All ETF Daily News Articles

PRECIOUS-Gold steadies near $925 as dollar recovers, ETF up

3-16-09-gold-125x125TOKYO, May 14 (Reuters) - Gold held steady around $925 per ounce on Thursday as a recovery in the dollar dented sentiment, pushing prices below a six-week high touched the previous day on buying by gold-backed exchange-traded funds. Despite U.S. and euro zone data suggesting recent optimism about a global economic recovery may have been premature, gold struggled to extend gains as current prices were already seen as high, traders said. "Gold prices have been stabilising at relatively high levels, slowing fresh investment," said a senior trader at a Japanese smelter. "For gold prices to break above recent ranges, there has to be some fresh news about economic turmoil," he said. But gains in other commodities such as oil and base metals in recent weeks suggest gold will remain supported, keeping prices in the $915-$930 range for now, the senior trader said. Spot gold <XAU=> held steady at $924.00 per ounce, down 0.2 percent from New York's notional close of $925.45. It fell 0.4 percent to a low of $922.20 earlier on Thursday. On Wednesday, gold rose to a six-week high of $930.40 an ounce as buying by exchange-traded funds and losses in stock markets boosted interest in the metal. The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said holdings had risen to 1,105.62 tonnes as of May 13, up 1.53 tonnes from the previous business day for the first gain in a month. Full Story:
NYSE:GLD May 14, 2009 12:01pm

Commodity ETF’s Are The Best Place To Be For The Next Decade

commoditiesWhy invest in commodities? Two and a half billion people are going to live like Americans in the next 20 years and prices go up over time, that’s the nature of inflation. We are in the middle of a global economic crisis and commodities are on sale. Buy commodities now while they are still cheap. When we finally emerge from this global economic crisis — prices will explode higher. I’m talking about another long-term bull market in commodities. Let me explain… Inflation Will Push Commodities Prices Higher Our Federal Reserve Chairman Ben Bernanke is an inflationist, which is an advocate of the policy of deliberate inflation achieved by increasing the supply of available currency and credit. They call him helicopter Ben because he once quoted a statement made by Milton Friedman, about using a “helicopter drop” of money into the economy to fight deflation. Bernanke is a student of the causes of the Great Depression, and he has written extensively on this subject. Bernanke knows that deflation is quite negative for an economy and should be avoided at all costs. We have recently seen deflation as prices for real estate and commodities dropped during this recession. But, Ben Bernanke’s Fed and other central banks around the world have fired up the printing presses to combat deflation. They have been dumping new currency into the economy to reverse deflation and stimulate the economy. It’s working! One measure of inflation- the Consumer Price Index (CPI) has recently turned positive. Deflation is out—Inflation is starting. The problem is, inflation could really skyrocket, especially when we finally emerge from this recession.  Inflation eats away at your purchasing power and takes away your wealth. One of the best ways to protect against inflation is to invest in commodities.In the 1970s, when inflation in the U.S. was high and the economy was in a deep recession, commodity prices soared. You want to own tangible assets like metals, energy, agriculture, and livestock as these commodities hold their value in inflationary times. Full Story:
ETF BASIC NEWS May 14, 2009 11:11am

Growing Interest In UNG ETF Spurs Natural Gas Price Rally

natural-gasThe front-month natural gas NYMEX contract has rallied 45% since the end of April. The price rally has taken many by surprise because fundamentals have not changed. Industrial demand remains down, liquefied natural gas (LNG) imports are starting to show up and storage inventories will likely hit a new record this fall. Some analysts believe the rally in natural gas prices is due to a nearing economic recovery, but Energy Solutions, Inc. doubts that is the case. “History shows that natural gas prices rally in the second quarter of the year,” says Valerie Wood, President of Energy Solutions, Inc. “The rally usually starts a little earlier than it did this year, but it does tend to peak in May. So, the timing of this rally isn’t that much different from past years.” “Another factor driving this rally involves a little speculative déjà vu,” says Wood. There has been a surge of investor interest in United States Natural Gas Fund, LP (UNG), an exchange-traded fund. When UNG is purchased, the portfolio of products that make-up UNG are purchased. One of those products are natural gas NYMEX futures contracts. “If the purchase of UNG is aggressive, it can very well cause a quick rally in natural gas prices, which in turn increases the value of UNG and makes investors very happy. This prompts investors to throw more money at UNG, which could be a driving force behind another rally. This same type of investment happened last year, albeit with other types of funds,” says Wood. Full Story:
NYSE:UNG May 14, 2009 10:06am

Van Eck Launches Market Vectors Brazil Small-Cap ETF

brasilVan Eck Global today introduced the Market Vectors Brazil Small-Cap ETF (NYSE Arca: BRF), the first U.S.-listed exchange-traded fund (ETF) to focus on Brazilian small-cap stocks. BRF and its underlying index (Market Vectors Brazil Small-Cap Index, ticker: MVRIO) are designed to give investors exposure to domestic investment themes and opportunities, such as the growth potential in Brazil’s homebuilding and consumer goods sectors. “In our view, small-cap stocks represent excellent direct exposure to the Brazilian economy since small-caps are typically driven by local trends,” said Jan van Eck, Principal at Van Eck Global. “BRF is well diversified and avoids the heavy commodities and materials weightings of other Brazil-focused products currently on the market.” “Energy and Materials accounted for more than 50 percent of the weighting in the typical Brazil-focused index as of April 30th of this year,” continued van Eck. “By way of comparison, Energy and Materials made up just 16 percent of MVRIO at that same time. We believe that this makes BRF a unique product and one that will appeal to investors who are looking for a different type of exposure to Brazil’s local economy.” The top three industry weightings for BRF’s index are Household Durables, Food Products and Specialty Retail at 16%, 9% and 8%, respectively. Full Story:,824925.shtml
ETF BASIC NEWS May 14, 2009 9:51am

Industrial ETFs Ride the Economic Rebound

industryGeneral Electric, whose shares have climbed 17% in the past three months, is still down by more than half over the past year, suggesting there's plenty of room to rise. GE, United Technologies and 3M are the three-largest holdings of the Dow Jones U.S. Industrial Sector Index Fund(IYJ), which jumped 18% in April alone. The most attractive industrial ETF, based on its holdings' price-to-earnings ratio, is the PowerShares Dynamic Industrials Sector Portfolio (PRN), which owns only U.S. stocks. The fund's 60 members trade at an average of 11 times earnings. (Inverse and leveraged funds have been excluded from this review.) Holdings of PowerShares Dynamic Industrials Sector Portfolio include GT Solar International(SOLR), Chart Industries(GTLS), EnerSys(ENS), Flowserve(FLS) and Goodrich(GR). PowerShares Dynamic Industrials Sector Portfolio has fallen 0.6% so far this year, lagging behind some of its peers. First Trust Industrials/Producer Durables AlphaDEX Fund(FXR) has risen 5.6% over the same period, but is now potentially overvalued with a price-to-earnings ratio that's twice as high at 22. The best-performing international industrial ETFs this year are the SPDR S&P International Industrials Sector ETF(IPN), up 6.8%, and WisdomTree International Industrial Sector Fund(DDI), up 3.1%. Full Story:
ETF BASIC NEWS May 14, 2009 8:20am

Harvard Buys Korea, Brazil ETFs as Emerging Markets Beat U.S

harvardMay 14 (Bloomberg) -- Harvard University, the richest U.S. college, raised its holdings of exchange-traded funds that track stocks in Brazil, China and Mexico in the first quarter as emerging markets outperformed U.S. equities. The biggest new purchase reported by Harvard Management Co., which oversees the school’s $28.8 billion endowment, was 1.74 million shares of iShares MSCI South Korea Index Fund valued at $49 million, according to a filing yesterday with the U.S. Securities and Exchange Commission. Its largest stake was 8.28 million shares of iShares MSCI Emerging Markets Index valued at $205 million. The quarterly 13F filing, which doesn’t reflect all of Harvard’s equities, offers a glimpse of how the Cambridge, Massachusetts, school is navigating the worst financial crisis since the Great Depression. The MSCI Emerging Market Index rose 0.52 percent in the quarter, while the Standard & Poor’s 500 Index, a benchmark of U.S. stocks, fell 12 percent...... ......Vanguard Emerging Markets Harvard added to its ETF holdings in the quarter by buying 2.27 million shares of Vanguard Emerging Markets, as well as 1.5 million shares of iShares MSCI Brazil Index Fund and 1.14 million iShares FTSE/Xinhua China 25 Index Fund. Full Story:
ETF BASIC NEWS May 14, 2009 8:09am

Barclays Files To Launch Two Actively Managed ETFs

ishares_logoBarclays Global Investors' iShares group is apparently moving forward with plans to launch actively managed exchange-traded funds. In a filing dated May 4, BGI is requesting approval from the Securities and Exchange Commission to open two broad-based active ETFs. One would focus on stocks and the other on bonds. The exemption request was actually made on the behalf of two subsidiaries—Barclays Global Fund Advisors and iShares Inc. A third outside party, SEI Investments, would serve as distributor. The proposed ETFs would be: •The iShares Active Equity Fund. It would invest at least 80% of its assets in large-cap U.S. stocks. No specifics are given on where the remaining 20% can go, but a section of the document does describe how the fund can use American Depository Receipts, or ADRs, with foreign-based companies. While not holding to any index, the ETF's adviser will select from the 1,000 largest stocks traded on domestic exchanges. "BGFA will utilize a portfolio construction and optimization process to select stocks in the initial equity fund which incorporates proprietary investment insights," the filing stated. But here's the real interesting part: "BGFA will seek to weight the securities in a transparent quantitative manner. The weighting of the securities will be consistent with research suggesting that equal weighted approaches to stock selection may provide superior risk adjusted returns." The fund would also be permitted to invest in futures contracts, options and other derivative instruments. Those could include among others: convertible securities; floating rate securities; credit-linked notes and preferred stock. It could also make short sales "to enhance returns as part of an overall investment strategy or to offset a potential decline in the value of other holdings," the filing added. Full Story:
ETF BASIC NEWS May 13, 2009 6:35pm

Concerns UNG ETF gas fund driving price may be overblown

naturalgas1NEW YORK, May 13 (Reuters) - Recent concerns that growth in the United States Natural Gas Fund (UNG.P) (UNG) has been the primary driver behind the strong gas price run-up this month may be overblown, some industry analysts said. Some analysts have estimated UNG could hold as much as 80 percent of New York Mercantile Exchange June natural gas open interest, stirring concerns that such a huge share could impact price volatility. But some said the share was probably a lot lower. "There's been a lot of attention paid to the growing open interest held by UNG, but it's completely disingenuous to say that it currently represents 80 percent of the futures market. That completely overstates the case," said Addison Armstrong, director of market research at Tradition Energy in Connecticut. Armstrong noted that data from May 12 showed UNG held the June futures equivalent of about 42,000 contracts, or only about a quarter of the NYMEX June gas open interest, which includes both swaps and futures contracts. UNG is an exchange-traded fund, or ETF, that tracks the price of natural gas futures on the New York Mercantile Exchange. It's one way for smaller players to invest in commodities like gas by buying shares in the fund without worrying about margin calls if their bet goes wrong. Full Story:
NYSE:UNG May 13, 2009 6:24pm

Stocks Downshift After Steep Run Higher; FAZ up 14%

ouchStocks tumbled, led lower by the Nasdaq, which fell -3.0%, or -52 points, to 1,664. The Dow dipped -184 points to 8,285, while the S&P dropped -24 points to 884. Oil slipped -83 cents to $57.88 a barrel, while gold climbed $2.00 to $925.90 an ounce. Topping the economic headlines, the Commerce Department announced that total retail sales dipped -0.4% in April, and -0.5% excluding autos. Economists were looking for April retail sales to be flat and up 2.0% excluding autos. The Leveraged ETFs Index was the top performing tickerspy Index on the day, led by Direxion Daily Financial Bear 3x Shares (NYSE: FAZ - News) with a 14% gain. Full Story:
NYSE:FAZ May 13, 2009 5:24pm

Going Beyond Big Oil to Profit from the Rise in Crude: XOM, AGU, POT, USO

gas(La Jolla CA)  With the price of petroleum hitting a six month high, stocks and sectors other than Big Oil are also prospering.  There are other benefits to owning shares in these companies or ETFs, as they are not as exposed as an Exxon (NYSE: XOM ) or a British Petroleum (NYSE: BP) to the fluctuations in the price of crude.  These stocks and sectors bring diversity and downside protection to a portfolio while still gaining when the cost of oil increases. Canadian energy income trusts offer investors high yields, a currency hedge and a play on the price of oil.  Penn West Energy Trust  (NYSE: PWE), Baytex Energy Trust  (NYSE: BTE),  Pengrowth Energy Trust (NYSE: PGH) and Enerplus Resources Fund (NYSE: ERF) have to pay out earnings to shareholders.  As a result, yields are often double digit: Penn West at 12.33% and Pengrowth Energy Trust at 12.96%, for example. As the price of oil climbs, so do the share prices.  Canadian Energy Trusts also increase in value when the Canadian dollar is stronger against the US dollar.  With the economic outlook indicating an increase in the price of oil along with a decline in the US dollar, Canadian energy trusts offer an upside potential on several fronts.  Fertilizer stocks such as Agrium (NYSE: AGU), Potash (NYSE: POT) rise with the price of oil, as petroleum is used in production.  Over the past 18 months, these stocks have outperformed the main oil ETF (NYSE: USO). Full Story:
NYSE:USO May 13, 2009 12:03pm

4 ETF Portfolio Strategies to Grow Your Money

horse-raceEven though the stock market has rebounded from its March lows, millions of individual investors are still stuck in the mud. They’re lost, scared, disillusioned, and confused, which means they’re probably still losing money. Only the best investors adjust their investment strategies to avoid financial catastrophe. And what about the worst investors? They just keep repeating their mistakes, perfecting them until they can stand no more.

Let’s analyze four basic strategies to help you get your investment portfolio on track. If your money is already on track, these strategies will reinforce the rightness of your way.

Stop Betting on the Wrong Horses Around 85% of all mutual fund assets are invested with fund managers that propose to beat the market, while the remaining portion is in index funds and index ETFs that propose to match the market. Even though most fund investors are betting that fund managers will lead them to the Promised Land of outperformance, look at what the numbers say.

Over the past 5 years, Standard & Poor’s reports 71.9% of active large cap funds failed to beat the S&P 500 index (NYSEArca: SPY), 79.1% of active mid cap funds failed to beat the S&P MidCap 400 index (NYSEArca: MDY) and 85.5% of active small cap funds failed to beat the S&P SmallCap 600 index (NYSEArca: IJR). What does all of this mean?

The financial lesson you can take from this, is not that investors need to pick their mutual fund managers more carefully as those that suffer from data misinterpretation deficit (a form of financial puberty) would conclude. Here’s the real lesson: Trust the indexes and the financial products tracking them, not the portfolio managers that try to beat them and fail. Translation: Align your money with winners not losers.

Full Story:

NYSE:IJR May 13, 2009 11:48am

The Other Shoe; Commercial Real Estate (IYR)

pooAMERICANS IN THE PAST TWO YEARS have been closely watching residential real estate, as TV commentators breathlessly relate each downward tick in home prices and upward move in foreclosures. But all the while, another important part of the real-estate market has been quietly cratering, all but ignored by the general press. Since peaking in early 2007, the value of the nation's commercial property has fallen an estimated 30% to 40%. You can get a good idea of the pain being suffered by looking at an index of real-estate investment trusts, the publicly traded entities that investors use to play the commercial real-estate sector. The MSCI REIT Index fell 77% from a high of 1233 in February 2007 to the low of 287 hit in March. Since then, it has rebounded 45%, to 420, as investors seek opportunities and the economy seems to be improving. But the commercial-property sector remains fraught with peril. Some REITs will be strong enough to snap up buildings at bargain prices, while other REITs may go bust or need to raise gobs of new equity to bolster their debt-heavy balance sheets. The commercial real-estate problem has become a focus of federal regulators in recent weeks as they stress-tested the 19 largest U.S. banks to see where losses could pop up if the economy, rather than recovering, worsens. Why has the value of REITs tumbled an average of 65%, while the value of their properties has slid more like 35%? REITs tend to rely on borrowed money. That boosted profits in the good times, from 2002 to 2007, but has magnified problems ever since. Full Story:;mod=yahoobarrons
NYSE:IYR May 13, 2009 11:46am

Data, and dilution weigh on financial sector (XLF, KRE, KBE)

downNEW YORK (MarketWatch) -- Shares of U.S. financial stocks fell on Wednesday as the latest data from the government showed that consumer spending continues to fall. Analysts had expected a small boost in consumer spending in April. Retail sales dropped a seasonally adjusted 0.4%, the eighth decline in the past 10 months, the Commerce Department estimated Wednesday. The Financial Select Sector SPDR (XLF) shed 3.5% on Wednesday morning. Rising home foreclosures and a report that the government is looking to take a more active role in regulating financial services firms also spooked investors who have driven up financial stock prices sharply over the last six weeks. And, a flood of new bank shares headed to the market after the recently concluded stress tests also weighed on the sector. The KBW Bank ETF (KBE) and the KBW Regional Banking ETF (KRE) both fell. U.S. foreclosure filings in April rose to a record, affecting one in every 374 housing units, and bank repossessions in particular may spike in the next few months, RealtyTrac reported. Foreclosure filings -- defined as default notices, auction-sale notices, and bank repossessions -- were reported on 342,038 U.S. properties in April, up less than 1% from March and up 32% from April 2008, the Irvine, Calif., real-state consulting firm reported. RealtyTrac began issuing its report on foreclosures in January 2005 Full Story:
NYSE:KBE May 13, 2009 11:37am

Tech Funds: What the Pros Are Buying Now

techAlthough financial services stocks have taken much of the credit for the broad-based market rally that began more than two months ago, technology names may be the safer bet for all kinds of economic scenarios that might lie ahead. After all, banks and other financial names still have a host of unresolved issues around capital levels and distressed assets -- and remain vulnerable to another batch of grim economic data. All 15 broad technology sector exchange-traded funds, as well as 17 subsector ETFs, are trading between 25% and 40% higher since the Standard & Poor's 500-stock index hit its bear-market low on Mar. 9. But the gains by tech stocks aren't merely tracking the rally in the broader equities market. In fact, they have significantly outpaced the Nasdaq composite index, known for its tech-heavy focus, since the year began. Safe from Collapse, Tech Thrives Indeed, technology stocks reached their lows in November. The rebound in the sector has been driven less by fundamental considerations than by the realization that the worst-case scenarios involving the collapse of the financial system were not going to come to fruition, says Ryan Jacob, manager of the $30 million Jacob Internet Fund (JAMFX). Once the federal government decided to throw its full support behind the financial services industry, most of those scary scenarios came off the table, and Jacobs says he can't imagine the market returning to that extreme level of fear again, whatever may happen in the economy. What's made tech stocks so attractive over the past four to five months? The fact that most of these companies still have an opportunity to show growth within their industries even if there's no growth in the economy as a whole, according to Jacob. With so much cash and minimal or no debt on their balance sheets, these companies have the means to continue investing in internal growth initiatives and acquisitions, which is important since access to capital is likely to remain tight for the rest of this year and possibly longer, he adds. Full Story:
ETF BASIC NEWS May 13, 2009 10:21am

Where Next For Leveraged ETFs?

backfireHartmut Graf, head of the index team at the German stock exchange in Frankfurt, gave a fascinating talk on the performance of leveraged indices at yesterday's "Investing in ETFs" conference. Graf started his presentation by recalling the basic fact about these indices - that they do not track the "equivalent" multiple of the underlying index return if held over long periods.  Why?  Because the simple effect of compounding and rebalancing on a daily basis leads to significant tracking error. There are several good explanations on the internet of how this occurs, but one of the first and best was given by Tristan Yates and Lye Kok, here. Essentially, what is called the "constant leverage trap" forces the fund to buy high and sell low, a strategy that goes against common sense.  The higher the volatility of the underlying market, the more likely that leveraged indices will lose ground, as well.  Furthermore, there's absolutely no way of telling, given  a certain period return on the underlying index, what the leveraged, or leveraged index's return will be.  What these derivative indices actually produce as a return is path-dependent; how you get to the end point is more important than what start and end levels of the "base" index actually are. Graf reminded the audience that the expected ultimate value of an index that maintains constant leverage through daily or monthly rebalancing is zero.  And the higher the underlying market volatility, the sooner you eat up all your capital. Essentially, holders of leveraged and leveraged index ETFs are the ultimate gamblers.  While these funds can deliver outsize returns for investors who get their market timing right, they are still playing a form of Russian roulette. Full Story:
ETF BASIC NEWS May 13, 2009 10:06am

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