All ETF Daily News Articles

Getting More Income From Your ETF Bond Investments

bondsThese are trying times for income oriented investors. Interest rates are still stuck at record low levels which means lower income generated from bonds and other fixed income investments. U.S. Treasuries with a 10-year maturity are yielding just 3.20%, which isn’t much over the lifetime of the investment, especially after deducting the cost of taxes and any potential for re-inflation. The interest rates being paid by bank certificates of deposit (CDs) is also down. According to BankRate.com, today’s national average 1-year rate for bank CDs is just 2.20%.What can bond investors do? Bonds, like stocks, come in many different varieties. Government bonds are issued by U.S. or foreign governments, municipal bonds are issued by cities, states and local governments, corporate bonds are issued by companies and there are also asset-backed securities, mortgage backed securities and convertible bonds along with Treasury Inflation Protected Securities (TIPS). Diversifying your bond portfolio is one strategy to gain more income and to reduce market risk. Let’s briefly evaluate 5 bond ETFs that can help you to generate more income from your bond investments. iShares Barclays Aggregate Bond Index Fund (NYSEArca: AGG) The performance and yield of AGG are linked to the widely followed Barclays U.S. Aggregate Bond Index. The index measures the U.S. investment grade bond market, which includes investment grade U.S. Government bonds, investment grade corporate bonds, mortgage pass-through securities and asset-backed securities. With almost $10 billion in assets, AGG is the largest bond ETF and it carries a yield in the vicinity of 4.5%. Year-to-date, AGG has declined 2.09%*. In 2008, AGG gained 5.88% and the fund’s annual expense ratio is 0.24%. iShares iBoxx $ High Yield Corporate Bond Fund (NYSEArca: HYG) HYG is benchmarked to the iBoxx $ Liquid High Yield Index, which is designed to provide a balanced representation of the U.S. dollar-denominated high yield corporate bond market through some of the most liquid high yield corporate bonds available. The number of bond issues within HYG is typically 50, although this may change from time to time. The fund has close to $2.13 billion in assets and carries a juicy yield of 11.56%. Year-to-date, HYG has increased by 5.35%. In 2008, HYG fallen 23.86% and the fund’s annual expense ratio is 0.50%. Full Story:  http://www.etfguide.com/commentary/544/Getting-More-Income-from-Your-Bond-Investments/
NYSE:AGG May 11, 2009 3:51pm

Barclays iShares bidder search success

ishares_logoLONDON (Reuters) - Barclays Plc's (BARC.L) efforts to find more bidders for its iShares funds arm seem to have paid off, showing that prize assets can draw plenty of interest even in crisis-stricken markets. Barclays said on Sunday it had received new interest from both trade and private equity buyers for iShares, after a report in the Sunday Times newspaper said buy-out house BC Partners might top a 3 billion pound ($4.56 billion) deal with CVC Capital Partners, agreed in April...... ......In addition, any blow to CVC would be softened because of a $175 million break-up fee, payable if Barclays finds a new buyer. "If they walk away, they'll (CVC) earn a nice bit of money for a few weeks work," one banker said, asking not to be named, because he was not involved in the sales process. BC Partners and CVC declined to comment...... ......RARE COMMODITY Any estimates of what iShares is worth can only have gone up given that Barclays shares have roughly doubled since it announced the deal -- and almost quintupled since a trough in March -- giving it bigger clout in the talks. The "go-shop" clause, in effect until June 18, could therefore result in a fresh offer from CVC. "Don't underestimate CVC's interest in iShares ... they've got their bid in first and they do have the ability to raise the offer if they want to," another banker said. Any buyer picking up iShares, which offers exchange traded funds (ETF), will get access to a rare commodity with strong growth potential now that investors favor the conservative asset class. Full Story: http://www.reuters.com/article/euDealsNews/idUSTRE54A3RE20090511?pageNumber=2&virtualBrandChannel=0&sp=true See our previous story: http://etfdailynews.com/blog/?p=2154
ETF BASIC NEWS May 11, 2009 11:36am

ETFs: What New Trends Mean for Investors

etf-news7Even after a two-month stock market rally, market volatility remains high. Simply put, investors are worried, not only over the timing of an economic recovery, but also by the possibility that the recent surge in equities may be little more than another bear market rally. The uncertainty bodes well for the popularity of low-cost exchange-traded funds (ETFs) that allow investors to jump into and out of positions with great agility throughout the trading day. Total ETF assets increased by $49 billion, or 10.2%, for the month, to $531 billion at the end of April, according to State Street Global Advisors' (STT) April ETF Snapshot report. Since 2002, assets have increased more than fivefold, as the number of ETFs has grown more than eightfold. The ongoing net flows of money out of open-end mutual funds and into ETFs is mainly the result of the drop in the stock market in the last few months of 2008 which "freed up the tax handcuffs" among investors, says Noel Archard, managing director for product research and development at iShares. Archard points out that investors stood to incur a much smaller tax bill, if any, from pulling money out of conventional mutual funds after the market downdraft. The poor performance by many mutual funds, coupled with the capital gains distributions they had to pay out, only added to investors' eagerness to shift into tax-efficient ETFs, he adds. He estimates that roughly $170 billion in assets migrated from mutual funds to ETFs last year. Full Story: http://www.businessweek.com/investor/content/may2009/pi2009058_328608.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis
ETF BASIC NEWS May 11, 2009 10:35am

Coal ETF On Fire (KOL)

coalLast summer, I wrote about the prospects for getting into the coal market. At the time, I pointed out that "just because coal is up 140% does not mean that Joe's Coal Mine is all of a sudden 140% more profitable." And indeed, like so many bull markets of that halcyon summer, the bull market in coal came to a crashing halt, and brought down with it coal stocks, as well as the only coal-focused exchange-traded fund in town at the time, the Van Eck Market Vectors Coal (KOL). The story has been pretty straightforward and painfully familiar: The global economy tanked, including China, and thus energy and steel demand for coal dried up. At least, that's what happened to the demand for the spot coal that shows up on charts. The reality from the coal company's perspective is that long-term contracts drive the bottom line, and those long-term contracts are negotiated based on real supply and demand - how many boatloads of the stuff go from point A to point B, and on what schedule. Full Story:  http://www.istockanalyst.com/article/viewarticle/articleid/3226149
NYSE:KOL May 11, 2009 10:16am

Bank shares fall on capital-raising plans (ETF: XLF)

fedbankBOSTON (MarketWatch) -- The U.S. financial sector opened to the downside Monday after several banks announced common-stock offerings designed to help pay back the funds they've borrowed from the government under its rescue plan. The Financial Select Sector SPDR Fund (XLF), a widely followed barometer of financial stocks, was down 3% in early trading.   Also weighing on the sector Monday was a report that several banks won concessions from the Federal Reserve during the government's stress tests, the results of which were released last week Full Story: http://www.marketwatch.com/news/story/banks-plans-sell-stock-hurt/story.aspx?guid=%7BD56E2362%2D6E94%2D4FD7%2D840C%2D0F70B259EB87%7D&siteid=yhoof
NYSE:XLF May 11, 2009 10:09am

Don’t Buy This New Investment

dont-buyYou can always find promising ways to invest. But your portfolio can live without this particular new investment vehicle, even though many have anticipated it for years. Earlier this month, a relatively small fund company, Grail Advisors, launched an actively managed exchange-traded fund named Grail American Beacon Large Cap Value ETF. Unlike previous active ETFs, which have investment objectives that require them to follow quantitative models without room for subjective thought, Grail's offering gives its managers latitude to buy whatever stocks they believe will help the ETF outperform the Russell 1000 Value index of large-cap value stocks. Hey! It's just another fund! The endless hype about ETFs amuses me. It seems like anytime a new ETF comes out, many investors hold their breath, hoping that they've stumbled onto the next great innovation in investing -- and will somehow capitalize by getting in on the ground floor. Full Story:  http://www.fool.com/investing/etf/2009/05/11/dont-buy-this-new-investment.aspx
ETF BASIC NEWS May 11, 2009 9:53am

Are Commodity ETF’s Getting In The Middle Of Fear or Greed?

greedA repeat of last week with nine of the ten major sectors ending the week higher, and one struggling sector to watch. Technology was down 2.2% for the week after setting the pace and leading the broader NASDAQ higher. The challenge for the sector was the semiconductor space, down over 7% on the week. Regardless, the index ended up 1.2% on the week and continued the string of nine weeks to the upside. The weekly volume has been above average eight out of the nine weeks, showing the strength of this move higher. Financials were down 2.3% on the expectations of last week's banking stress test announcement. As we all know, the news was perceived as positive and the sector led the week gaining more than 20%. The banks were up more than 30%! Regional banks added 21% on the week. Broker/dealers were high by 10.6%. The results show a bullish response to the stress test data. Money is moving into the market and the result is more sectors breaking higher and creating a broader uptrend for the markets overall. Health care, utilities, and energy joined the positive trends moving higher. However, the market remains overbought, technically. Commodities have joined the uptrend with a breakout this week. DBC, PowerShares Commodity Index ETF, broke above resistance at $21.30, DBA, PowerShares Agriculture ETF, broke above resistance at $26, and both are worth watching for a positive entry point. Oil is one of the positive sub-sectors of commodities, moving above $58 per barrel this week. USO, the United States Oil Fund ETF, broke above resistance at $32.40. UNG, the United States Natural Gas ETF, spiked above the $14.45 resistance to close at $16.93, breaking the downtrend line in play near $16 as well. KOL, Market Vectors Coal ETF, continued to move higher from the break through resistance at $17.35 last week, closing at $22.85. Full Story:  http://www.moneyshow.com/trading/ETFCorner.asp?aid=ETFCorner-16769
NYSE:DBA May 11, 2009 9:28am

FAS/FAZ Dealing With Billions of Dollars of Securities Sales from Members (FAS, FAZ, BBT, COF, PFG, WFC, USB)

leveragedThe triple leverage ETF’s, the Direxion Financial Bull 3X Shares (NYSE: FAS) and Direxion Financial Bear 3X Shares (NYSE: FAZ), are perhaps the most volatile of all financial-stock ETF’s.  This morning these two are getting to deal with a wave of secondary offerings and capital offerings from constituent member banks and financial firms.  These ETF’s are reacting to major “raising cash” filings and offerings from BB&T Corp. (NYSE: BBT), Capital One Financial Corp. (NYSE: COF), Principal Financial Group Inc. (NYSE: PFG), Wells Fargo & Co. (NYSE: WFC), and US Bancorp (NYSE: USB)...... ........As a result of all of these financials lower on offerings and after seeing profit taking in other major financial firms, we have the Direxion Financial Bull 3X Shares (FAS) down 9.8% at $11.32 and the Direxion Financial Bear 3X Shares (FAZ) up 8.9% at $4.90 at 9:47 AM EST. Full Story:  http://247wallst.com/2009/05/11/fasfaz-dealing-with-billions-of-dollars-of-securities-sales-from-members-fas-faz-bbt-cof-pfg-wfc-usb/
NYSE:FAS May 11, 2009 9:16am

Investors, not jewellers, driving gold price-ETF

gold-minerGlobal commodities exchange-traded fund manager ETF Securities believes that the current gold price is too high to attract the key jewellery sector, leaving investment demand as the sole driver of prices. Gold will need to fall to between $800-$850 an ounce to generate stronger interest from jewellery makers, Nicholas Brooks, head of investment strategy for ETF Securities, told reporters on a media call from London. About 60 percent of total world demand for gold last year came from the jewellery sector, versus 30 percent from investors, with the rest from industrial users, according to Brooks. Gold rose $900 an ounce late last month as worried investors fretted over currency and stock markets. Spot gold stood at around $915 an ounce early on Monday. It last traded below $850 an ounce on Jan. 22, according to Reuters data. Full Story: http://money.ninemsn.com.au/article.aspx?id=812238
ETF BASIC NEWS May 11, 2009 9:07am

Flipping Nuclear Power Back On (ETFs: NUCL, NLR)

nuclearNuclear-power generation is experiencing a revival. While there hasn't been a new plant started since the Three Mile Island fiasco in 1979 (www.eia.doe.gov/emeu/aer/txt/ptb0901.html), the Nuclear Regulatory Commission (www.nrc.gov) is currently processing applications for 26 new facilities, which amounts to only half the capacity needed for nuclear to continue meeting 20% of America's energy needs. Using Energy Information Administration's (www.eia.doe.gov) projections that U.S. electricity demand will grow 50% over the next 30 years, NRC Commissioner Kristine Svinicki figures that America will need the equivalent of 50 new 1,000-megawatt nuclear-power plants just to maintain the status quo (www.nrc.gov/reading-rm/doc-collections/commission/speeches/2009/s-09-008.html). More importantly for investors, while America has mixed feelings about this non-carbon-emitting energy source, other industrialized countries are stepping up their decades-old nuclear commitment; 75% of France's electricity is nuclear-generated. More than 60 new nuclear plants should come online overseas by 2015...... ......Despite being politically unpopular, nuclear utilities like Exelon could actually profit if a carbon-tax system is introduced, says Miller, and are lobbying Congress to get a cap-and-trade system that doesn't undermine their regulated monopolies. Besides the utilities mentioned, he likes American Electric Power (AEP) and Public Service Enterprise Group (PEG), but is cool on Constellation Energy. Three nuclear-oriented exchange traded funds let investors spread risk across the uranium and nuclear-power industries. Morningstar's Justice and ELF Digest (www.etfdigest.com) Publisher David Fry favor Van Eck Associate's (www.vaneck.com) Market Vectors Nuclear Energy ETF (NLR). Justice notes that NLR has exploited "first-mover advantage" to capture about 15 times the assets of second mover Barclays' (http://us.ishares.com) iShares S&P Global Nuclear Energy (NUCL), thus offering investors a tighter bid/ask spread. Full Story: http://online.barrons.com/article/SB124182248204002189.html?mod=googlenews_barrons
ETF BASIC NEWS May 11, 2009 8:57am

Gold investment demand wanes, ETFs in dry spell

goldGold prices eased back towards $910 overnight and early this morning, as risk appetite made a comeback and was seen as a hunger for stocks and certain currencies. Investment demand for gold as a safe-haven was waning in the wake of dissipating angst in various local markets. ETF-related demand has gone into drought mode since reaching a record high last month. Some of today's easing in values was seen as being related to news that US Bancorp, Capital One, and BB&T Corp will offer common stock and are intending to check out of Hotel Geithner (TARP) in the near future. What's in your wallet? Enough money to pay back kind Uncle Sam. So much for bank nationalization, Nostradamus. In addition, gold sales have plunged in several key regionally-oriented locales, such as Dubai (gateway to India) and Hong Kong (gateway to you-know-where). Local chain store spokesmen have characterized the situation as " high gold prices having hit the bullion trade" and opined that "gold sales will now pick up only when the prices come down." March/April figures show a sharp (50%) drop in offtake in Dubai. Hong Kong and Singapore fared not much better, on the back of persistent recessionary forces at work, and on the lack of available funds to buy gold with. Bear in mind that investment demand has been the key (and some -such as ETF Securities- say, the 'sole') driver/support for gold in Q1. Gold's year-to-date average price has been near $905 per ounce (the highest such average, yet). This, against a background that had the average gold price (since 2001) hover near $540 per ounce, and near $390 (for the 36 years between 1974 and 2009). Full Story: http://www.commodityonline.com/news/Gold-investment-demand-wanes-ETFs-in-dry-spell-17665-3-1.html
NYSE:GLD May 11, 2009 8:24am

Drug companies see acquisitions as prescription to health

drugsTo add the bright promise of biotechnology but spread out its volatility and risk, she recommends the exchange-traded fund SPDR S&P Biotech. That ETF tracks the Standard & Poor's Biotech Select Industry index of 27 stocks from the S&P Total Market index. Although the fund includes a few established biotechnology firms, nearly half of the companies in its portfolio don't have drugs on the market. "Every drug introduced has to be a $1 billion blockbuster to support the spending on research and development that went into it," said James Molloy, pharmaceutical analyst with Caris & Co. in Boston. "Pharmaceutical companies have the cash and the capacity to take on additional companies that might be a good fit or will deliver a new portion of the market for them." The slower regulatory process of recent years has taken its toll on new discoveries and added to the desperation of companies whose reputations were built on popular drugs. The steady demand for pharmaceuticals and the aging of the Baby Boomer generation continue to bode well for the industry, but companies cannot escape patent expirations and generic competition. "Drug development drives pharmaceuticals, and there hasn't been a whole lot of that development for five years," said Les Funtleyder, health-care strategist for Miller Tabak & Co. in New York. "There are companies that need drug pipelines, and there are smaller companies that have it." Although pharmaceutical firms have consolidated for a long time, megamergers don't always create greater shareholder value, Funtleyder said. Drugs are an innovation business, and mergers won't help unless they lead to new products, he said. Nine out of 10 drugs fail, and it is crucial to produce successes to make up for those failures, he said. Exchange-traded funds are gaining popularity as a means of diversifying risks of the pharmaceutical industry. Full Story:  http://www.chicagotribune.com/business/yourmoney/sns-yourmoney-0510pharma,0,2169995.story
ETF BASIC NEWS May 10, 2009 5:34pm

How Is the New Hedge Fund Strategy ETF Doing?

resultsThe innovators were out with guns blasting as they introduced an ETF that acts like a hedge fund. How has it been doing since the March 25 launch?This new ETF, established by IndexIQ analyzes publicly available hedge fund performance data and then tries to replicate returns utilizing ETFs and other liquid trading vehicles. Additionally, it promises to perform as well as a hedge fund without the risk and with low correlation to traditional assets. Another benefit that this ETF could offer to investors is risk reduction because of its low correlation with the stocks and bonds that already dominate an investor’s portfolio. To take it a step further, the ETF replicates six different common fund strategies using ETFs to match the calculated risk exposure of the hedge funds, states Scott Burns of Morningstar. It invests in other ETFs, and offers investors a low cost option to the world of alternative investments. Full Story:  http://seekingalpha.com/article/136798-how-is-the-new-hedge-fund-strategy-etf-doing
NYSE:QAI May 10, 2009 2:18pm

Led by the iShares exchange traded fund group, exchange traded funds are poised to break the stranglehold that mutual funds have on 401(k) retirement plans

401kThe San Francisco-based unit of Barclays Global Investors launched the “iShares in 401(k)” program last month to help financial advisers use ETFs as investment options within 401(k) retirement plans. The program identifies administrative providers and networks that offer access to ETFs in 401(k) accounts, making it easier for advisers to provide the funds in clients' retirement programs alongside traditional mutual funds. The timing seems right. The massive losses in 401(k) plans — losses that can be attributed to mutual funds that in many cases are more expensive than ETFs — work to the advantage of ETFs, said Darek Wojnar, head of product research and strategy at iShares. And more 401(k) administrators and networks have cleared the technical hurdles of buying and selling ETFs and are making room for the products. “The record keepers have figured out ETFs are coming and they need to accommodate them,” said Bruce Levine, president of ETF provider WisdomTree Investments of New York. WisdomTree rolled out its own ETF 401(k) platform in 2007. With assets of $25 million spread among 10 plans, Mr. Levine admitted that it has been “slow going.” Industrywide, ETFs account for less than 5% of the assets in 401(k) plans, Mr. Wojnar said. Full Story: http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090510/REG/305109977/1025/ETF
ETF BASIC NEWS May 10, 2009 10:04am

BC Partners enters a 3.5 billion pound bid for iShares

breakingnewsiShares are units of families of exchange-traded funds (ETFs) managed by Barclays Global Investors. LONDON (Reuters) - Barclays Plc (BARC.L) said on Sunday it has received new interest from both trade and private equity buyers for its iShares funds business, responding to a media report that said BC Partners might trump last month's agreed bid from CVC Capital Partners.  A Barclays spokesman said there had been "tremendous" interest in iShares from "both strategic and private equity" since April 9, when Barclays agreed to sell the asset management firm to private equity company CVC for 3 billion pounds ($4.4 billion) but kept the right to hunt for a better deal until June 18.  The spokesman said it was "way too early to speculate if there will be a better offer and from whom."  The Sunday Times newspaper said that buyout firm BC Partners has lodged a 3.5 billion pound bid for iShares.  The newspaper said it was not clear whether CVC would be willing to match the higher offer from BC Partners, which it said was being advised by Perella Weinberg.  The Daily Telegraph said on its website on Sunday that Barclays has got at least two counter-offers for iShares, with private equity groups Apax, BC Partners and Hellman & Friedman all having been looking at trumping the CVC offer. Full Story: http://www.reuters.com/article/innovationNews/idUSTRE5490VZ20090510
ETF BASIC NEWS May 10, 2009 9:46am

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