All ETF Daily News Articles

Buyers Lining Up For Barclays’ iShares Unit

buyersThe pursuit of Barclay’s prized iShares unit, the No. 1 ETF firm, continues to heat up. Could ETFs emerge as a more widely sought financial product in the future? It certainly looks that way from the interest Barclays is seeing not only in its iShares business but now its entire asset management unit, BGI. The British bank confirmed on May 15 that it’s considering selling BGI for up to $12 billion, with BlackRock and Bank of New York Mellon reportedly heading the list of suitors. Under the terms of a sale agreement to it signed in April, Barclays has until June 18 to look for an offer that would top the roughly $4.4 billion price that private equity firm CVC Capital Partners is willing to pay for iShares. A number of firms are said to have shown interest in iShares and BGI, including Vanguard, another of the three biggest ETF providers. The thought that BlackRock is open to such a big acquisition tells the world that BlackRock, and possibly other strategic acquirers, see this product as having a very hopeful future, says David Elan, a principal at Boston-based Windward Investment Management, 95% of whose holdings are in ETFs. That BlackRock would be willing to find the money for such a deal in these capital-constrained times is even more impressive. Reportedly, all the deals that Barclays is considering would allow it to keep a stake in BGI, which manages $1.5 trillion in indexed assets. Its agreement with CVC excluded the lucrative share lending part of iShares, which earns big fees by lending shares in its funds to short sellers. Even though iShares, with about $300 billion in assets, is a small portion of BGI, Matt Hougan, editor of IndexUniverse.com, estimates that ETFs would account for half the price tag of $10 billion or more for BGI. ETF investors should hope that whoever ends up buying BGI or one of its parts doesn’t take on too much debt to do so, and consequently have to raise management fees and take other steps to increase margins, says Hougan. Full Story:  http://www.businessweek.com/investing/insights/blog/archives/2009/05/bids_for_barcla.html?chan=top+news_top
ETF BASIC NEWS May 16, 2009 10:07am

Canadian Investor group blasts makers of leveraged ETFs

angryAn investor rights group on Thursday blasted the makers of leveraged ETFs and urged regulators to enforce tighter standards for disclosure and advertising in a market that has swelled to $2.5-billion in assets just two years. The Foundation for Advancement of Investor Rights (FAIR) said regulators should require sellers of leveraged and inverse exchange-traded funds -- made only by BetaPro Management Inc. in Canada -- to file a new prospectus carrying an explicit warning that they are not suitable for holding longer than a few days "nor are they for virtually all retail portfolios." "There's a lot of detailed disclosure in the prospectus about risk but nowhere does it bluntly tell you you could be completely right in your selection of an ETF and find out that despite being right, you lose money," said Ermanno Pascutto, FAIR executive director. "In several cases, no matter which way you bet over the past year, you would have lost money." A former regulator himself, Mr. Pascutto founded FAIR a year ago with funding from the predecessor to the Investment Industry Regulatory Organization of Canada. Full Story: http://www.financialpost.com/creditcrunch/story.html?id=1597265
ETF BASIC NEWS May 16, 2009 7:35am

Barclays confirms ‘expressions of interest’ in BGI

barclaysBarclays PLC officials today confirmed they’ve received “a number of expressions of interest, including unsolicited interest” in BGI, its money management division. Gemma Abbott, Barclays spokeswoman, declined to provide further details about the bids for BGI...... ......“Barclays will update the market further upon the conclusion of the go-shop process,” according to the statement. Separately, banking sources familiar with the possible sale said BlackRock, Bank of New York Mellon and Fidelity could be among those interested in acquiring BGI. Full Story: http://www.pionline.com/article/20090515/DAILYREG/905159983
ETF BASIC NEWS May 15, 2009 5:12pm

Financial Sector Play: Large vs. Regional Banks (ETF: KBE, KRE)

bank2One trade I have been extremely bullish on is a long position on the KBW Bank Index (KBE) while  shorting the KBW Regional Bank Index (KRE).  This trade has worked out very well ever since I wrote on RealMoney’s Columnist Conversation with the trade.  The play is betting on the relative out-performance of the large cap banks compared to smaller regional banks.  The trade is unique in the sense that you are hedging your downside risk by shorting the Regional Bank Index, but profit when the spread widens. In more detail, the KBE is an ETF of the 20 largest banking institutions in the U.S.  Players like Bank of America (BAC), Wells Fargo (WFC), J.P. Morgan, US Bancorp, and Bank of New York Mellon (BK) make up the top five holdings of the security.  The KRE ETF replicates the KBW Regional Banking Index, which is an equal weighted index of over 50 geographically diverse regional banking institutions.  Top players in the KRE include First Niagra Financial Group (FNFG), WestAmerica Bancorp (WABC), TCF Financial (TCB), Hudson City Bancorp (HCBK), and City National (CYN). Full Story: http://www.forexhound.com/article/Fundamentals/Daily_Reports/Financial_Sector_Play_Large_vs_Regional_Banks/132696
NYSE:KBE May 15, 2009 5:01pm

Shiller: Now You Can Short Housing (ETF: DMM)

housing4“One reason we have bubbles in the housing market is because there's been no way to short housing,” the Yale professor tells Time. “The ability to short is essential to an efficient market, otherwise there's nothing to stop zealots from pricing things abnormally high.” One version of the ETF (UMM) allows investors to buy the index. “It's like buying a house, except you don't have to go through the real estate agent, take possession of a property, maintain it, rent it out,” Shiller says. The other offering (DMM) provides an opportunity to short the index. “Markets like this will also create an infrastructure for products,” Shiller says. “For example, insurers could issue home-equity insurance and then hedge themselves by taking a position in this market.” Full Story: http://moneynews.newsmax.com/streettalk/shiller_short_housing/2009/05/15/214868.html
NYSE:DMM May 15, 2009 4:46pm

5 ETFs to Buy on the Pullback

fiveThe rally fizzling as much as 5% this week put the dreaded but not unexpected correction into the forefront of the market's mind. But rather than fret, investors should be filling out their shopping lists. After all, stocks have never moved in a straight line and -- more important -- the whole point is to buy low. So while the current retreat after a remarkable two-month rally might be a bit unnerving, professional investors say it's also making some appealing plays cheaper by the day. "We're thinking 9500 to 10000 on the [Dow Jones Industrial Average] would not be out of the realm of possibility in this bear-market rally," says Dean Barber, president of Barber Financial Group, a Lenexa, Kan., wealth management firm. "But we're anticipating a pullback to somewhere in the 7800-range. At that point in time we think there's going to be some opportunities."......
  • Brazil and China: Clark likes the iShares MSCI Brazil (EWZ) and iShares FTSE/Xinhua China 25 (FXI) ETFs. "If you missed Brazil or China, you need to be looking for it," he says. "Anytime Brazil [EWZ] goes below $46 you need to be in."
  • Small-Cap Growth: Rubino Financial Group, says small-cap growth is his favorite area after emerging markets, "and I would like it even more if it pulled back 10%." With an expense ratio of just 0.11%, the Vanguard Small-Cap Growth (VBK) ETF offers cheap, broad exposure to this asset class.
  • Technology: Keith McCullough, chief executive of ResearchEdge, a New Haven, Conn., research firm, is advising clients to go long on the SPDR Technology Select Sector (XLK) ETF, noting that another big potential catalyst is that tech benefits from the various stimulus packages enacted throughout the globe.
Full Story: http://www.smartmoney.com/Investing/Short-Term-Investing/5-ETFs-to-Buy-on-the-Pullback/
NYSE:EWZ May 15, 2009 9:35am

GETTING PERSONAL: For Leveraged ETFs, Triple May Be Limit

multiplyLeveraged exchange-traded funds have been offering investors more and more bang for their buck. But while funds that triple daily returns recently became a hit, that doesn't necessarily mean quadruple funds are on the way. Since so-called leveraged and inverse ETFs appeared in 2006, the pattern has been clear. Investors like funds that offer the chance for bigger and bigger gains - despite the risk of bigger losses. While the fund industry has so far responded by upping the ante, experts say even more extreme funds would face design hurdles, such as extra costs and problems tied to market volatility. Unless someone uses a new blueprint, current levels of leverage could be the limit. "We have no plans to launch products with higher leverage points," says Andy O'Rourke, marketing director at Direxion Funds, which created a stir last year by launching funds that multiply daily returns by three. "If you had four-times or five-times (leverage) it would make it more difficult to run the fund." Direxion's chief rival, ProFunds Group, wouldn't comment on product plans. Rydex Investments, a third firm that offers leveraged ETFs, said multiples of four or five are "not something were looking at." Investors' preference for the high-proof stuff became clear early on. When ProFunds launched the first bear and bull ETFs three years ago, it offered two types that let investors bet against the market: "inverse" funds that rose 1% if the market fell 1% and "double inverse" funds that rose 2% in the same scenario. (All long funds were double.) Almost immediately, the double-inverse proved a bigger hit than the simple inverse, collecting more assets and racking up larger trading volumes. ProFunds' rival Direxion was able to capitalize on that preference last November by launching three-times funds, that have already pulled in nearly $4 billion from investors, according to data from the National Stock Exchange. Full Story:   http://online.wsj.com/article/BT-CO-20090514-715501.html
ETF BASIC NEWS May 15, 2009 9:28am

Semiconductors Conduct A Comeback (ETF: SMH, PSI)

semiconductorRecent commentary from management at Applied Materials (Nasdaq:AMAT), Intel (Nasdaq:INTC) and Advanced Micro Devices (NYSE:AMD) seems to indicate the current semiconductor cycle is in a bottoming process, providing an opportunity for investors willing to make that bet. Applied Materials Reports Messy Quarter Applied Materials, which manufactures capital equipment for sale to Intel and others, recently reported on its fiscal second quarter ended April 26. The company had a GAAP loss of $255 million, or 19 cents per share. The quarter was a messy one, as usual for technology companies. But excluding one-time items and stock option expenses, the loss comes in at $136 million, or 10 cents per share. New orders in the quarter totaled only $649 million, leading to a $3.16 billion decline in backlog - a drop of nearly $1 billion sequentially.  Management Optimistic Despite Recent Earnings Despite the weak earnings report, management at Applied Materials gave optimistic comments about current conditions in the industry during the conference call...... ......Investors who don't want security specific risk can look at the Semiconductor HOLDRs (NYSE:SMH) or the PowerShares Dynamic Semiconductors (NYSE:PSI) - two ETFs that hold shares of semiconductor and capital equipment stocks. Full Story: http://community.investopedia.com/news/IA/2009/Semiconductors-Conduct-A-Comeback-INTC-AMAT-AMD0515.aspx?partner=YahooSA
NYSE:PSI May 15, 2009 9:14am

Opposites Attract

oppositesAt this week's Financial News conference on "Investing in ETFs" John Godden, head of London-based hedge fund advisor IGS Group, spoke of the convergence of the hedge fund and ETF industries. This may seem strange at first sight, since the two types of fund sit at opposite extremes.  One type of fund structure is associated with manager skill, performance fees, opaqueness and illiquidity. ETFs, by comparison, offer a purely formulaic approach, ease of trading and transparency, as well as cheapness. In fact hedge funds and ETFs have long gone together, though in a slightly different way. ETFs' flexibility has endeared them to the managers of long-short portfolios, not least because of their historical exemption from the "up-tick" restriction on shorting individual stocks in the US, which reigned from 1938 to 2007, and may yet be reintroduced. But a number of recent news stories suggest that the two worlds may be combining in a more fundamental way. From db x-trackers' recent launch of a European-listed ETF investing in hedge funds, to IndexIQ's hedge fund replicator range, product developers are already hard at work on combining the two types of fund.  Then, if one considers the hedge fund/ETF marriage more broadly, as a merger of active and passive trading vehicles, then Barclays' recent filing to launch actively-managed ETFs under the iShares banner, reported by Murray Coleman earlier this week, must be seen in the same category. Finally, today's reported interest of Blackrock, the leading active US-based fund manager, in buying Barclays Global Investors, the world leader in passively-managed funds, takes the convergence theme to a new level. Full Story:  http://www.indexuniverse.com/component/content/article/49-blog-iueu/5839.html?Itemid=19
ETF BASIC NEWS May 15, 2009 9:09am

Gold ETF’s Try To Interpret Anglogold Earnings (AU, GLD, GDX)

gold-minerWith gold back well above the $900.00 mark, it seems that the SPDR Gold Shares (NYSE: GLD) and the Market Vectors Gold Miners ETF (NYSE: GDX) are trying to interpret a key gold earnings report.  South African gold miner AngloGold Ashanti Ltd. (NYSE:AU) reported first quarter 2009 profits of $150 million and EPS of $0.42, substantially better than fourth quarter 2008 loss of $17 million (EPS loss of -$0.05). With only 1 real estimate seen in the U.S., this is one to watch but one that is hard to use for significant comparisons.   Production totaled 1.103 million ounces of gold, down 13% from the previous quarter, but inline with previous guidance. Cash costs were also inline, totaling $445/ounce. Revenue for the quarter was $689 million, way off analysts expectations of $1.05 billion and down 22% sequentially. Full Story:  http://247wallst.com/2009/05/15/gold-etfs-try-to-interpret-anglogold-earnings-au-gld-gdx/
NYSE:GDX May 15, 2009 8:49am

Barclays has confirmed takeover interest in its BGI asset management arm

barclaysThe banking giant is already offloading its iShares fund management business, which is the most profitable part of BGI, in an agreed £3bn sale to CVC Capital Partners. However, Barclays said it had received a number of rival approaches for the iShares business under the 'go shop' clause in its sale to CVC, including interest in the wider BGI business. A report in the Financial Times said the group was in negotiations with possible bidders including US fund manager BlackRock over a deal for BGI, which is one of the bank's most valuable assets. Shares rose 6% as investors cheered the prospect of a bidding battle for BGI. A sale of the business could also net further hefty windfalls for top managers who own shares in BGI, including a possible £12.5m payout for Barclays' investment banking chief Bob Diamond. Full Story: http://www.thisismoney.co.uk/investing-and-markets/article.html?in_article_id=485143&in_page_id=3
ETF BASIC NEWS May 15, 2009 8:35am

Natural Gas ETF Draws Heavy Call Trades

natural-gasThe U.S. Natural Gas Fund (UNG) is drawing large trades that are apparently counting on its shares to rise 20% in the next five months. More than 31,700 calls traded at the Oct. 20 strike yesterday, dwarfing the average volume of 523 contracts, according to OptionMonster's tracking programs. The calls included two large blocks -- one of 4,000 contracts and the other of 22,000 -- trading at $1.45 within seconds of one another Thursday. Full Story: http://www.thestreet.com/story/10501553/1/natural-gas-etf-draws-heavy-call-trades.html?puc=_tscrss
NYSE:UNG May 15, 2009 8:17am

Options: Put-Buying in SPDR Retail ETFs

retail-shoppingThe news hasn't been good so far this week for retail stocks, and big put activity in the SPDR Retail Exchange Traded Fund (XRT Quote) today could suggest investors are hedging against a further downturn. Looking at the Sept. 20 puts, we see that more than 15,300 of those contracts changed hands for around $1.00 vs. open interest of 18,100 during the first 10 minutes of trading today. The bulk of that volume happened even earlier when one customer wasted little trading time and bought 15,000 Sept. 20 puts for 98 cents with the stock around $25.50. What's interesting about this trade is the current stock price for XRT is up 46 cents so far today to $25.98, which is about 25% higher than the strike price. In order for the customer to make money, the ETF needs to be trading below $19.00 at September expiration, which is the difference between the strike price and the premium the customer paid. XRT shares have not hit $19.00 since March 9, but the stock price has dropped about $1.00 since the beginning of the week. Full Story:  http://www.thestreet.com/story/10501355/1/options-put-buying-in-spdr-retail-etfs.html?cm_ven=GOOGLEFI
NYSE:XRT May 14, 2009 5:02pm

Using ETFs to Snag Equity-Beating Returns in Bonds

bondsIn the wake of a furious market rally over the last few weeks, and all sorts of talk about "green shoots" popping up, one would think that all of the most recently published economic data being produced is decidedly positive. I regret to say that it is not. Granted, we have seen some relatively better numbers recently than we had just three months ago, but those are comparisons against an awfully low standard. There have been no "all clear" signals distributed, but disaster no longer seems imminent. While the economy will no doubt resume growing at some point, I lack the foresight to say when that will happen and from what base we will begin anew. In a nutshell, there is plenty of uncertainty in today's market. That said, let's not forget that there is always some uncertainty in investing. Risky asset classes, like stocks and corporate bonds, do not always go up. If they did, they would be called risk-free. In fact, orthodox financial theory claims that systemic risk is the only source of long-term returns above the risk-free rate paid on cash deposits. If an investor could avoid all risk simply by purchasing a broad basket of world stocks and bonds, everyone would jump into the markets to try to capture the outsized returns. The returns on stocks and corporate bonds would then be equal to Treasury yields. Anytime most investors agree that there are no systemic risks to investing--which seemed to happen multiple times over the past decade--the market en masse seems to err. Stock prices get too high, equity risk premiums disappear, and a "Black Swan" event, such as a credit crisis, strikes.   Full Story: http://news.morningstar.com/articlenet/article.aspx?id=291429&pgid=etfarticle
ETF BASIC NEWS May 14, 2009 2:30pm

Barclays Global Investors Buys Mexico’s Naftrac ETF Program

mexicoMEXICO CITY (Dow Jones)--Barclays Global Investors said Thursday that it has purchased Mexican state development bank Nafin's Naftrac exchange traded funds program for an undisclosed amount. In a press release, Barclays Global Investors said the deal makes its iShares family of ETFs the largest provider of ETFs based in Latin America. Barclays Global Investors said Naftrac has been renamed iShares Naftrac...... ......"In the coming months, we will intensify our efforts to develop and broaden our presence in Mexico," Daniel Gamba, Barclays Global Investors' director for Latin America and the Caribbean, said in the press release. Full Story: http://online.wsj.com/article/BT-CO-20090514-715156.html
ETF BASIC NEWS May 14, 2009 2:06pm

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