All ETF Daily News Articles

Financials Extend Gains XLF Up 5.6%

surgeAfter opening this morning's session slightly lower, financial stocks across the board have rallied steadily throughout the day. The Financial Select SPDR ETF (NYSE: XLF) is now up 5.6% to $11.22 after starting today's trading session down more than 2% from Thursday's close. The FAS, or Financial Bull 3x ETF (NYSE: FAS) has now risen more than 13% after opening today down more than 6%.
ETF BASIC NEWS April 13, 2009 4:40pm

ETF Securities Ltd. Planned ETF & Japan Stimulus Plan Push Platinum to 6 Month High

platinum2April 13 (Bloomberg) -- Platinum climbed to a six-month high in New York on speculation that demand for the metal will rise in Japan after the government outlined a record stimulus package to help revive the country’s economy. Palladium gained. Japan’s Prime Minister Taro Aso’s 15.4 trillion yen ($153 billion) plan aims to revive an economy headed toward the worst recession since World War II. Including financial measures and guarantees, the effort will reach 56.8 trillion yen, Aso said in Tokyo on April 10. Platinum and palladium are mostly used in auto and truck pollution-control parts and in jewelry. “The Japanese came out with a stimulus package and that is a big factor in the platinum market,” said Stephen Platt, a commodity analyst at Archer Financial Services Inc. in Chicago. Platinum futures for July delivery gained $51.70, or 4.3 percent, to $1,247 an ounce on the New York Mercantile Exchange. The most-active contract earlier rose to $1,252 an ounce, the highest since Sept. 24. The metal may rise to $1,320 an ounce by late next month, Platt said. The most-active platinum contract has soared 32 percent this year, after tumbling 38 percent in 2008. Palladium futures for June delivery climbed $11.25, or 4.9 percent, to $242.35 an ounce on Nymex. The metal gained 2.7 percent last week and has surged 28 percent this year. Some investors buy platinum and palladium as alternatives to holding stocks, bonds and currencies. “It’s up on risk appetite,” said Tom Pawlicki, a metals analyst at MF Global Ltd. in Chicago. “Chinese car sales were strong in March; prospects for U.S. car sales are improving.” Full Story:
ETF BASIC NEWS April 13, 2009 2:06pm

Deal Or No Deal – Cash Or Stocks?

deal-or-no-dealInvestors are suffering from Howie Mandel's "Deal or no Deal syndrome:" You never know what's next, the banker is always against you and models (Wall Street puppets) can't give any profitable tips. Read this article to find out when to hold'em and when to fold'em.     Aside from the one million dollar price, investing in the markets has been somewhat like contending on Howie Mandel’s Deal or no Deal. Wall Street analysts and economist have given investors about as much profitable guidance about where the market’s going as Howie’s 26 models about where the million is hidden – none!

Unlike Howie’s guests, investors “play” with their own money, they have “skin in the game.” This market meltdown translates into more than just a few less cases (and ladies) to choose from. This is serious stuff, stuff that affects everyday life.

Unlike Howie’s contestants, each and every one of us knows how much our case of money (portfolio) is worth. The question is, should we cash in and protect what we have or “gamble” for higher values?

Today’s Wall Street “models”

Economist and Wall Street were just as baffled by the market meltdown as Jim Cramer and the likes who insist that nobody could’ve foreseen this turn of events.

At this point though, there is nothing we can do to undo the S&P’s (NYSEArca: SPY) and Russell 1000’s (NYSEArca: IWB) 50%+ top-to bottom drop. Rather than raising sunken ships to calm the storm, let’s fortify our ships. In other words, what did we learn that will protect our life savings in the future?

First and foremost, we need to remember not to allow our judgment to be clouded by complacency. As this rally continues, investors will grow more confident about a continuation of this rally. This entitlement of profits to come was the exactly sentiment that led to the post October ’07 meltdown. Be aware of a repeat!

Dr. Doom turns soft

In September 2006, Mr. Roubini, one of the few and probably the most popular economist who early on saw the writing on the wall, said that the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession.

Full Story:–-Cash-Or-Stocks?/

NYSE:IWB April 13, 2009 1:57pm

Highly Defensive Index: Opportunities In Healthcare

etf-news7The ETF Innovators Highly Defensive Index contains 32 market cap leading companies from the defensive industry groups (A-J) specified below in addition to one position reserved for the SPDR Gold Trust (GLD) as a hedge against long-term inflation and global currency devaluation. Since I last wrote about the index two months ago, Genentech has been acquired by Roche (RHHBY.PK) and the number of securities has been reduced from 40 to 33. Over the past year, the index has outpaced the overall market and all of its benchmark defensive ETFs on a total return basis through 4/13/09 with a loss of 14.2% compared to losses of 28.8% for the Sabrient Claymore Defensive ETF (DEF), 19% for the Consumer Staples Sector SPDR (XLP), 21.1% for the Healthcare Sector SPDR (XLV), 28.8% for the Utilities Sector SPDR (XLU), 35.2% for the Dow Jones Global Titans (DGT), 34.8% for the iShares Dow Jones Select Dividend (DVY), and 32.4% for the S&P 500 SPDR (SPY). This equally-weighted, highly defensive index is 60% as volatile as the overall market with an average market cap of $76B and an average dividend yield of 2.9%. The goal of this index is to provide a composite blend of traditional safe havens represented by the benchmark funds outlined above, rather than choosing a single sector (i.e. healthcare or consumer staples) or a specific strategy (i.e. high dividend yields or Dogs of the Dow). Full Story:
NYSE:GLD April 13, 2009 1:52pm

How This ETF and Market Bear Compares to Past Ones

bear-marketThe stock market and exchange traded funds (ETFs) have taken a bath over the past 15 months and some believe that a bottom has been hit.  When compared to other bear markets, just where does this one stand?  Henry Blodget of Tech Ticker describes the past 10 bear markets and bear market recoveries since 1950 and outlines the following points:
  • The 10 most recent bear markets have bottomed out down 20% to 57% off the peak.  As for the current market, it is the worst seen since the Great Depression, which posted a decline of 89% from its peak.
  • The bear phases lasted anywhere from three to 30 months; we are in month 17.  The Great Depression,  lasted 30 months.
  • Most the markets offered some sort of retest of the low, but some didn’t.
  • The S&P 500 is trading about in line with its long-term price trend after 15 years of trading above it and is likely that it will continue to trade below trend for a considerable period of time.
Full Story:
ETF BASIC NEWS April 13, 2009 10:54am

Mutual fund expense ratios are on the rise; Look to ETF’s

feesIf you own a mutual fund, check your expense ratio and compare it to last year to see if your fund is costing you more. Even low-cost fund giant Vanguard has raised expense ratios on some funds. Don't expect the fund to always inform you of the change. As a Vanguard investor, I did not know about the increase until Morningstar reported it, although Vanguard had issued an announcement that I later found. You can avoid the fee creep from the funds by looking elsewhere at lower-cost index funds. Look even further by moving into exchange-traded funds, which are like mutual funds but trade on an exchange like individual company stocks. While an ETF can have an expense ratio of 0.1, it does charge a trading commission each time it is bought or sold. Therefore, ETFs can be costlier if you are making frequent investments or withdrawals. An ETF exists in almost every asset class, making it possible to have just as diversified a portfolio as using funds, or even more diversified by using specialty ETFs. Full Story:
ETF BASIC NEWS April 13, 2009 10:44am

Cerulli Study Sees More Financial Advisor Interest in ETFs

financialplanningAlmost half of advisors who responded to a recent Cerulli Associates survey said they intend to increase their clients’ allocation to alternative investments in the coming years, including non-core exchange-traded funds. Within that universe of alternative investments, Cerulli is including exchange-traded funds—but only those that pursue an alternative strategy or asset class. Overall, ETFs have grown at an astonishing clip over the past five years; although they, like other types of investments, have seen their assets fall recently. According to latest figures from the Investment Company Institute, ETF assets decreased $109.64 billion, or 19.6%, during the past 12 months. In February, the combined assets of the country’s ETFs were $449.67 billion, ICI said. But, that’s a 9.2% drop from the month before. Even so, Cerulli believes that advisors are taking a new look at certain types of alternative investments and ETFs because of the market meltdown. Cindy Zarker, Cerulli’s director of research, said her firm’s study, entitled "Alternative Investments in the Retail Marketplace: Evaluating Opportunities and Growth," looked at just "how retail asset managers are going to bring alternatives down market to the mass market. And then one of the things we stumbled upon was a need to educate advisors and clients on what alternatives are." Full Story:
NYSE:GLD April 13, 2009 10:22am

Active ETF Assets Low, But Managers Optimistic

active1Since debuting about a year ago, exchange-traded funds that are actively managed have gotten off to a slow start. The first folded after seven months. Those currently on the market from Invesco PowerShares have performed relatively well, but market turmoil, a narrow track record and investors' unfamiliarity with the concept of actively managed ETFs have kept assets low. "I don't think the market is ready for it just yet," said Ronald Rowland, the president of Capital Cities Asset Management Inc. in Austin. The first actively managed ETF, the Bear Stearns Current Yield fund, debuted in March of last year but closed in the fall after failing to attract enough investors. Such funds had been anticipated for years as an important rival to mutual funds. If they can deliver the same range of returns as mutual funds, their additional advantages would include lower fees and taxes, as well as more flexibility and transparency. Invesco PowerShares launched four funds in April of last year and another one in November. At the end of January the funds had $14.6 million of assets under management. Other ETFs, from advisers and sponsors such as Invesco PowerShares, Grail Advisors LLC, American Beacon Advisors Inc. and State Street Corp., are awaiting approval from the Securities and Exchange Commission. Rowland said the four PowerShares launched in April of last year are on the ETF "death watch" list he maintains online. The list includes funds with low average daily trading volumes and average daily values traded. He acknowledged that big backers like Invesco PowerShares can support funds through a long lean period if necessary. Ed McRedmond, senior vice president of portfolio strategies at Invesco PowerShares, acknowledged that its funds have modest asset levels so far, but he said the situation is not much worse than anticipated. "We wouldn't say we're thrilled" about the asset levels, "but it also wouldn't be way out of our expectations." Full Story:
ETF BASIC NEWS April 13, 2009 10:15am

iShares Deal Open To Other Offers Until June 18th “Go Shop Clause”

sold1 Barclays is poised to receive bids for the whole of its asset management arm, Barclays Global Investors, after writing a break clause into its deal to sell the division’s exchanged-traded funds business iShares last week for £3bn. The bank has indicated it will listen to offers for BGI by including a “go-shop” clause in the sale of iShares to private equity firm CVC Capital Partners. Under the deal, Barclays has until June 18 to “solicit or consider proposals for a superior transaction involving iShares and potentially other related businesses”. Barclays had previously suggested it would not sell the whole of BGI, valued in the accounts at around £8bn. Full Story:
NYSE:GLD April 13, 2009 10:01am

China Flexes Its Muscles And Finds Support In A Bid To Dump The US Dollar As The World’s Main Reserve Currency

china1Finance officials from Beijing in Moscow on Thursday held a videoconference to discuss the creation of a “supra-national reserve currency,” the latest evidence of the support China is getting from developing countries as it seeks to replace the U.S. dollar as the world’s main reserve currency. This controversial proposal - and the support that it’s getting - also underscores China’s continued emergence as a growing global force in both the financial and political arenas. That’s a trend that successful global investors won’t be able to ignore. The recent torrent of criticism to swirl around the dollar began with remarks by Chinese Premier Wen Jiabao.  Speaking last month at a press conference leading up to the recent Group 20 meeting in London, Premier Wen voiced his concern about the value of China’s large holdings of U.S. Treasuries. “We have lent a huge amount of money to the United States,” he said. “Of course, we are concerned about the safety of our assets. To be honest, I am definitely a little bit worried. I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.” Of China’s $2 trillion in foreign currency holdings, about $1 trillion is invested in U.S. Treasuries and notes issued by other government affiliated agencies, such as Fannie Mae (FNM: 0.74 +0.06 +8.82%) and Freddie Mac (FRE: 0.77 +0.07 +10.00%). “They are worried about forever-rising deficits, which may devalue Treasuries by pushing interest rates higher,” JP Morgan & Co. (JPM: 32.75 +5.32 +19.39%) analyst Frank Gong told The Associated Press. “Inside China, there has been a lot of debate about whether they should continue to buy Treasuries.” Earlier this year, the Congressional Budget Office (CBO) projected that the U.S. budget deficit would nearly triple from last year’s $455 billion - and would reach a staggering $1.2 trillion. And that was even before U.S. President Barack Obama unveiled his $787 billion in stimulus, bank-rescue and anti-foreclosure plans. And that massive projected shortfall also doesn’t include other fix-up initiatives that are sure to surface in the months ahead. But rather than sit idly by and watch the value of its reserves be eroded by the U.S. government’s economic policies, China is trying to lay the foundation for future change. Full Story:
ETF BASIC NEWS April 12, 2009 6:57pm

Banks Are Not Reaching Bottom – Meredith Whitney

meredith-whitneyBanks are reaching a bottoming phase according to BCA research and neutral positions are warranted. Not so fast says top bank analyst Meredith Whitney. Banks are about to have an asset fire sale after its last source of capital, the U.S. government, runs out. Loan loss reserves as a percentage of non performing assets have reached cyclical lows of the early 90s, says BCA Research. This analysis, based on FDIC data, looks thin. For one thing, it is based on bank data for the fourth quarter of 2008, which is dated. For another it only looks back to the late 80s and early 90s, which featured a banking crisis in a shallow recession unlike today. The first round of losses at U.S. banks were in real estate lending-- in subprime lending and most prominently in construction and land development (AD&C) lending according to Zelman & Associates. AD&C loans accounted for only 4% of bank assets in the fourth quarter of 2008 but a disproportionate share of non-performing loans (22%). Full Story:
ETF BASIC NEWS April 12, 2009 6:22pm

Letter To iShares Clients About Sale To CVC

letterThe acquisition of iShares by CVC Capital Partners is a significant endorsement of the iShares franchise. Even during the current economic crisis, iShares has enjoyed continued growth as we have provided innovative investment solutions to advisors and institutions around the world. Along with the rest of the iShares management team, I am very excited to work with CVC Capital Partners in taking the iShares business forward. CVC Capital Partners has a track record of investing in firms that have demonstrated strong revenue and earnings growth and a history of reinvesting in the business. As a leader in Exchange Traded Products, iShares is committed to serving investors around the world. This deal provides an excellent platform for the next phase of iShares growth. With this new streamlined ownership structure, iShares is well positioned to continue bringing you innovative products and solutions as well as unmatched client service. The continuity of the iShares business is a central tenet of this transaction. Not only does the current leadership team remain in place but the portfolio management and trading will as well. The iShares business will be an independent asset manager creating, managing and distributing innovative investment solutions to our clients around the world. However, the real partner behind the success of iShares has been, and will continue to be, financial advisors. We are committed to providing you the tools to grow your business and will continue to bring you innovative investment solutions and service. Thank you for your business to date and in the years to come. Sincerely, Lee Kranefuss Associate of Barclays Global Investors Services and Barclays Global Investors Fund Distribution Company, which are affiliates of Barclays Global Investors, N.A.
ETF BASIC NEWS April 12, 2009 10:29am

Jim Cramer Says The Depression Is Over

NYSE:GLD April 12, 2009 10:17am

UltraShort ETF Losses Go to ‘Money Heaven’

ultrashort1We like to think of trading as a zero-sum game -- the money you lose is money someone else has made. But that is not always the case. Sometimes the money you lose simply goes away to "money heaven." Never has that concept been truer than when looking at the levered ultra-short ETFs. Periodically, I check in on these to see how they are "performing." Typically, what I will do is take the vanilla ETF on an index and compare it with the 2x short sided ETF on the same index and figure out how much the levered short ETF has outperformed or underperformed. I started this exercise back in November, when I first noticed the tremendous volatility of these levered funds. I keep a spreadsheet, use the adjusted prices to account for dividends and compare the actual performance with the implied performance over various periods of time. Take a look at the data for the U.S. Financial Sector ETFs, the unlevered iShares Dow Jones Financial Sector and the 2x short UltraShort Financials ProShares:
From 3/26
From 3/6
From 2/23
From 12/31
From 11/20
-19.7% 8.0%
SKF 80.95 -13.1% -67.6% -59.9% -21.4% -69.2%
  implied -10.0% -101.6% -60.4% 39.4% -16.1%
  over/(under) -3.1% 34.0% 0.5% -60.8% -53.1%
 The table reflects Friday's close and then looks at return from various dates. Of those dates, we have the autumn closing low for financials on Nov. 20, and we also have this spring closing low on March 6. We also have year-end, which is close to the high for the IYF over the time period (the actual high was Dec. 8). So since the autumn low close on Nov. 20, the IYF is up 8.0% through Friday night. This implies a 2x short return of -16.1%. Yet the SKF is down 69.2% over that period, reflecting an underperformance of 53.1% vs. if one had simply shorted the IYF with two times leverage. Given that the IYF closed below its NAV and the SKF closed above its NAV, this return discrepancy is not caused by NAV differentials (and for what it is worth, on Nov. 20 the SKF closed about 6 points below NAV). So where did the money go? The answer is in the title of this article. Full Story:
NYSE:SKF April 11, 2009 1:33pm

8 Index Funds With a Leading Edge

etf-news7Whenever the stock market takes a turn for the worse, it reignites an age-old debate in the mutual fund world: Which strategy works better, active or passive management? Fans of active management argue that it's well worth it to pay for the privilege of having a good manager that uses analysis to pick winning investments. However, passive investors reason the overwhelming majority of those managers inevitably underperform a given index over time. These investors simply put their cash in a low-cost index fund that tracks the returns of a benchmark like the S&P 500. The downturn just exacerbates this debate: The average S&P 500 index fund is down 4.4% in 2009, according to Lipper. Almost 40% of the large-cap funds and share classes in our database failed to beat that return. The average large-cap fund also trailed the S&P 500 in 2008. That means index funds seem to have the upper hand — at least for now. With that in mind, we decided to focus this week's screen on index offerings. This is a much more elaborate undertaking than it appears. We don't simply look at S&P 500 funds since the only thing differentiating them would be the fees that eat into their performance. So instead of weeding out funds based on our regular set of criteria, this week we list a range of index funds and their performance numbers. The surprising revelation: Index funds with exposure to tech and small caps are beating their actively-managed competitors — and the S&P 500, too. See the table below for our eight picks. There are a few reasons we resort to compiling the screen this way. Over the last few years the exchange-traded fund industry has pushed the boundaries of what constitutes an index fund. The gold standard used to be the S&P 500, but now investors can find funds based on indexes from Russell, Morningstar and Dow Jones and others that track the Nasdaq or use a new-fangled "fundamental" indexing strategy that focuses on book value and sales, among other things. There are even offerings that equal weight the S&P and concentrate on dividends. While there may not be a huge difference between these funds' performances, even the slightest edge can add up since index investors usually hold their funds for decades. Just 1% more a year can mean tens of thousands of dollars over the life of a retirement account. There are certain trends worth picking up on in the index world that professional money managers and individual investors alike can follow. Technology stocks, for example, typically perform well coming out of downturns because investors rush to the few shares still experiencing growth. That theme is playing out now. The tech-heavy PowerShares QQQ (QQQQ: 32.94, +0.99, +3.09%), or Cubes, which tracks the 100 largest non-financial stocks on the Nasdaq, is up 10.9% this year thanks, in part, to merger and acquisitions and some decent earnings. Full Story:
ETF BASIC NEWS April 11, 2009 11:29am

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