russia also saw big gains. Merrill's data show the pace of inflows into emerging-market funds has been strong and accelerating, totaling $14 billion over the past seven weeks. For the year to date, the MSCI ETF is up nearly 26%, while the Vanguard ETF is up nearly 29%, far and away outpacing the 2.4% gain for the S&P 500. Merrill Lynch said that its own emerging-markets trading indicator remains in "sell" territory but that this gauge continues to "be wrong-footed" by the big economic and financial policy stimulus being put in place in various emerging markets, as investors go increasingly for reallocation of assets into global equities. Full Story:
ETF BASIC NEWS May 8, 2009 4:51pm

Taxes on Commodity ETF’s

ETF BASIC NEWS May 8, 2009 4:42pm

New kids in the old mutual fund biz, Mutual Funds using ETF’s

mutualfundA few weeks ago, David Wild of Appleton Group Wealth Management, Inc. visited our offices to explain the nuts and bolts of its mutual fund -- the Appleton Group Plus Fund (AGPLX $) -- and how it has performed since its launch in 2005. It's one of just a handful of funds that use exchange traded funds (ETFs) as their main investment vehicles, and given the volatility of ordinary mutual funds these days, they're worth a long look. Indeed, Wild's visit sparked us to evaluate other funds primarily using ETFs, and our research came up with only three others: Ashton/Smart Allocation ETF Fund (ASENX $), Ashton/New Century Absolute Return ETF (ANENX $), and ETF Market Opportunity (ETFOX $). We combed through, Charles Schwab's mutual fund research and Googled "ETF mutual funds" but only came up with these four. Others may exist, but we couldn't find them. Before we go any further, we need to explain the differences between traditional mutual funds, ETFs, and ETF-oriented mutual funds. Traditional mutual funds hold plain old stocks and bonds. They sell their shares to the public and repurchase those same shares from the public. This type of mutual fund is priced at the end of each trading day. ETFs, or exchange traded funds, are baskets of stocks, bonds, or other investment vehicles that are in the custody of banks. These so-called baskets -- holding a specific group of stocks like the S&P 500 -- are traded like stocks on the stock exchanges during regular trading hours. Investors don't own the individual shares within those baskets, but rather the entire baskets via custodial arrangements between the bank and the ETF sponsor. Now the new wrinkle: A few traditional mutual funds, like the four above, are now investing in ETFs rather than stocks and bonds. In essence, they've blended the traditional mutual fund with ETFs. One obvious advantage of this approach is the reduction in specific stock risk; traditional mutual funds can suffer disproportionately if one or more of their stock holdings gets flattened, like Enron or Fannie Mae. That being the case, the next step for us in evaluating these funds was to look at their investment strategies and their returns. Full Story:
ETF BASIC NEWS May 8, 2009 11:30am

The Ultimate Commodities ETF Guide

etf-newsCommodities have received greater exposure in recent years thanks to a major bull rally in commodity prices coupled with new products designed to make these securities available to common stock investors. Many investors are familiar with precious metals and energy exchange-traded funds (ETFs), such as SPDR Gold Shares (GLD), PowerShares DB Oil (DBO), U.S. Oil (USO) and iShares Silver Trust (SLV), but they now have the option of investing in a variety of individual commodities and have a choice between several indexes that offer unique commodity weightings. When oil prices rallied to $150 per share and corn prices advanced on ethanol demand, investors looked to grab a slice via ETFs and exchange-traded notes (ETNs). When commodities slid at the start of a major global recession, prices fell as much as 75 and 80 percent. Recently, several commodities have climbed off their lows, and some investors are starting to look at the sector in anticipation of an economic recovery. Commodities tend to outperform during the early phases of an economic expansion, when the rising demand outstrips the supply, due to recessionary cutbacks, and during the later stages, when demand again outstrips available supply. The point of this article is not to assess whether the economy is on the verge of a recovery—that’s a topic unto itself—but to compare the relative strengths of different indexes and investment approaches. Any decision to invest in commodities should begin with the index funds. For the vast majority of investors, indexing makes the most sense. As with equity indexes, the securities providers have designed a plethora of ways to gain commodity exposure. Full Story:
NYSE:DBO May 8, 2009 10:24am

Oil Setting Up For A Spill (USO, XES)

oil5The price of crude is beginning to look like it might be setting itself up for a spill in the short-term. The United States Oil Fund ETF (NYSE:USO) has soared 39.1% since hitting a 52-week low in mid-February. This run is somewhat unexpected given lagging underlying demand. It is also opening up opportunities for investors. Excessive Inventory On May 7, the price of crude broke above $58 for the first time in 2009. I am a bit leery of this rally given the lack of a fundamental basis to support the climb. On May 6, the Energy Department reported that crude inventories reached their highest level in 18 years. The move up in crude appears to be based more on the optimism that equities have been experiencing recently as well as lower-than-expected increases in crude stockpiles. Over the long run, I believe the price of crude will recover, but this current rally may be a bit premature. Full Story:
NYSE:USO May 8, 2009 9:34am

Chineese ETF’s on the move: ADRA, CAF

NASDAQ:ADRA May 8, 2009 9:16am

Thin ETFs Can Have Wide Bid-Ask Spreads

simpletradingAside from comparing holdings and expense ratios in selecting ETFs, also watch out for wide spreads, which tend to vary with an ETF's average daily trading volume and the amount of assets. ETF providers are loath to admit that liquidity or average daily trading volume matter because they can theoretically create and redeem shares as necessary to meet demand. They claim an ETF's liquidity is based on the liquidity of the holdings. If the underlying components are thinly traded and have wide bid-to-ask spreads, so will the ETFs. (The bid-ask spread is the difference between the price sought by buyers, i.e. the bid, and the price at which they're being offered in the market, the ask.) But in reality, the more thinly traded an ETF, the wider its spread. Wide spreads can dramatically affect your returns because you could be automatically in the red by the amount of the spread once you buy, even if the stock's price remains the same. The most highly traded ETFs such as the S&P 500 SPDR (NYSEArca:SPY - News), ProShares QQQ (NasdaqGM:QQQQ - News), the iShares MSCI EAFE (NYSEArca:EFA - News) and the sector SPDRs have spreads of just one or two pennies. But the most thinly traded ETFs, in which only a few hundred shares change hands a day, have spreads of as much as $1 to $5. For example, the spread on the thinly traded Claymore U.S. Capital Markets Bond (NYSEArca:UBD - News) showed a gap in bid-ask prices of more than $8 at the close on May 1, according to NYSE Arca. Divide the spread by the spread's midpoint, and that works out to 23%. Full Story:
ETF BASIC NEWS May 8, 2009 9:05am

ETFs are a boon to buy-and-hold investors. Just don’t get suckered into one of the flaky ones.

suckerThe exchange-traded fund is maybe the fastest hit in the history of financial products. In the decade and a half since its inception the category has attracted $450 billion in assets. The ETF is a cross between a closed-end fund and an openend fund. It offers diversification, low cost, high tax efficiency and the convenience of trading on a stock exchange throughout the day. What's not to like? Plenty. Many of the 850 ETFs now vying for your attention suffer from one or more of the same cardinal sins seen in other Wall Street products: an excessively narrow focus, high leverage, misleading packaging and tax inefficiency. First Trust Global Wind Energy, for example, sells itself as a clean-energy ETF. But the pool of wind-energy producers is so shallow that it owns significant stakes in carbon polluters BP and Royal Dutch Shell just to maintain liquidity. United States Oil Fund purports to track the price of West Texas Intermediate Crude Oil. The futures market in which it trades is so thin, however, that pros can front-run it each month, knowing that the ETF will have to roll over its positions. Two highly leveraged funds, Ultra Oil & Gas ProShares and UltraShort Oil & Gas ProShares, are supposed to move in opposite directions; they lost 74% and 30%, respectively, last year. "If you're hell-bent on using leverage for longer than a day, use a margin account," suggests Paul Justice, a Morningstar analyst. Full Story:
ETF BASIC NEWS May 8, 2009 8:45am

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