All ETF Daily News Articles

iShares prepares for growth post sale

ishares_logo2US- Officials at iShares are making plans to fill vacant key roles and potentially shuffle its non-US personnel, as it breaks away from parent company Barclays and positions itself for overseas growth. Rory Tobin, global co-chief executive at exchange traded fund company iShares, says the firm will look for external candidates to fill some high-level positions, like that of a chief financial officer, which used to be covered by Barclays. Tobin told Global Pensions he and global co-chief executive Mike Latham "will spend time evaluating the organisational structure and how we will position the team." However, no changes will be made until the ‘go-shop provision’ has passed, a clause in the sale that allows other bidders to make offers for the business for the next 45 days. Barclays will begin accepting competing bids tomorrow. On Thursday, Barclays announced the sale of iShares for $4.4bn to private equity firm CVC Capital Partners, as it moved to raise cash and avoid joining the UK government’s asset protection scheme. The deal is expected to close in the fourth quarter of 2009. (Global Pensions, 4 April 2009) Tobin says the portfolio management team will remain intact, particularly in the US. "On the investment side, the transfer of the portfolio management and trading is dependent on location. We’re moving the entire portfolio management team in the US to the iShares business from the start." Full Story:
ETF BASIC NEWS April 14, 2009 9:58am

China ETF Investment: PGJ and FXI

china2The Dow has been on a mini-roll. Therefore, most investors are thrilled to see battered stock portfolios recover even a smidgen of their massive losses. The problem is that these investors aren't paying attention to what's happening elsewhere around the globe. And they may be missing out on the opportunity of the decade! That's because the morsels of good economic news coming out of the U.S. are completely overshadowing what's happening in Asia.
China: A Bright Spot in the Region And the Global Economy
Just last week, a new report from the World Bank painted a very pretty picture about the economies of China, the world's third-biggest economy, and its Asian neighbors ...
The World Bank is forecasting that the Chinese economy will grow by 6.5 percent this year and expects it to really take off in 2010.
Thanks to China's $586 billion stimulus spending plan, the World Bank is forecasting that the Chinese economy will grow by 6.5 percent this year. Could you imagine the cartwheels Bernanke and Obama would do if the U.S. economy was growing by that amount?
Things are so positive in China that the World Bank called China "a bright spot in the region and the global economy" and expects the Chinese economy to really start rocking and rolling in 2010. Vikram Nehru, the World Bank's chief economist for its East Asia region, thinks the worst is behind China and that China has or is very close to bottoming. He said:
"The evidence on what's happening in China seems so pervasive and seems to cross so many indicators that I think there is now a growing degree of confidence that the stimulus package in China is having impact. Purchases of inputs have soared. Even consumer confidence is up and of course everybody knows bank lending has accelerated quite significantly."
Source: newsletter
ETF BASIC NEWS April 14, 2009 9:45am

NYSE wants ETFs exempt from short sale rules

shortsaleNEW YORK (Reuters) - The New York Stock Exchange will ask U.S. regulators to exempt exchange-traded funds from any new rules curbing short selling, an executive at the exchange operator said Monday. The Securities and Exchange Commission proposed five short sale restrictions last week and is now seeking public comment. It is under pressure to crack down on the trading strategy that profits from falling stocks, and has indicated it is considering including ETFs in any new rules. "We'll be including in our comment letter that we believe an exemption for ETF products is appropriate," Joseph Mecane, NYSE Euronext's executive vice president of U.S. cash markets, told Reuters in an interview. ETFs -- which have exploded in the last few years along with the growth in high-frequency trading firms -- are publicly traded products that track an index, commodity or some other underlying asset. Leveraged inverse ETFs, such as UltraShort ProShares, yield a compounded profit when the underlying asset falls. They have been blamed by some for exacerbating the sharp market drop that began last summer. "They seem to be functioning as intended," Mecane said of ETFs, which exchanges have come to rely on for continued growth in trading volumes. "We don't think they actually cause distortive behavior, and that's the main area where they've been villainized." Full Story:
ETF BASIC NEWS April 14, 2009 8:27am

ETFs Gaining on Traditional Mutual Funds, Study Finds

exchange-traded-fundsExchange-traded funds are becoming a serious threat to traditional mutual funds, a trend that will gain pace over the next few years. That’s the word from Financial Research Corp. of Boston, Mass, which is releasing a study on ETFs today (Monday). In a survey of financial advisers, FRC found that 71% of the advisers it polled used ETFs in 2008, up from just 25% in 2003. ETFs, which are baskets of securities that trade on a stock exchange, have grown in assets at a more rapid clip than index funds in the last several years. Over that same period, traditional, actively-managed mutual funds have fallen in assets. Consider this: for every $100 invested in 2001, $90 went into mutual funds, $8 went into index funds, and $2 went into ETFs. Fast-forward seven years: By the end of 2008, the share of mutual funds fell to around $81.5, while index funds attracted $9.5 and the remaining $9 went into ETFs. FULL STORY:
ETF BASIC NEWS April 13, 2009 5:37pm

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

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