All ETF Daily News Articles

Investors warm to ETFs

peaceloveThe rise of exchange traded funds has been one of the key developments in the investment world during the past 10 years. It is a popularity that has gained further impetus since the collapse of Lehman Brothers as ETFs are seen as safer and more cost efficient than their actively managed rivals. ETFs have grown dramatically since 1999 from assets totalling $39bn to $593.3bn in February this year – a 15-fold increase, according to Barclays Global Investors (BGI). The total amount of assets has fallen from the peaks of 2007, when the industry was worth $796.7bn – but, as markets worldwide have crashed, key data on fund flows and a rising share of trading volumes point to an industry on the up. ETFs now account for 25 per cent of all trading in US markets compared with 15 per cent a year ago, according to Credit Suisse. In Europe, according to Source, ETFs managed to attract net inflows of $47bn in 2008, in spite of the financial shocks, while European mutual funds saw outflows rising close to $250bn. (Source is a specialist provider of exchange traded products set up by Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley.) But it is in the past seven months, since the demise of Lehman in September and as volatility on the financial markets has hit levels not seen before, that investors have shown even greater interest in ETFs  Full Story:
ETF BASIC NEWS April 30, 2009 8:52am

Picking Apart a Pro’s All-ETF Portfolio

portfolio1Mark Luschini, an equity strategist at Janney Montgomery Scott, has an all-ETF portfolio designed to be a solution for investors trying to rebuild their investments. It's always worth deconstructing these exercises to learn from strengths and weaknesses. That way, we build better portfolios for ourselves. Here's the portfolio: Vanguard Total Stock Market ETF(VTI Quote): 30% SPDR S&P Dividend Aristocrat(SDY Quote): 18% SPDR S&P World ex-US(GWL Quote): 9% iShares iBoxx Invesment Grade Corp Bond(LQD Quote): 20% Vanguard Total Bond Market ETF(BND Quote): 20% SPDR Gold Trust(GLD Quote): 3% The positives include inexpensive access to many asset classes, a conservative mix that isn't overly dependent on a single outcome and the realization that price inflation looms as a threat with the inclusion of the SPDR Gold Trust. There are a couple glaring omissions as well. There is virtually no small-cap exposure. Total stock market proponents will tell you that Vanguard Total Stock Market ETF covers the entire market, which includes small companies. But the fund is heaviest in mega-cap names like ExxonMobil(XOM Quote), AT&T(T Quote) and Microsoft(MSFT Quote). The ETF's small-cap stocks have miniscule weightings and are unlikely to move the needle. Full Story:
ETF BASIC NEWS April 30, 2009 8:33am

Taiwan Stocks in U.S. Surge on China Investment, UMC (EWT)

china3April 29 (Bloomberg) -- Taiwanese stocks traded in the U.S. rose the most in five months after the island allowed Chinese investments for the first time and United Microelectronics Corp. said computer-chip shipments may double. The iShares MSCI Taiwan Index Fund jumped as much as 14 percent before trading was halted. American depositary receipts of United Microelectronics and Taiwan Semiconductor Manufacturing Co. rallied at least 8.7 percent as China Mobile Ltd. agreed to buy 12 percent of Far EasTone Telecommunications Co., the first investment by a Chinese state-owned company in Taiwan since a civil war ended in 1949. Taiwan’s main stock index climbed 0.3 percent. “It’s the perfect marriage,” said Paul Justice, an exchange-traded fund analyst with Chicago-based Morningstar Inc. “You have Taiwan with great technology expertise and China with huge manufacturing potential. It gives the sentiment that more institutions are putting money to work, which is a very positive sign for the market.” Ties between Taiwan and China have improved since President Ma Ying-jeou took office in May and dropped the pro-independence stance of his predecessor, Chen Shui-bian. The two sides signed agreements on April 26 to allow financial institutions invest and operate across their borders, expand direct flights and cooperate in combating crime. After the close of local markets, China Mobile said it will pay NT$40 a share, or 14 percent higher than Far EasTone’s closing price, for the stake in Taiwan’s third-largest phone company. China Mobile, the world’s biggest wireless-phone carrier, rose 1.6 percent to $43.99 in New York trading. Full Story:
NYSE:EWT April 29, 2009 4:19pm

Dow 10,000 By Year’s End? Some Pros Think It’s Possible

dow10000After months of being fed doomsday scenarios, investors are now starting to take a look at stock market utopia. In this land, bad news, like Wednesday's dismal GDP numbers, don't matter. Here, housing prices stabilize, banks are resuscitated, corporations offer positive earnings guidance, and economic data points start showing signs that things are actually improving and aren't just less horrible than before. A total fantasy land? Maybe not, say some experts who believe the market's best-case scenario isn't too shabby. "I'm very impressed at how strong the market has been in the past several days. We've had every opportunity to sell off," says David Twibell, president of wealth management for Colorado Capital Bank in Denver. "Objectively, you've got to be somewhat surprised by that and certainly impressed. "Are we really seeing a bottom in the market or a substantial bear market rally?" he adds. "This looks more and more like there are some real legs to this thing." 'Green Shoots' or Just Weeds? In the case that the so-called "green shoots" of the economy—as delineated by Fed Chairman Ben Bernanke—are real, then so are the realities that accompany the mild improvements in some areas. One of the starkest is that anyone who thinks this market will see its historic highs from October 2007 anytime soon is dreaming. "Are we going to get back to 14,000 on the Dow this year? That is highly, highly, highly unlikely," says John Buckingham, chief investment officer at value-based Al Frank Asset Management in Laguna Beach, Calif. "But you have to be realistic. If stocks doubled in the next five years, that's a phenomenal return from here." Full Story:
ETF BASIC NEWS April 29, 2009 4:04pm

Gold rises first day in three as dollar falls; copper rallies

goldNEW YORK (MarketWatch) -- Gold futures rose Wednesday for the first session in three, climbing above $900 an ounce as the U.S. dollar fell after a worse-than-expected U.S. economic report, raising gold's investment appeal.   Meanwhile, copper futures rallied nearly 5% to above $2 a pound, pacing strong gains in crude oil and U.S. stocks as inventories at London Metal Exchange showed another decline. Gold for June delivery gained $6.90, or 0.8%, to end at $900.05 an ounce on the Comex division of the New York Mercantile Exchange. May copper gained 9.4 cents, or 4.9%, to $2.01 a pound. After floor trading closed, gold reduced part of today's gains in electronic trading after the Federal Reserve said that the economic outlook had improved over the last six weeks, although the economy was likely to remain weak for a time. The Fed also kept its key interest rate unchanged at 0 to 0.25%. Gold for June delivery fell $4.70, or 0.5%, to $895.80 an ounce in recent trading. U.S. GDP Gains in commodities and stocks came after economic data showed the U.S. economy contracted at a bigger-than-expected rate, pushing the U.S. dollar sharply lower. Full Story:
NYSE:GLD April 29, 2009 3:58pm

Fed Rate Call Boosts ETFs

federalreserveMarket Wrap-Up The Federal Reserve left a key interest rate as low as zero and the market responded with a substantial bump. Despite a 6.1% decrease in GDP, investors responded to news that the federal funds rate would remain between 0.00% and 0.25%. The Dow Jones Industrial Average increased 169 points to close at 8186. Wednesday’s gain puts the Dow on track for its best monthly showing in more than six years. Winners Signs that Taiwan's major computer makers and semiconductor manufacturers appeared to have reached an inflection point in the bottoming process made the iShares MSCI Taiwan fund (EWT: 9.80, +1.06, +12.12%) one of the best performing ETFs on Wednesday. Shares rose 12.9%. Vanguard's Emerging Markets Stock fund (VWO: 27.50, +1.41, +5.40%) gained 5.4%. Expectations of revived commodities demand pushed up shares of the SPDR S&P Metals & Mining fund (XME: 30.88, +1.45, +4.92%) by 4.8%. Losers A drop in natural gas prices nipped shares of the United States Natural Gas fund (UNG: 13.01, -0.39, -2.91%) by 2.6%. Betting against the rally did a bit of damage to skeptical investors, as the ProShares Short S&P 500 fund (SH: 70.29, -1.45, -2.02%) shed 2.1%. The big move to equities knocked back shares of the safe haven iShares Barclays 20+ Year Treasury Bond fund (TLT: 98.47, -0.88, -0.88%). It shed 0.7% Wednesday. Full Story:
NYSE:EWT April 29, 2009 3:54pm

New ETF Player Aims At Tax-Deferred Yields On SPY

newNext Investments, the New Jersey-based structured products developer, has filed to launch its first exchange-traded fund. The proposal is for a new fund of funds. Its only holding would be the S&P 500 SPDRs (NYSE: SPY). Every month, the ETF's adviser would sell a certain percentage of the portfolio's shares. What's interesting about this ETF is that by making predefined distributions on a regular basis, such payouts could be treated as return of capital for tax purposes. That would seemingly provide investors with a way to earn tax-deferred treatment of distributions from the fund. In the filing, Next notes that at SPY's current yield of around 2%, the new ETF's targeted rate of return—with a majority of distribution payments coming on a tax-deferred basis—would provide roughly another 4% to the fund's income stream.   But that's just yield. The fund would remain invested at all times in SPY. Officials at Next Investments declined to comment on the filing on Wednesday. However, Next Investments Chief Executive Dan McCabe has told in the past that the firm is working on developing a suite of different ETFs. A patent is pending on the structured distribution process for ETFs created by Next. Full Story:
NYSE:SPY April 29, 2009 3:22pm

The future of 401(k) plans. ETFs vs. mutual funds. ETFs make an advisor’s life a lot easier

401k3......Use ETFs as the investment choice!  All of the nasty stuff mentioned above doesn’t exit in the ETF world.  An ETF closely replicates an index.  No fund manger personnel changes to worry about, no market timing issues, no short-term trading fees, and very few active managers consistently beat “the index.”  

Plan participants can have a consistent style box investment choice.  If they want a small cap fund, they get a true small cap choice with an index-period. Buy into an emerging market country, and then sell out after you’ve made a profit.  If you sold an emerging market mutual fund, you probably would lose a good percentage of your profits due to a short-term trading fee.  This doesn’t happen with an ETF.  

What about that balanced fund that most of the participants in your plans have used?  How much did it go down, 20 percent, 30 percent or 40 percent?  I’m sure you were shocked when you found out the “fixed income” component wasn’t really investment grade bonds, but mortgage backed securities.  Use ETFs to build your own models.  iShares Aggregate Bond Index (AGG) or TIPs (TIP) product isn’t loaded down with mortgage backs. 

It’s not the low operating expense ratio of ETFs; it is the consistency and, most importantly, the ability to make an advisor’s life a lot easier.  The future is here; check out Barclays iShares 401(k) website,

Full Story:

ETF BASIC NEWS April 29, 2009 1:50pm

3 Asian Country ETFs Are Rocketing Higher (EWY, EWM, EWT)

missileWhy do some events have limited affects on world markets? Consider North Korea's recent determination to develop its plutonium and to launch its missiles capable of carrying nuclear warheads. One might have expected some trepidation by its Asian neighbors. Yet the iShares MSCI South Korea Fund (EWY) has barely missed a heartbeat in 2009. The basket of top South Korean companies has collectively put together a 4-month run of approx 24% through April 29. It has also managed a feat that few nations have achieved yet... a position above its 200-day, long-term moving average. In truth, it's mostly about a growth bias. Investors are flocking to the potential growth of Korean info tech names like Samsung and LG, as well as the market share pick-up by Hyundai. And yet, even on the value front, you have the Oracle of Omaha himself with a 4%+ stake in Korean steelmaker Posco. Each of these companies is heavily represented in the iShares MSCI South Korea Fund (EWY). Full Story:
NYSE:EWM April 29, 2009 1:48pm

Two Steps Forward, One Step Back?

questionConsider that since the current rally started on March 10, smaller stocks have been outperforming their bigger brethren. For example, the prices of the iShares Russell 2000 (NYSE: IWM) and the MidCap SPDRs (NYSE: MDY) have shot up roughly 30% in that period. By comparison, the S&P 500 SPDRs (NYSE: SPY) is up some 20% since early March. Interestingly enough, prices on the Rydex S&P 500 Equal Weight ETF (NYSE: RSP) have jumped around 30% since early March. That illustrates how an equal-weighted index can capture smaller company outperformance. Normally in a rebounding economy, it's more likely to see a quicker turnaround in fortunes at a small-cap name than a huge goliath..... What if stock markets do start to collapse? Technical indicators show that the first floor for such a falloff would be around 825, or about 5% less than current levels. But major support levels really would come into play if the S&P 500 dropped closer to 800. That would demonstrate a much more significant test to the market. And such an 8% fall might be healthier in terms of setting up the broader market for a longer-term run. ......The argument that some sort of pullback at this point is overdue does make sense. Consider that starting in the second week of January through early March, the S&P 500 fell eight out of nine weeks. Then, it went up six straight weeks. In fact, the PowerShares QQQ (Nasdaq: QQQQ) is on its eighth straight week of price improvements...... ......Another theory is circling around Wall Street these days that might be worthwhile to keep in mind. The contention is that trading desks at key financial institutions involved in government bailouts are heavily using leveraged ETFs and similar vehicles to make a profit. Although such rumors are sure to bring more fuel to the fire about the role of leveraged ETFs in courting volatility, investors need to focus on what's important. The point isn't whether leveraged ETFs are proper investment vehicles or not—that's up to each individual—it's that credit markets are a long way away from unfreezing. Full Story:
NASDAQ:QQQQ April 29, 2009 1:29pm

How To Avoid ETF Pitfalls

pitfall1Exchange-traded funds can be great for long-term investors, as long as you steer clear of these traps. When exchange-traded funds were introduced in 1993, they were one of the greatest innovations for long-term investing in decades. A class of mutual funds that trade throughout the day like stocks, "Better than Mutual Funds" is how we described them in one headline. Early on, ETFs mostly parroted broad benchmarks like the S&P 500 for rock-bottom fees and with excellent tax efficiency. The fanciest ones did nothing more exotic than break down the indexes into a handful of component parts--consumer staples, health care and financials, for example. Times have changed. There are currently 850 ETFs vying for a piece of a $450 billion market. They still offer easy access to markets, but these days that access often seems to benefit Wall Street sharpies more than Main Street investors. In fact, many of the cardinal sins of financial excess seem to be part-and-parcel of the ETF business these days: extreme leverage, market manipulation and tax bills that can blindside unsuspecting investors, to name a few. Full Story:
ETF BASIC NEWS April 29, 2009 1:01pm

ETF Gold Rush Looks Set To Continue

gold-rushAs fears of a global swine flu pandemic have continued to grow both in Mexico and around the world the price of gold hit an "intra day" high yesterday of $918 having already been given a boost by last Friday's revelation that China has been secretly raising its gold reserves by 75% since 2003, thereby confirming years of speculation that it has been stockpiling the metal.
The gold price is now just 8% below its all time high of $1000 last seen in February 2008. However, from a technical perspective the gold price has a number of price hurdles or "resistance" levels to overcome before we are likely to see this price once again. One of the biggest hurdles or resistance levels for the gold price is at the $960 price point which was last seen in March of this year. In the meantime there are other equally compelling factors which may affect the price of gold in the short term and these include the increase in gold imports by India which may double this month from a year ago, as recent price dips revive demand for the Akshaya Tritiya festival when it is considered auspicious to buy gold. However, this year the demand seems to have translated into heavy demand for gold back ETF's (exchange traded funds) rather than for the physical metal. Full Story:
NYSE:GLD April 29, 2009 11:34am

Beware the leveraged ETF

buyer-bewareLeveraged exchange-traded funds are, in theory, an excellent way to harness that conviction you have about the future direction of a particular index. Some of these funds will reward investors with two-times or even three-times the daily moves of the underlying investment – so if the S&P 500 rises 1 per cent, you could gain 3 per cent. In theory. In practice, these ETFs have received a lot of criticism recently because investors have realized that the actual returns, on a longer-term basis, don't come close to reflecting the moves of the underlying indexes. Birinyi Associates listed a number of fine examples on their web site. The Ultra S&P 500 ProShares, which aims to give investors twice the daily performance of the S&P 500, has fallen 66 percent since June 21, 2006. However, its opposite – the ETF that gives investors twice the inverse performance of the S&P 500 – has risen just 12 per cent. In other words, if you had made an astute bet against U.S. blue-chip stocks during one of the greatest equity meltdowns in history, your return wouldn't have beaten the dividend on a high-yielding tobacco stock. Full Story:
ETF BASIC NEWS April 29, 2009 11:24am

MacroShares Major Metro Housing ETFs: Changing the Housing Game

make-offerA smidgen of good news came with the release of the S&P/Case-Shiller Home Price Indices Tuesday morning. Although single family home prices continue to fall at an 18.8 percent rate across the country, the decline seems to be stabilizing. For the first time in 38 months the 10-City Composite index’s year over year performance improved from the previous month’s report. While “one robin” does not make it spring, let us hope this “robin” is soon joined by more friends. I suspect this news will embolden housing Bulls, but there is plenty of data in the report for the Bears to snarl that investors should not be fooled by a slight up-tick. For instance, while the large California cities have shown improvements for a few months, New York had its first year-over-year double-digit decline since 1981 and is headed in the wrong direction. Up until now, these confrontations between housing Bulls and Bears have been mostly academic, but that is about to change. On May 11, a new product will start trading allowing investors to wager on where these indexes are headed in the longer term. The housing index space has seen new products fail before, and this new entry is complicated, but I think the MacroShares have a decent chance of success. In very simple terms, there are two shares: the Major Metro Housing UP and Major Metro Housing DOWN (Toronto: DMM.TO - News). When the product was designed each share was worth $25 and together the pair is worth $50. Based on yesterday’s Index of 154.70, the UP shares now have an underlying value of $21.55 and the DOWN shares $28.45. Full Story:
ETF BASIC NEWS April 29, 2009 10:54am

The Anatomy of a 5-Star Active ETF (PWV)

goldstarOver the past three years, PowerShares Dynamic Large Cap Value (NYSEArca:PWV - News) has generated a track record that may not look that great on an absolute basis but is pretty impressive on a relative basis. Through April 24, 2009, PWV has returned negative 6.21% over the past three years. While negative returns are rarely something to crow about, when you compare that to the three-year return of the S&P-500-tracking SPDR (NYSEArca:SPY - News), negative 11.10%, the relative performance is impressive. The differential was good enough to earn this active ETF a 5-star rating against its ETF and open-end mutual fund competition. So, how did PWV manage to generate 489 basis points of relative outperformance against its large-value benchmark? Structurally, the PWV is a quantitative-active fund following PowerShares' Intellidex indexing strategy. First, the index sorts the investable universe into its market-cap style--in this case large cap--and then further sorts the list down to a value component. From that series of sorts, the fund picks and weights and invests in the 50 best stocks according to its multifactor model. The factors essentially boil down to three categories: valuation, growth, and market-price momentum. Every quarter, the index mechanically re-sorts the list by these sorts and factors and rebalances as necessary. So, that is how the fund works, but that doesn't necessarily explain how the factor screening managed to create such strong relative performance. To do that, we need to conduct an attribution analysis. This kind of analysis seeks to pull apart a fund's performance relative to its benchmark in order to dissect the true source of a fund's returns. There are a hundred ways to slice and dice a fund's performance, but the most common are to look at how various weightings affected the returns in terms of sector, industry, and style categories. Additionally, we can take a look at how the fund performs in these separate categories to get a sense of its stock-picking ability. Full Story:
NYSE:PWV April 29, 2009 8:23am

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