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Mapping Indexes (ETF’S)

mappingIndex investing continues to grow in size and scope. The Morningstar Principia database shows that about 15% of distinct portfolios are index-based products. These funds are either open-end index funds or exchange-traded products (ETPs) that track indexes. Together, index-based funds represent more than 20% of the value of all funds in the database. As this segment of the market grows, so does the complexity of the indexes. There are now hundreds of sophisticated indexes whose construction and purpose bears little resemblance to traditional benchmarks such as the Russell 3000. These new methods include quantitative security selection and alternative weighting strategies. Today's advisors can best serve their clients with a working knowledge of the various index methodologies. Unfortunately, this is no easy task. There are simply too many indexes and strategies available. We need new tools to make the analysis of index-based products faster and easier.
ETF BASIC NEWS June 1, 2009 10:12am

ETF Stats For May 2009

statsThe month of May brought the largest monthly decline ever in the number of US-listed ETFs and ETNs.  Active listings changed by -14 after averaging more than +17 new products per month during the past three calendar years.  Additionally, the six-month moving average of net new listings turned negative for the first time in history. There were five new ETFs introduced during the month and 19 closures.  The total number of listed products at the end of May stands at 830 (745 ETFs and 85 ETNs), the lowest level since last October.  The quantity is down 15 from the start of the year and down 29 from the peak level of 859 established in early February prior to the closure of the Northern Trust NETS family of ETFs.
ETF BASIC NEWS June 1, 2009 9:56am

Is new book’s ETF-based timing system better than buy and hold?

guessingWhen investors seek to limit damage from bear markets, their approach generally is based on a gut feeling or prediction. Such short-term moves are known as "market timing." But emotional responses are counterproductive and market forecasts are a dime a dozen. Which is about what they're worth. So, if the market can't be timed - and if a buy-and-hold approach doesn't work, either - what's an investor to do?
ETF BASIC NEWS June 1, 2009 8:47am

Which ETF Sectors Are All the Rage?

rageSINCE SEPTEMBER, DEBORAH FUHR has occupied one of the loftiest perches in the world of exchange-traded funds. As managing director and global head of ETF research at Barclays Global Investors, one of the world's leading ETF shops, she is considered one of the top analysts in her field. She talked with Barrons.com by phone recently about her industry and which ETFs are sparking investor interest these days. Q: You joined Barclay's last September, around the time that the financial world as we know it changed. What has it been like in the industry during this period?
ETF BASIC NEWS June 1, 2009 8:38am

ETFs Profit From Rising Treasury Bond Yields

treasurybondLeveraged exchange-traded funds that short U.S. Treasury bonds got a nice pop last week from a jump in yields, and the ETFs could see further gains if investors lose their thirst for government-backed debt. In a dramatic sell-off Wednesday in government bonds, yields on 10-year notes surged above 3.7% at one point to their highest levels since November. That upheaval in the bond markets, which some traders said was exacerbated by mortgage-related selling, ignited fears that inflation is on the horizon as a result of the government's efforts revive the ailing financial system.
NYSE:GLD June 1, 2009 8:31am

New Pimco Bond ETF Marks Shift In Sector

shifterIn a move that could shake up the clubby business of exchange-traded funds, bond giant Pacific Investment Management Co. is poised to launch its first ETF early this week. The move by Pimco, a unit of Allianz SE co-founded by bond guru Bill Gross, marks the first time in years such a high-profile mutual-fund company has tried to muscle its way into the ETF business, long dominated by a handful of large-but-lesser-known asset managers that specialize in indexing, such as Barclays PLC and State Street Corp. ETFs, baskets of stocks or bonds that trade on an exchange, have been rapidly gaining popularity with investors, and took in tens of billions of dollars in 2008. But many big-name mutual-fund companies have shrugged off ETFs because these offerings were traditionally just index funds with low management fees, which ensured that profit margins were measly.
ETF BASIC NEWS June 1, 2009 1:00am

SPDR University weds learning with marketing

statestreetIn April 2008, State Street’s intermediary business group, which is the investment management arm of State Street Corporation, launched SPDR University—an agile learning portal exclusively for financial advisors. The intermediary business group is responsible for distributing its SPDR (pronounced “spider”) Exchange Traded Funds (ETFs) and additional products via financial advisors, brokers, and other investment professionals. While State Street is one of the world’s largest ETF providers, competition for advisor mindshare—and assets—is fierce. That’s why State Street made a strategic decision to offer its prospects and customers considerably more than just investment product and performance data.
ETF BASIC NEWS May 31, 2009 5:03pm

Plain vanilla ETFs come back into fashion

plainSimplicity was a strong selling point of the first exchange traded funds offered in the early 1990s. Issuers bought the shares that made up the underlying index and sold them on to investors in the form of a single easily traded security. But as the range of assets covered by ETFs has expanded it has become more difficult to assemble the underlying portfolio. Issuers have found a way round this difficulty by means of swaps, exchanging a perhaps less than perfect bunch of assets for a swap that precisely mirrored the relevant index.
ETF BASIC NEWS May 31, 2009 4:53pm

Do Inverse ETFs Do What They’re Supposed To?

inverseHow bad are inverse exchange-traded funds (ETFs) at returning the inverse movements of the indexes they track? Frank Elston and Doug Choi tell us in a paper published in the Proceedings of the Academy of Accounting and Financial Studies (Volume 14, Number 1: 2009). It turns out out they can be so bad in replicating implied returns that Elston and Choi conclude investors would be better off in many instances shorting the long or double-long ETFs instead.
NYSE:DOG May 31, 2009 8:29am

Active ETFs need time to catch on, some say

etfActively managed exchange traded funds are finally starting to trickle into the market. But for the trickle to become a flood, active ETFs will have to overcome a number of obstacles, not the least of which is the establishment of desirable performance. “Would people want active management that comes with the tax advantages, transparency and liquidity of an ETF?” asked Scott Burns, the director of ETF analysis at Morningstar Inc. of Chicago and editor of Morningstar ETFInvestor, a monthly newsletter. “The answer is yes, but if it turns into a tradeoff for returns, the answer is no.” It is a challenge, but some asset managers think that they are up to it. The Grail American Beacon Large Cap Value ETF (GVT) from Grail Advisors LLC of San Francisco, which began trading on May 4, allows portfolio managers unrestricted trading. Full Story: http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090531/REG/305319965/1025/ETF
ETF BASIC NEWS May 31, 2009 8:01am

Coffee Sweeter Than Sugar, Think Agriculture ETF’s

cow-mooWell, here we are on the final trading day of May.  Taking account for the month, the real story's been agriculture in its manifest forms. For investors at the sector level, the 9.8% gain scored by the PowerShares DB Agriculture Fund (NYSE Arca: DBA) in May could portend a broader resurgence in commodities. A more vigorous equity market breeze blew at the back of the Market Vectors Agribusiness ETF (NYSE Arca: MOO), however, pushing the fund 17.8% higher for the month.
ETF BASIC NEWS May 31, 2009 4:00am

Want To Make Money In Bonds? Look Overseas!

bondsMaking money in bonds when the dollar is tanking ... when deficit spending is surging ... when interest rates are rocketing ... and when the U.S. government's AAA credit rating is openly being questioned ... sounds darn near impossible. And it is if you spend all your time focused on U.S. bonds.

But this unique combination of forces also opens up specific profit opportunities in one corner of the bond market — FOREIGN debt.

 In fact, one of my favorite foreign bond mutual funds has gained more than 4.5 percent in the past month. Compare that to something like the iShares Barclays 20+ Year Treasury Bond Fund (TLT), which has plunged 22 percent in 2009 alone!
NYSE:TLT May 31, 2009 3:00am

4 ETF’s Which Provide The Best Hedges Against Inflation

inflation-toiletUnderground investor David Fessler, writing at Investment U, says the four best hedges against inflation are gold, inflation-adjusted Treasuries, energy stocks and commodities such as wheat, metals, cattle and fertilizer. 1) Gold David recommends investors hold 5% of their portfolio in gold to hedge against a declining dollar and an inflationary economy. He says investors can easily buy gold through the SPDR Gold Trust ETF (NYSE:GLD). This tracks the price performance of gold bullion without the hassles of finding and storing the physical metal.
NYSE:GLD May 31, 2009 2:00am

Report Highlights Global Growth Of ETF Industry

etf-newsThe exchange traded fund (ETF) industry is gaining popularity both in the states and abroad, and a recent industry review has shown just how much ground ETFs have covered. The characteristics of ETFs are hard to ignore for any savvy investor. ETFs have two forms of liquidity: First, through shares on a secondary basis on an exchange. Second, through a primary basis via an unique creation process, according to iShares. ETFs are also traded at or close to their underlying net asset values (NAV). But it should be noted that divergence in performance of an ETF to its benchmark is possible. In a recent review of the ETF industry by Barclays Global Investors, the overall picture of the ETF industry shows: 
ETF BASIC NEWS May 31, 2009 1:00am

How To Use ETFs To Diversify Away From The US Dollar

dollar-declineAs the U.S. dollar depreciates because of  increased government spending, investors may turn to exchange traded funds (ETFs) to defend their wealth. Here’s how. The U.S. dollar is under attack and there are several factors that are eating away at the dollar’s strength, remarks Ron DeLegge for ETF Guide. The Chinese yuan is being pushed to be included in the IMF’s basket of fund payments for bilateral trades, and the currency may overtake the U.S. dollar as the world’s reserve currency. The U.S. government is also continuing its defacement of the dollar by increasing spending and deficits.
NYSE:CYB May 30, 2009 10:40am

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