All ETF Daily News Articles

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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
ETF BASIC NEWS May 14, 2009 2:06pm

An ETF For Every Investor!

etf-newsIn last week’s Money and Markets column, I told you about the advantages exchange-traded funds have over mutual funds. Today we’ll go a little deeper and look at the many exciting ways you can execute your investment ideas with ETFs.  As you’ll see, practically all the new financial innovation is happening in the ETF niche. Mutual fund sponsors have all but given up on doing anything new and different. The first thing I want you to understand is that an ETF is nothing more than a tool. And most of the time, ETFs do what they’re designed to do. The more important question is which ETF is a match for your goals and situation? The ETF that works for your neighbor might not be the same one that you need. Adding ETFs to your toolbox is a terrific way to implement your investment strategy. So what are your goals? If you have a well-designed investment strategy, you’ll still need good tools to execute that strategy. And ETFs are a great way to fill up your toolbox.  Just look at some of the ways ETFs allow you to invest … Market Benchmarks: If you’re a broad-minded investor who wants to play the whole market, you can easily do it with ETFs. The iShares MSCI ACWI Index Fund (ACWI) tracks the MSCI All-Country World Index — which includes just about every stock market in the world: U.S., Europe, Asia, Emerging Markets, 46 countries in all. ACWI is one-stop shopping for equity investors. Style Investing: Do you think small-caps will outperform? Consider iShares Russell 2000 Index Fund (IWM), which lets you buy all 2,000 stocks in this popular index with one, quick transaction. Or if you’re looking to tilt your portfolio toward value stocks, or growth stocks, or dividend-paying stocks, you have plenty of ETFs to choose from. Sector ETFs: These are some of my favorites. You know that different industries tend to rotate in and out of favor: Technology, health care, retailers, utilities, and more. ETFs let you own the hot sectors and also give you a way to zero in on the best sub-sectors. Within the technology sector, for instance, there are ETFs that cover semiconductors, computer hardware, software, information services, networking, telecommunications and more. International: For years investors had to use mutual funds in order to invest outside the U.S. Fund sponsors covered broad regions, but to get any more precise you had to buy individual stocks. Not any longer. ETFs now cover not only the major regions of the world — Europe, Asia/Pacific, Latin America and so on — but also many individual countries. Whether you want to buy Singapore, Switzerland, or South Africa … ETFs let you do it. Try that with a mutual fund! Full Story:
ETF BASIC NEWS May 14, 2009 2:04pm

ETF inflation trades

NYSE:GLD May 14, 2009 1:41pm

Shorting both FAS and FAZ for an 87% return?

idea( I’ve been playing around with ETFs for a while and thought about a way to generate a considerable profit from them. Option traders are familiar with time decay but it also applies to leveraged ETFs. This ETF time decay is a result of the fund management fees, leverage financing interests and other expenses. Since November 2008, there are 2 interesting funds for this strategy: The Direxion Financial 3X ETFs. FAS is long the financial market and FAZ is short the financial market, both using 300% leverage. These ETFs are very popular and are traded in the tens of millions shares a day which make them good candidates for short selling. While I was looking around for information on this strategy, some people rightfully said “they cannot go both to 0”. This may be true but that’s not the object of this strategy. Here, we want to re-hedge the positions daily to balance the dollar amount on FAS and FAZ. This way, we profit from the downward bias on both funds and we are hedged against the market since the net delta of this position is near 0 and readjusted to 0 every day.

The strategy is: everyday, at close time, balance the positions on FAS and FAZ to have the same short dollar amount resulting in a net delta of 0. A quick backtest starting with a short position of $5000 on each ETF shows......

Full Story:

NYSE:FAS May 14, 2009 12:33pm

Invesco PowerShares Recognized With ETF Industry Awards

powersharesCHICAGO, IL--(Marketwire - May 14, 2009) - Invesco PowerShares, a leading provider of exchange-traded funds (ETFs) was recognized for launching the "Most Innovative ETF Product" in 2008 and for its ongoing "Contribution to the ETF Sector" at two ETF industry conferences held recently in New York City. Invesco PowerShares received the 2008 award for "Most Innovative ETF Product" for the Americas at the 5th Annual Global ETF Awards®. Invesco PowerShares introduced the industry's first actively managed equity ETFs in April 2008, listing the PowerShares Active Mega Cap Fund (PMA), PowerShares Active AlphaQ Fund (PQY), and PowerShares Active Multi-Cap Fund (PQZ). As part of the same listing, Invesco PowerShares also launched the PowerShares Active Low Duration Fund (PLK), and in November 2008, the company listed the first actively managed U.S. Real Estate ETF -- PowerShares Active U.S. Real Estate Fund (PSR). Actively managed ETFs combine the goals associated with active management (reduced volatility, managed risk and benchmark outperformance) with the traditional benefits of ETFs, such as tax efficiency and transparency. "It is truly an honor to be recognized by our peers as a leading innovator in the ETF Industry," said Bruce Bond, president and CEO of Invesco PowerShares. "We believe our diverse suite of ETF portfolios is at the forefront of the industry delivering value and market-leading ideas to investors." Separately, Edward McRedmond, senior vice president of portfolio strategies at Invesco PowerShares, was presented with the 2008 award for his "Contribution to the ETF Sector" at the 8th Annual Closed-End Fund & ETF Awards Capital Link Forum. This marks the second consecutive year Mr. McRedmond has received the award and the fifth consecutive year for Invesco PowerShares. "It's been my privilege to work and interact with so many wonderful and talented people in the ETF industry over the years," said McRedmond. "On behalf of Invesco PowerShares, I am deeply honored to be receiving the award for Contribution to the ETF Sector." Full Story:
ETF BASIC NEWS May 14, 2009 12:17pm

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