All ETF Daily News Articles

MacroShares Home Price IPO Stalls; New Plans

stallMacroShares’ planned initial public offering for its Major Metro Housing exchange-traded products has failed, due to an imbalance in orders between investors wanting to buy upside exposure to U.S. residential home prices and those wanting to invest on the downside.  The company says it will now launch the products using a traditional, market-maker-driven process; the new launch is scheduled for sometime in the next few days. "We set a $125 million minimum for the initial public offering and we had IPO interest that was a multiple of that," said MacroShares Chief Executive Sam Masucci. "Ultimately, however, we could not get $125 million to cross at appropriate prices." The Major Metro Housing Up (NYSE Arca: UMM) and Major Metro Housing Down (DMM) are designed to deliver 300% and -300% of the return of the S&P/Case-Shiller Home Price 10 Index over the next five years. They will achieve that return not by buying actual houses, but by following MacroShares' patented "teeter-totter" product structure. Under that structure, the Up and Down Macros hold Treasury securities as their sole asset. As the benchmark index moves up or down, those Treasuries are transferred back and forth between the Macros. The structure allows MacroShares to launch products tied to any reference price, including previously uninvestable benchmarks like national home prices.  To function, however, there must be an equal number of Up and Down shares, and the price of those paired shares must sum to a predefined number; in the case of the housing Macros, $50 (i.e., if UMM is worth $30, DMM must be worth $20).  And that's where the IPO had problems, according to MacroShares. The firm tried to raise assets for the products through a Dutch-auction IPO, wherein investors "bid" for IPO shares at prices of their choosing. At the end of the IPO, software was supposed to match up orders to ensure the largest possible IPO at the best possible price. Full Story:
NYSE:DMM May 19, 2009 4:48pm

VIX Breaks 30, Kills VIX ETF/ETN Trades (VXX, VXZ)

fire2The CBOE Volatility Index, or the beloved ‘VIX’ or ‘Fear Index,’ has reached a level not seen since September, 2008.  While the low yesterday appears to be 30.0, we have not seen this number below 30.0 since September 19, 2008.  In October we saw a high of 89.53 and this was around 50 even at the market lows in March.  It seems there was some price sensitivity to it as the index values came lower and lower.  The drop in the VIX is also having some key impacts on the ETF’s (actually ETN’s) iPath S&P 500 VIX Short-Term Futures ETN (NYSE: VXX) and the iPath S&P 500 VIX Mid-Term Futures ETN (NYSE: VXZ). The VIX ETF’s (actually ETN’s) are hitting new lows as well.  The iPath S&P 500 VIX Short-Term Futures ETN (NYSE: VXX) is down 2.2% at $76.16, compared to a 52-week range (actually about 3+ months is all) of $77.49 to $120.00. Full Story:
ETF BASIC NEWS May 19, 2009 11:18am

Who’s the number one asset manager?

numberoneBlackRock Inc. and Bank of New York Mellon Corp. are competing to become the world’s biggest money manager as stock markets show signs of recovery.  Each company is in talks to buy Barclays Plc.’s fund unit, whose $1.5 trillion in client assets ranks highest in the industry, people familiar with the matter said last week. Each covets Barclays Global Investors’ (BGI) exchanged-traded funds, quantitative index investments and securities-lending business, analysts said. “This will change the landscape, whether Bank of New York or BlackRock gets it,” said Geoff Bobroff, president of Bobroff Consulting Inc., an East Greenwich, Rhode Island, firm that advises mutual-fund companies. BGI, based in San Francisco, would vault BlackRock, the largest publicly traded money manager in the US, to $2.81 trillion in assets. Bank of New York Mellon, the world’s biggest custody bank, would rise to $2.38 trillion, surpassing firms including Fidelity Investments and Vanguard Group Inc. The New York-based companies would gain more customers outside of the US and put pressure on their main rivals—Pacific Investment Management Co. for BlackRock, and State Street Corp. for Bank of New York Mellon—to catch up.
ETF BASIC NEWS May 19, 2009 11:08am

Playing India’s Stock Surge With ETFs And ETNs

circuit-breakerGlobal investors were greeted with a massive rally in India's stock market to start the week after the Congress Party-led alliance scored a victory in the emerging market country's general election. Investors are betting in a big way that the ruling party's win can provide a boost to India's economy, and in their haste to snap up shares they triggered market circuit-breakers Monday as stock benchmarks surged to double-digit percentage gains. "I think the market still has the potential to go up by another 10% to 15%," said Deven Choksey, managing director at K.R. Choksey Shares & Securities in Mumbai. See earlier coverage. For investors who don't have the time or means to purchase individual Indian stocks, exchange-traded funds and notes can provide a broad-based, indexed approach for catching a prolonged rally. Choices include Barclays iPath MSCI Index Index ETN INP, PowerShares India Portfolio PIN and WisdomTree India Earnings Fund EPI. Also, WisdomTree Dreyfus Indian Rupee Fund ICN follows the local currency, while First Trust ISE ChIndia Index Fund FNI blends Indian and Chinese stocks in a single wrapper. The Indian-stock ETFs and ETNs enjoyed gains of more than 20% on Monday as the U.S.-listed funds joined in the buying frenzy. Exchange-traded portfolios following overseas market trade in the U.S. even while the underlying markets are closed due to time-zone differences. As such, some traders use them as a rough gauge of fair value after international markets cease trading. Full Story:
NYSE:EPI May 19, 2009 9:36am

Time To Follow The Top Hedge Funds And Buy Gold ETF?

gold-bullSo the two top holders of the gold ETF are revealed as hedge funds in their first quarter regulatory filings. Paulson & Co, whose founder was the highest paid fund manager in 2007 thanks to a well-timed bet against sub-prime mortgages, bought 31.5 million shares in GLD, the gold exchange traded fund, in Q1. Meanwhile, Lone Pine was not far behind with its purchase of 26.5 million shares. But Paulson has also acquired stock in AngloGold Ashanti to the tune of a cool $1.3 billion. The man who called the US housing market correctly is clearly hoping to do exactly the same with the gold market, and for the record he achieved a double-digit gain in 2008, along with a few stars like George Soros while the average hedge fund loss was 19 per cent. Follow the stars Is this hedge fund star on to another winner, or will commodity price deflation send this good fortune into reverse? Former performance is no guarantee of future performance but it is often the best guide we have. In 2007 few called the US housing market turn, and yet with hindsight this was a bubble that ought to have been obvious. Could we not say the same now of the bubble in US bonds? Interest rates are too low, and the inflation risk too high. Full Story:
NYSE:GLD May 19, 2009 9:29am

The Soul of an ETF

soulWhat makes an ETF an ETF? What distinguishes an Exchange-Traded Fund from other investment securities? When the first US-listed ETF, the SPDR S&P 500 (SPY), arrived on the scene in 1993 it had a number of features setting it apart from every other product that come before it. Yet in some ways it was quite familiar as well. The fact that it was a fund consisting of many stocks was nothing new; mutual funds had been around for decades. The fact that it tracked the S&P 500 index did not make it unique; the Vanguard 500 (VFINX) was launched in 1976. The fact that it was a fund that traded all day on a stock exchange was also nothing new; closed-end funds had also been around for decades. So what made this product so special? What set it apart from everything else? Two features provided the soul of what was to become the ETF industry: First, SPY had an Intraday Indicative Value (IIV), sometimes just called the Indicative Value, Underlying Trading Value, or Net Asset Value (NAV). Additionally, this IIV was updated every fifteen seconds while the market was open. For this to be possible, the fund’s holdings have to be 100% transparent because the actual value of the underlying portfolio can be updated only if the actual holdings are fully disclosed. Second, the first ETF had the ability to create new shares and redeem existing shares through an in-kind exchange process. Since the holdings were known, a large institutional investor (called an Authorized Participant) could put together a basket of stocks that exactly duplicated the ETF’s holdings and exchange these stocks for shares of the ETF (and vice versa). Full Story:
ETF BASIC NEWS May 19, 2009 9:25am

Profit From America’s Empty Shopping Malls With These ETF’s!

empty-shopping-cartWhile having lunch with my mother yesterday, she told me she’s never seen stores and malls so empty. And she should know - shopping is her favorite pastime. But you don’t need the keen insights of Mrs. L. to know that the retail sector is struggling big-time. Many malls and shopping centers have more vacancies than they’ve ever had. With unemployment headed towards the double-digits and the personal savings rate quadrupling since 2007, this is hardly surprising. There’s simply a lot less money sloshing around the retail sector. And this is having a negative trickle-down effect on a couple of other sectors…  Commercial real estate is in trouble. Perhaps more trouble than the housing market was when it started its slide.  Consider this: Delinquencies in retail office space have doubled over the past six months. And they’re up 80% in apartments and industrial buildings. Commercial loan delinquencies have risen from 1% to 5% in the past year. General Growth Properties (Pink Sheets: GGWPQ), second-largest mall owner in the U.S., recently became the largest U.S. real estate bankruptcy in history.  Simply put, commercial landlords are in a jam. With fewer customers patronizing their properties and major tenants closing up shop, there aren’t many options to improve their businesses. After all, it’s not easy to replace a big-box retailer like Circuit City. And the loss of that store leads to declining traffic at the other retailers in the mall. 
NYSE:IYR May 19, 2009 9:18am

P&A Retirement Plan Services Breaks the ETF Barrier

401kP&A Retirement Plan Services breaks the ETF barrier that has long existed inside employer sponsored retirement plans by announcing a program that finally allows participants of defined contribution plans to buy and sell ETFs like mutual funds, without the performance drag associated with other ETF offerings. "For plan sponsors and advisors who have been searching for a clean, easy to use ETF solution, this is the perfect answer. We are extremely excited to roll this out at a time when there is so much attention being paid to reducing plan level fees and expenses," said Sean Zent, Vice President of Retirement Plan Sales. P&A Retirement Plan Services, part of the Buffalo, NY based P&A Group, is an open-architecture defined contribution recordkeeper and Third-Party Administrator, providing services to employer sponsored retirement plans. ETFs have long been attractive to fee-based financial advisors due to their low costs, diverse selection and their ability to trade like stocks but until now, they have been administratively difficult to utilize in retirement plans. P&A401(k), P&A403(b) and P&A457, working with Mid Atlantic Trust Company's ETFxChange platform, offer advisors the opportunity to access over 800 ETFs that trade just like mutual funds. In fact, advisors can now utilize any combination of ETFs and mutual funds seamlessly in the same plan, including the ability to create model portfolios. Related Information Full Story:
ETF BASIC NEWS May 19, 2009 8:14am

iShares Files For Active Leveraged Currency ETF; the Shares will be listed on NYSE Arca under the symbol “ALT.”

isharesInvestment Objective; Strategies The investment objective of the Trust will be to maximize absolute returns from its portfolio of foreign currency forward contracts and exchange-traded futures contracts that may involve commodities, currencies, interest rates and certain eligible stock or bond indices while seeking to reduce the risks and volatility inherent in those investments by taking long and short positions in historically correlated assets. The Trust also expects to earn interest on the assets used to collateralize its trading positions. The return on assets in the Portfolio, if any, will not be intended to track the performance of any index or other benchmark. There is no assurance that the Trust will achieve its investment objectives. Forward Contracts A forward contract is an agreement between two parties, one of which undertakes to purchase from or sell to the other, on a specified future date, a specified quantity of a specified asset at a specified location in exchange for a specified purchase price. At the discretion of the Advisor, the Trust may enter into foreign currency forward contracts. See “Business of the Trust—Investment Objective; Strategies—Forward Contracts.”
ETF BASIC NEWS May 18, 2009 5:06pm

Would I Rather Invest In China ETFs or U.S. ETFs?

china-usa"Warren Buffett recently said that American ingenuity will spark an impressive recovery here in the United States. And I remember that you used to discuss ETFs that might benefit from Mr. Buffett's investment allocation. But lately, you've been talking about large and small China ETFs, even China real estate ETFs. If you had to invest in one or the other, would you rather invest in China ETFs or U.S. ETFs?" My first reaction was to defensively explain the value of diversifying. After all, I am not exclusively investing in foreign markets alone. But if I had to chose? What if I had to chose only one country? That's a "Sophie's Choice" ultimatum for a U.S. citizen who has also lived in Hong Kong and Taiwan. In spite of all the knockdowns to the canvas, it's hard to dismiss the entrepreneurial spirit of American citizens. And I don't find myself sharing Jackie Chan's feelings about the benefits of restraining freedom. The U.S. may still boast more freedoms than anywhere on Planet Earth. On the flip side, in the late 80s, with the 87 stock crash, the Savings and Loan blow-up, and the ensuing tax increases, I found myself gravitating towards Asia. Indeed, I even looked at the protests in Tianmen Square as a sign that China was clearly going to be the next great economic superpower. 
NYSE:FXI May 18, 2009 4:52pm

Stocks Rally On Building Data

lowesImproved builder sentiment, Lowe's earnings re-start U.S. markets. Analyst Bove thinks bank could triple; . Bank stocks jumped ahead of the market on Monday but you haven't missed the real rally yet, according to one well-known analyst. Richard Bove, of Rochdale Research, thinks bank stocks could triple from current levels as the industry, bolstered by government aid and flush with new capital, returns to basic lending practices in time for an economic rebound. First quarter profits fell by nearly a quarter at Lowe's but investors cheered an improved forecast for the year. The second-largest home improvement chain in the U.S. earned 32 cents a share, down from 41 cents last year, while analysts had expected 25 cents. Lowe's shares gained $1.49, or 8.1%, to $19.94. New home construction figures are due out tomorrow The SPDR KBW Bank ETF advanced $1.21, or 6.6%, to $19.51 on Monday. Rising stocks sank the SPDR Gold Trust, an ETF that buys gold, by $1.19, or 1.3%, to $90.36. Full Story:
NYSE:GLD May 18, 2009 4:47pm

Gold Trust ETF (GLD) Looking to Rally

goldGold – it is the yellow precious metal once used as a primary form of currency for thousands of years. It is durable, liquid and almost indestructible. Historically, investors have fled unstable markets in search of reliable sources of value and stability, which can generally be achieved by investing in this precious metal. For those who want cost efficient access to the gold market, investing in the SPDR Gold Trust Exchange Traded Fund (GLD) is one of the easiest means of doing so. It is the world’s largest gold-backed ETF that offers risk takers a chance to profit by establishing a position in an investment vehicle that has somewhat of an inverse relationship to the equity markets..
NYSE:GLD May 18, 2009 4:32pm

Buy-and-Hold Investing – For Better or for Worse?

buy-and-holdThe recent bear market has rendered many investment strategies – like “buy and hold” – obsolete, while the latest 30% rally has rekindled the hope that investors may be able to buy-and-hold their way back to profits after all. Before you make a decision, here are a few must-know facts to consider.    Are you married to your buy-and-hold strategy? If so, you may want to consider a divorce (metaphorically speaking). From October 2007 to March 2009, many got to experience firsthand the “for worse” part of buy-and-hold investing. The Dow Jones (NYSEArca: DIA) lost 7.839 points or 54.90%. Just before being snuffed out entirely, hope returned to Wall Street. Since the March lows, the Dow has rallied as much as 2.217 points. Patiently waiting for portfolios to recover all their losses has once again become a viable option.  See sobering facts below: Despite the recent rally, which lifted the Dow by as much as 34.43% and the S&P 500 (NYSEArca: SPY) by as much as 28.31%, there is a long road ahead to reach the break-even point. Based on Dow 8,200, the stock market would have to rally another 72% just to reach October 2007 levels. Even at an optimistic 12% annual return, it would take nearly five years for the broad market to recover to previous bull market levels. Chances are that the Financial Select Sector SPDRs (NYSEArca: XLF) won’t even come close to their high watermark within the next 10-20 years. This may sound absurd, but we’ve seen what happened to tech stocks after the bubble. After briefly poking above 5,000 in March 2000, the Nasdaq (Nasdaq: QQQQ) hasn’t even come within 2,000 points of its all-time high. When the S&P and Dow reached all-time highs in 2007, the Nasdaq still traded 44% below its lofty 2000 high. The same is true for the Technology Select Sector SPDRs (NYSEArca: XLK). Full Story:
NASDAQ:QQQQ May 18, 2009 11:31am

US Financial Stocks Up After Bank Of America Upgrade (ETF: XLF, KBE, KRE)

boaA bullish research note from Goldman Sachs urging clients to buy Bank of America Corp. (BAC) shares with conviction boosted the Charlotte bank's stock 10% and helped the financial sector in general. The Financial Select Sector SPDR exchange-traded fund (XLF) rose 40 cents, or 3.6%, to $11.94. The KBW Bank ETF (KBE) rose 96 cents, or 5.3%, to $19.26 while the KBW Regional Banking ETF (KRE) rose 80 cents, or 3.9%, to $21.36. Full Story:
NYSE:KBE May 18, 2009 11:01am

How To Construct A Portfolio With ETFs

portfolioWhen you are constructing or re-organizing your portfolio, exchange traded funds (ETFs) are easy to use and offer much more than a traditional mutual fund. In general, individual investors are often ill-equipped to evaluate the prospective success of an actively managed fund, because of the lack of transparency in most mutual funds. Holdings are required to be disclosed only once a quarter, and by the time you receive these statements, the information could be out of date. ETFs can be a valuable tool to individual investors when constructing a fully diversified portfolio. They offer relatively inexpensive access to areas of the market such as the various United States and international equity asset classes as well fixed-income investments, according to Investopedia. Here are three areas ETFs can help in :
  • Portfolio Construction
  • Many Choices With ETF Asset Classes
  • Time Horizon
  • Trend Following
Full Story:
ETF BASIC NEWS May 18, 2009 10:12am

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