All ETF Daily News Articles

MUTUAL FUNDS A THING OF THE PAST?

old-school Mutual funds will be a way of the past in the coming years.  ETF's expense ratio's is no comparison to the way mutual fund managers drain investors wallets.  Investors will flock to ETF's for the next generation, as portfolio's adjust to change in the way we invest!  What Does Exchange-Traded Fund - ETF Mean?  www.investopedia.com A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.  
 This week's Mutual Funds and ETF stories More investors are switching to exchange-traded funds, and the mutual-fund business may never be the same. ETFs started out humbly enough, but as the stock-market declined over this decade their status has risen. Now ETFs are giving actively managed funds a literal run for their money. One look at a typical mutual-fund's dismal performance and you can understand why financial advisers in particular have embraced these index-tracking vehicles that trade like stocks. ETFs are low-cost, tax-efficient, easily bought and sold, and deliver average returns -- everything traditional mutual funds are not. When every penny counts -- especially if you're sending clients a monthly bill -- ETFs are attractive assets. But don't think mutual-fund companies are about to let the ETF bakers run away with the pie. Two of the biggest firms, Charles Schwab and Pimco, are trusted names with financial advisers, and now they're planning to give them what they want. Their entry into the ETF world is aimed at protecting this crucial base, and could spur other fund giants to join the fray in hopes of keeping disgruntled investors from jumping ship. One thing's for sure: If actively run funds don't lower expenses for money-losing shareholders, those expensive cash-cows they stable will increasingly be exchanged and traded away. Source: www.marketwatch.com -- Jonathan Burton, assistant personal finance editor
ETF BASIC NEWS March 28, 2009 1:30pm

QAI THE NEW HEDGEFUND ETF IS RAISING EYEBROWS!

eyebrows

Can the Hedge Fund ETF Actually Deliver?

By Matthew Hougan  www.seekingalpha.com The new IndexIQ Hedge Fund ETF (QAI) is one of the most interesting - and controversial - ETFs to launch in a while. The fund, which aims to synthetically replicate the performance of hedge fund strategies, launched Wednesday on NYSE Arca. Judging by early trading volume, the new fund is going to be a hit: QAI looks like it will trade more than 100,000 shares today (Thursday), an impressive performance for just its second day on the market. The idea of providing access to hedge fund-like returns through an ETF is hugely attractive. The best investors in the world—endowments like Harvard and Yale—hold enormous investments in hedge funds for a reason: They deliver returns with low correlations to the broader market. If QAI can make those returns available to all investors in a low-cost wrapper, it'll be big news. As I said yesterday on CNBC, however, the proof will be in the pudding: Can QAI actually deliver on its promises? It's important to understand that this ETF doesn't actually invest in hedge funds; rather, it uses factor-based analysis to determine the performance characteristics of hedge funds in general, and then builds a portfolio (using other ETFs) that it thinks will replicate that performance. Over the past few days, a lot of people have told me that this idea sounds crazy. I disagree. Too many people have a near-mythical conception of hedge funds; they think they are run by high-paid geniuses who make either spectacular or spectacularly bad investments. The truth is more mundane: While some hedge funds are run by geniuses, most are run by normal guys who use pretty standard strategies to generate a certain kind of return. They do a reasonable job, and are paid absurdly well to do it. The idea of synthetically replicating that performance at lower costs is well-established both in academia and the real world. Both Goldman Sachs (GS), and IndexIQ itself, for example, have been running synthetic hedge fund mutual funds since last summer. Generally speaking, they've done pretty well: The Goldman Sachs fund is down about 15% since July 2008, while the IndexIQ fund is down about 12%; that compares to the S&P 500, which is down about 38%. That's a good relative performance. Most hedge funds are down over that span too, in line with the synthetic products. The question now is whether these funds will be able to perform well as the market recovers. Although both funds have well-documented methodologies, they are nonetheless largely black box strategies; the concept behind the funds make sense, but you have to have faith that the quant-engine driving them is going to work. One advantage of the new ETF is that you can watch the holdings on a daily basis and see for yourself if they make sense. As of Wednesday's close, here's what QAI was holding:

LONG

INVERSE

Fund Ticker Weight Fund Ticker Weight
iShares Barclays Aggregate Bond AGG 23.89 ProShares UltraShort Russell 2000 TWM 1.93
iShares Barclays 1-3 Year Treasury Bond SHY 18.32 ProShares UltraShort MSCI EAFE EFU 1.62
iShares MSCI Emerging Markets Index EEM 11.11 ProShares UltraShort Real Estate SRS 0.46
Vanguard Total Bond Market ETF BND 8.39 ProShares UltraShort Euro EUO 0.4
PowerShares DB Currency Harvest DBV 7.94
iShares iBoxx $ High Yield Corp Bond HYG 7.29
iShares Barclays Short Treasury Bond SHV 3.92
SPDR Barclays High Yield Bond ETF JNK 3.25
Vanguard Short-Term Bond ETF BSV 3.11
SPDR Barclays 1-3 Month T-Bill ETF BIL 2.36
Vanguard Emerging Market ETF VWO 2.22
iShares Barclays TIPS Bond TIP 1.81
PowerShares DB Commodity Index DBC 1.53
SPDR Barclays Capital Aggregate LAG 0.45
If you drill down, the portfolio is fairly simple. The fund's positions include:
  • 72.79% fixed income, including 32.73% in broad-based bond indexes; 27.71% in short-term Treasuries; 10.54% in junk bonds; and 1.81% in TIPS
  • 13.33% in emerging market stocks, the only long equity position in the portfolio
  • 9.47% in commodities and currencies
  • 4.41% in various inverse funds
That's a fairly defensive portfolio. The question is, how will this portfolio perform if the market recovers? How will it adapt and change over time? It's worth watching.
NYSE:QAI March 28, 2009 11:54am

INFLATION WILL MAKE UYM A 10 BAGGER BY THE END OF 2009!

million-dollar-billThe markets could be on the brink of turning, which makes ETF-UYM my pick of the year for 2009.  The price of materials could surge by year's end as inflation kicks in to possible hyperinflation.  The more the federal government prints money, the faster I will put my money in UYM making it a 10+ bagger in the coming years!  The investment "UYM" seeks daily investment results, before fees and expenses, which correspond to twice the daily performance of the Dow Jones U.S. Basic Materials index. The fund normally invests 80% of assets in financial instruments with economic characteristics that should be twice the return of the index. It may employ leveraged investment techniques in seeking its investment objective. The fund is non diversified.
2009-2010 Inflation (Or Hyperinflation) In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.The term "inflation" once referred to increases in the money supply (monetary inflation); however, economic debates about the relationship between money supply and price levels have led to its primary use today in describing price inflation. In economics, hyperinflation is inflation that is "out of control", a condition in which prices increase rapidly as a currency loses its value. Formal definitions vary from a cumulative inflation rate over three years approaching 100% to "inflation exceeding 50% a month." In informal usage the term is often applied to much lower rates. I think a lot of things will be much higher in price, including oil, next year or maybe later this year. But, don't confuse price with value. If there is any economic recovery globally and the dollar is falling, we could see any possible price you want to imagine but, it would be in dollars, and not other currencies. There are several analysts that are predicting a large drop in the dollar and that will even give the markets a boost. Using an extreme example, you could see DOW 50,000 by the end of the year if the dollar gets dumped but, while you would have seen over 40,000 more pts. you couldn't buy any more at 50,000 than now, if you sold it and probably a lot less. The price of the DOW doesn't reflect value, just price. Oil is the same. If there is a recovery globally, oil demand will rise and with all the supply being cut now, it will cause oil to go back up for all nations but, if the dollar is falling, even if they don't pay more, we will. We could pay $1,000 a barrel or $10,000 a barrel or $1 million a barrel as that is what happens when a currency collapses. For those who say that would crush our economy. Correct 100%. That too, is what happens when a currency collapses. The world basically moves on without you. If that happens to the U.S. then the world will move on but much slower than before. Because we are such large consumers there is good news and bad news in that. The countries that move on would find fewer buyers but, also less demand for copper, oil, steel, concrete, etc. and thus, they could still have profits even with fewer exports. They may not be large for years but, there are two sides to U.S. consumption. It drives up both the price of goods and the price of things to make goods with when we consume a lot. Peter Schiff goes as far as to say the world's exporters would actually be better off without us increasing demand for raw materials so much due to our consumption. However, just as it takes a depression for us to go from debtor nation to creditor nation, it will take a global recession at the minimum to go from a global economy dependent on us to one that isn't. Consumption is touted as this big "cure all," but, it isn't. Production and making things faster than debt rises, is the cure all. Spending less than you earn, saving so you can spend in down times, budgeting, and sensible investing vs. "gambling" on stock moves is the "cure." Less government, not more, less government spending, not more, fewer programs not more at the federal level is what we need. If we aren't already there then soon we will be more of a drag on the global economy than aid to it. Peter Schiff, if not right now, soon will be. Think of it this way. You make things. I buy from you but, to keep buying from you, you have to keep loaning me money from what I pay you. To make it worse, I pay you back with devalued money so that you are even losing buying power with every new loan to me. How long are you going to keep selling to me? You end up better off making something else and selling to somebody else or just making the stuff for "trade" and "sale" with people you buy your raw materials from. In the last couple of years, one oil nation, Venezuela has done just that. It "trades" some of its oil instead of selling it for things it needs from nations that don't want to "buy dollars" to buy oil with and that have materials that Venezuela needs. Iran stopped using dollars, too. It even got Japan to buy the oil it gets from Iran in Yen as well as sell in euros to other nations. In short, there are no certainties going forward except that we have to change the way we run this nation from top to bottom. Source: www.ezinearticles.com
NYSE:UYM March 27, 2009 3:36pm

TREASURY BUBBLE? NOW IS THE TIME TO BUY TBT!

bubbleHow long can an investor earn 0% on their money?  The days of moving your money to a safe haven environment can't last for ever.  Treasuries will be the next bubble to burst as investors seek to make their money work!  I am reccommeding this ETF because I believe treasuries have nothing to do but reverse course, and TBT will be a good bet.  The investment TBT seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the Lehman Brothers 20+ Year U.S. Treasury index. The fund normally invests at least 80% of assets to investments that, in combination, have economic characteristics that are inverse to those of the index. It also typically invests in taking positions in financial instruments, including derivatives that should have similar daily return characteristics as twice the inverse of the index. The fund is non diversified.
Ultra Short Treasury ETF: Have Patience, Money Will Eventually Flow Again 
What does one make of an investment that is down 40% in 12 weeks, yet has unquenchable investor interest? The ETF in question averaged less than 500,000 shares traded in September 08, but is currently averaging about 2,000,000 in December 08?
Say "Hello" to the ProShares Ultra-Short 20+ Treasury Fund (TBT). This exchange-traded fund seeks twice the inverse of the daily performance of the Lehman Brothers 20+ Year U.S. Treasury index. Since longer-term treasury bonds have gained more than 20% over the last 3 months of the credit crisis, TBT has been cremated. Even 3 months ago, pundits surmised that the 30-year U.S treasury bond yielding 4.5% was undesirable... yet the bonds rose precipitously as the yields dropped from 4.5% to 4% to 3.5% to 3% to 2.5%. Yields could drop lower... sure. And that would mean more losses for those investing in ProShares Ultra-Short 20+ Treasury Fund (TBT). However, I think the frenzied safe haven buying of treasuries has come to an end. And here's why: 1. A-grade corporate debt demand has jumped dramatically. At what is often talked about as the "October 10 lows," investors didn't just leave the stock market; they also left company debt. In fact, they left A-grade Wal-Mart and Procter&Gamble-like debt. At that time, the iShares Investment Grade Bond Fund (LQD) traded at 80. Ten weeks later, LQD is trading 20% higher. Of course, it isn't just the 20% capital appreciation in corporate debt that's impressive here. It's the fact that it is trading near the 100 price point that it historically traded at before the Lehman bankruptcy and Fannie/Freddie failure. What's more, the 5% annual yield paid monthly is going to keep pushing LQD up to the 110 level, as any yield above 4% will be seen as attractive. And that money will likely come out of treasuries. (Read more on Investment grade bond ETFs right here.) 2. Stock market volatility is declining. I honestly never expected to be declaring a CBOE Volatility Index (VIX) reading of 43 as a "good thing." It's like a summertime in Phoenix, Arizona... "It's 117 degrees and cooling down this week." In the past, any VIX spike above 30 was a sign of irrational fear. For the last 90 consecutive days, however, the VIX has traded between 30 and 89, breaking record highs and ushering in a new era of heightened "scared-to-death-ness." All that said, the VIX is well below its 50-day moving average. What's more, intra-day price swings have declined substantially each month since October. In other words, treasury overdrive may be wearing a bit thin. 3. Everything and the kitchen sink. The bear market itself may be getting long in the tooth. But stocks still have serious detractors. The possibility of a multi-year recession, as opposed to a "hoped-for" late 2009 recovery, may keep stocks in relative check. But the central banks/governments around the entire world are fighting the credit crisis with everything and the kitchen sink. Some of the efforts will take hold, encouraging a bit of risk taking activity. That means money will come out of treasuries and go somewhere... whether it's A-grade debt, foreign bonds, emerging bonds, preferred debt, convertible debt. In other words, the money does not have to flow into stocks for the ProShares Ultra-Short 20+ Treasury Fund (TBT) to thrive; it just has to leave U.S. treasuries... and I believe that it will. Source: www.seekingalpha.com
NYSE:TBT March 27, 2009 12:43pm

Housing Bottom? A turn for XHB & ITB ETF’s?

constructionNew home starts? I think we still have quite a bit of inventory to work through before home builders see any real recovery. Unfortunately foreclosures are still rising, and auctions are being held with properties being sold off to the tune of hundreds at a time. Looking through local foreclosures many of the homes on the auction block are less than 10 years old. Who needs to build right now? Perhaps there are pockets of the country that are experiencing a population shift are the key? Dallas Texas added more than 162,000 residents between 2006-2007, Atlanta 151,000, Phoenix 132,000. Seems like all warm weather areas...? These are only a few of the areas of the country people are retreating to for lower housing prices and costs of living. Perhaps their influx of people will help the new home starts as other areas will be left working through the foreclosure backlog. As always, we appreciate your input.
A Bottom for Real Estate? – HOV, URE, XHB, KBH March 27, 2009 By: Billy Fisher Contributor, Stock Traders Daily   Following what has seemed like an unending downturn for the sector, real estate received some rays of light this week. As of the market’s close on Thursday, major homebuilder names such as KB Home (NYSE: KBH) and DR Horton (NYSE: DHI) had already locked in gains of 25.9% and 30.6% this week alone. Hovnanian Enterprises (NYSE: HOV) had soared 64.4% since last Friday’s close and experienced double its average daily trading volume on Wednesday. So what initiated this week’s rally? On Wednesday the Commerce Department reported that sales of new homes in February rose for the first time in 7 months. This metric increased 4.7% to an annual rate of 337,000. Then Thursday brought an additional encouraging development for the sector when a Deutsche Bank analyst said that the stocks of homebuilder companies may be reaching a bottom. If this development proves to be the case, it would be a welcomed sequence of events for a sector that has been in a downward spiral since peaking in the summer months of 2005. The past two years have been especially trying for those stakeholders associated with the homebuilding industry. In 2007, the SPDR S&P Homebuilders ETF (NYSE: XHB) and the iShares Dow Jones U.S. Home Construction Fund (NYSE: ITB) racked up respective declines of 47.7% and 58.0%. Last year did not turn out to be all that much better. These two funds experienced declines of another 36.2% and 41.8%. Looking forward, it is inevitable that investors in this arena will be wondering whether or not this week’s rally is sustainable. Fortunately, the inventory of new homes hitting the market is much leaner than it has been during past years of this extended market downturn for homebuilders-- it is at its lowest point in nearly 7 years. Prices of newly constructed homes have been coming down for several quarters now and mortgage rates are at record lows. A tax credit that arose out of the government’s stimulus plan for buyers who purchase a home prior to December 1st also should play a contributing role in stirring up new sales in the months ahead. Homebuilders aren’t the only stocks looking to shift into a recovery mode. Even REITs participated in the broader real estate rally on Thursday. The Ultra Real Estate ProShares Fund (NYSE: URE) experienced a 5.5% move up the charts yesterday before closing at $2.69. “We invested in URE at $2.14,” said Tom Kee Jr., president and CEO of Stock Traders Daily. “We intend on holding onto it with risk controls in place.” The volatility that REITs have been subjected to in recent months will likely continue to keep Kee on his toes. He will also be monitoring homebuilder stocks for trading opportunities via trading plans he has developed specifically for KBH, DHI and HOV.  Source: stocktradersdaily.com  
NYSE:ITB March 27, 2009 10:40am

QAI – NEW HEDGE FUND ETF TOP HOLDINGS: AGG, SHY, EEM

 hedgefund1

IndexIQ Launches Hedge Fund Strategy ETF

March 26, 2009

SAN DIEGO (ETFguide.com) - Investors looking for hedge fund like strategies within an ETF package now have a new choice.  

IndexIQ, a Rye, NY-based index provider, has just introduced the IQ Hedge Multi-Strategy Tracker ETF (NYSEArca: QAI) which is benchmarked to the IQ Hedge Multi-Strategy Index.  

Although QAI does not own or invest directly in hedge funds, it uses hedge fund like investment strategies that include long/short equity, global macro, market neutral, event-driven, fixed income arbitrage, and emerging markets. The goal of the underlying index is to capture the risk-adjusted return characteristics of the collective hedge fund universe using multiple hedge fund investment styles. 

"The IQ Hedge Multi-Strategy Tracker ETF brings together two of the most significant developments in the investment business over the last several years - the growing importance of alternative investments and the convenience, low cost, liquidity and transparency of ETFs," said Adam Patti, chief executive officer at IndexIQ.  

QAI executes its hedge fund styled strategies using ETFs. The fund's top three ETF holdings are the iShares Barclays Aggregate Bond Index Fund (NYSEArca: AGG), the iShares Barclays 1-3 Year Treasury Bond Index Fund (NYSEArca: SHY), and the iShares MSCI Emerging Markets Index Fund (NYSEArca:EEM). The portfolio weights of the underlying index components are rebalanced monthly.  

The IQ Hedge Multi-Strategy Tracker ETF is the first in a planned series of alternative investment ETFs that are to be based on proprietary indexes developed by IndexIQ. Unlike traditional market indexes, which track the performance of publicly-traded issuers representing a market or industry sector, the IndexIQ indexes provide exposure to alternative investment asset classes, including the IQ Hedge family of indexes, which track the returns of distinct hedge fund investing styles.  The fund's annual expense ratio is 0.75%.  

"A large body of academic research shows that one need not necessarily invest directly in a hedge fund to capture much of the potential benefits of the various hedge fund strategies," said Professor Robert F. Whitelaw, chief investment strategist of IndexIQ, and Chairman of the Finance Department at NYU's Stern School of Business.

Source: www.etfguide.com

 

NYSE:AGG March 26, 2009 3:37pm

GLD – UNEMPLOYED? DIG IN YOUR DRAWERS FOR GOLD!

treasure-chest Need some quick cash?  Host a gold party and cash in on the craze.  Check out www.mygoldparty.com and see if there is a representative in an area near you!  Similar to a tupperware party, you can host a party and bring in your dated gold jewelry.  They will pay you instead of dishing out your own money to buy someone else's products.
New Gold Rush: Party Like It's 1849 With gold prices topping $900 an ounce and jobs still disappearing, a new gold rush is on. It's taking place in California again, where unemployed people are heading for the hills to prospect for gold. It's also happening on TV and online, where sometimes dubious ads promise rich rewards if you'll just hock your jewelry. And it's even creeping into a new kind of cocktail party that could only start in the Golden State. And just like last time, the new gold rush can come with a mix of disappointment and, well, rush. The adrenaline kind, as one miner says. "Some days you sit here and make two cents. Some days you make a couple of hundred dollars," said John Gurney, who like his crusty predecessors came from the East to find gold by digging around in California river beds. "I had one good day and made about $10,000," Gurney told the KNBC-TV in Los Angeles. What they're after The mineral gold is dense but highly flexible. It is virtually indestructible and extremely rare. All of the gold ever mined can fit into a cube with 72-foot sides, says Stuart Simmons, a researcher from University of Auckland, New Zealand who has studied how gold forms. Today, Fort Knox holds 8-foot-tall stacks of gold bars worth some $130 billion, enough to bail out at least one large American corporation. The original 49ers came California starting in 1848 when James W. Marshall found gold at Sutter's Mill in Coloma, now a ghost town. Soon 300,000 people flocked to the state. San Francisco became a boomtown and California gained statehood in 1850. Some early prospectors hit the mother lode, but most - especially those who came in the dwindling days of the phenomenon through about 1855 - spent as much or more on equipment as they ever extracted in precious metal. Gold mining today, for the most part, is a big-business affair as the pickings are no longer easy. To extract enough gold flecks from a typical mine to make a single wedding band requires digging up at least 20 tons of rock. Meanwhile, geologists figure 80 percent of California's gold remains to be found, KNBC-TV reported. Dig Deep The trick today is to dig deep. Where nuggets were once found in river beds, panners today report having to dig as much as 30 feet lower than the old timers did to strike it rich. The real winner, as in the old days: A company that makes the equipment you'd need. Keene Engineering of Chatsworth, Calif., makes everything from plastic pans for riverbed sifting to large commercial gold mining rigs. Business has doubled, the owners report. Others are simply digging into the jewelry drawer. Online pawnbroker Cash For Gold USA (you've seen the TV ads) says the company has grown "1,000 percent" in the past year, helped in part by the recession and plummeting TV ad prices, according to an article in the Christian Science Monitor. Who is selling their stash? "In the last two months we've seen an extraordinary amount of jewelry that typically is owned by the upper middle class," said Michael Gusky, CEO of GoldFellow, which also buys gold over the Internet. Pawning jewelry is no longer necessarily a low-class affair conducted in a dusty shop in the bad part of town. GoldFellow's Web ad reads: "Want a new plasma HDTV? Sell us your gold today." And the price of gold has inspired another phenomenon you might expect in California: gold parties. According to a report on the "CBS Evening News" this week, some Long Beach party-goers come not to get snockered but to get cash for their gold. Rings, necklaces and other jewelry is bought up by party organizers who recycle it so others can pay their bills. Source: Robert Roy Britt  @ LiveScience.com
NYSE:GLD March 26, 2009 3:08pm

ETF Death March– FAZ, RWR, IHF, ITA

cliff We would like to note that ETF Daily News does not agree with the outlook on RWR.  CB Richard Ellis Group Inc., the world’s largest property broker, posted the S&P 500’s steepest gain, jumping 64 percent to $4.92, and the shares were raised to “overweight” at JPMorgan Chase following the approval by lenders to amend its credit facility. This is sending us signals that there could be some glimmer of hope for real estate, so we are not calling RWR a dead horse. I am not a fan of this ETF right now, but looking forward it should come into its own.
Betting against financials in 2008 was a winning play. Recently that has been anything but the case. Betting against health care or real estate in 2008 both also proved to be winning plays. In 2009 it looks as if these calls still continue to be on the money. Financials Snap Back Going into yesterday, the Direxion Financial Bear 3X Shares (NYSE: FAZ) was dead last among ETFs over the past four weeks as it had lost 56.7% over this time period. The notion that Citigroup (NYSE: C) was profitable during the first two months of 2009 as well as a positive outlook from Jamie Dimon at J.P. Morgan Chase & Co. (NYSE: JPM) has lead to financial bears being carried off the trading floor in a box. It looks as if FAZ's downward trend is going to persist. The ETF was down 45.1% on Monday as financial stocks rallied on the Treasury Department's toxic asset plan which could purchase $1 trillion in troubled assets from banks' balance sheets. On Life Support In 2008, investors in the SPDR Dow Jones Wilshire REIT ETF (NYSE: RWR) and the iShares Dow Jones U.S. Healthcare Provider Fund (NYSE: IHF) choked on losses of 38.9% and 43.7%. The outlook for these two ETF continues to remain bleak. RWR and IHF are down 13.0% and 18.7% over the past four weeks. RWR is suffering from a deteriorating commercial real estate environment and heavy debt burdens that are weighing down many REITs in the fund. This ETF's 11% dividend yield is unlikely to remain sustainable. IHF could also have more pain of its own coming its way. The Obama administration has laid out plans to fund a large portion of its health-reform agenda with new taxes and $175 billion in cuts to private Medicare plans which will impact several components of this fund. Getting Defensive nother sector that has caught the attention of the Obama administration, albeit in a negative fashion, is that of defense contractors. Earlier this month, Obama put the sector on notice to watch wasteful spending practices. The Government Accountability Office found that 95 major Defense Department weapons contracts ran a total of $295 billion over budget last year. The message has contributed to a 12.9% decline in the iShares Dow Jones U.S. Aerospace & Defense Fund (NYSE: ITA) over the past four weeks. Billy Fisher Analyst, Oxbury Research Source: http://www.marketoracle.co.uk
ETF BASIC NEWS March 26, 2009 12:59pm

KWT – SOLAR ENERGY STOCKS SOAR!

solar-homes Solar panels on every house across the GLOBE?  I certainly would like to reduce my utility bills.  What would the landscape look like with solar panels on every rooftop?  The country would be a cleaner and better place using the sun's energy to put back into the world! :-)   The investment "KWT" seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Ardour Solar Energy index. The fund normally invests at least 80% of total assets in equity securities, which may include depositary receipts, of U.S. and foreign companies primarily engaged in the production of solar power. It is non diversified.
Government Comments Send Chinese Solar Stocks Soaring Chinese solar stocks soared on Thursday after the Chinese government stated support for solar initiatives According to a report in Digitimes, the Chinese government has shown a strong interest in the development and support of solar energy. No details were offered regarding a time schedule or plans for government subsidies. Still, the news has sent Chinese solar stocks higher. As a whole, tickerspy's Chinese Solar Stocks Index is up by 27.1%. Among the leaders are Suntech Power Holdings (NYSE: STP - News) and Yingli Green Energy (NYSE: YGE - News), with gains of 38% and 35% respectively. Even the laggards in the Index today, JA Solar (Nasdaq: JASO - News) and Canadian Solar (Nasdaq: CSIQ - News) are posting gains north of 17%. Solarfun Power Holdings (Nasdaq: SOLF - News) is up 20% despite analyst comments on liquidity concerns. Citing a difficult operating environment, Jeffries notes that the company faces cash issues relating to an acquisitions payment and ongoing CapEx demands. Meanwhile, a number of Chinese solar stocks, including China Sunergy (CSUN) and LDK Solar (NYSE: LDK - News), have faced the pressure of declining inventory value as a result of the global economic downturn. However, this news too has been shrugged off amid the rebound, as LDK is surging ahead with gains of over 33%. China Sunergy is also a top performer with a gain of 29%. As of this writing, the Chinese Solar Index is up about 57% over the last month, easily outpacing the performance of tickerspy's other Chinese stock Indexes. Investors can follow the Chinese Solar Stocks Index and view related performance charts and metrics at tickerspy.com Fun and informative, tickerspy.com is a free investing website where you can track multiple stock portfolios and compare against 250 proprietary Indexes tracking themes from nanotech to agriculture to precious metals. Best of all, tickerspy.com lets you spy on the portfolios of nearly 3,000 Wall Street institutions and hedge funds and see graphs of their performance. Try tickerspy.com today and find out how you stack up against investing legends like Warren Buffett! Source: www.tickerspy.com
NYSE:KWT March 26, 2009 11:53am

Option bull rolls dice again in industrial ETF-analyst

bull2 CHICAGO, March 25 (Reuters) - An investor who walked away with a handsome payoff on a bet that shares tied to a basket of industrial stocks would hit bottom and quickly recover, appears to have rolled the dice again, banking the worst is over.   On March 5, the player stepped up late in the day and bought some 250,000 call options, conveying the privilege to buy shares of the Industrial Select Sector SPDR XLI.P at a fixed $18 by April expiration.   At that time, shares of the exchange-traded fund traded at $15.67 and have since gone up 26.8 percent. XLI shares fell 1 cent to $18.49 near the end of the session.   "The buyer paid a 30-cent premium for a transaction that cost $7.5 million," said Andrew Wilkinson, senior market analyst at Connecticut-based Interactive Brokers Group.   The next day marked the bottom for stocks and the XLI traded to a 52-week low of $15.15 before embarking on a largely uninterrupted run-up as high as $19.22 on Wednesday.   The well-timed transaction has brought the investor back to the table. On Wednesday the player closed the long call position at the $18 strike in exchange for the same amount of April call options at the $20 strike, Wilkinson said.   The investor cashed in on the initial transaction, while retaining upside exposure and paid a 45-cent premium for the privilege of buying rights at the April $20 strike and collected $1.50 for the $18 calls for a net credit $1.05, said Trade Alert president Henry Schwartz.   The April $18 calls rose to $1.50 during the session and represented a $30 million net gain in three weeks, Wilkinson said.   "At the same time the investor is staking $11.25 million out of those gains on a wager that the rebound for stocks will keep going," Wilkinson said. "In order to ensure he doesn't lose a penny of that stake, shares in the industrial SPDR would need to rally from the current $19 to $20.45 by April expiration."   The XLI is a fund that tracks industrial companies such as diversified U.S. manufacturer 3M Co (MMM.N), package delivery company United Parcel Service (UPS.N) and manufacturer Caterpillar Inc (CAT.N). Economic bellwether General Electric Co (GE.N) is the largest component. (Reporting by Doris Frankel; Editing by Kenneth Barry) Source: www.thomsonreuters.com
NYSE:XLI March 26, 2009 11:41am

FIRST EVER HEDGE FUND REPLICATION ETF

hedgefund
 INDEXIQ LAUNCHES FIRST U.S. LISTED HEDGE FUND REPLICATION EXCHANGE-TRADED FUND  

 

The IQ® Hedge Multi-Strategy Tracker ETF (NYSE Arca: QAI) seeks to replicate, before fees and expenses, the returns of the IQ® Hedge Multi-Strategy Index. The Index is designed to capture the risk-adjusted return characteristics of the collective hedge fund universe using multiple hedge fund investment styles, including long/short equity, global macro, market neutral, event-driven, fixed income arbitrage, and emerging markets.

The ETF-based approach to hedge fund replication offers a number of advantages to investors, including intra-day liquidity, portfolio transparency, lower fees than the typical hedge fund, the elimination of manager-specific risk, and real-time pricing. The IQ® Hedge Multi-Strategy Tracker ETF uses a wide variety of liquid ETFs currently in the market to build the underlying portfolio and does not invest in hedge funds.

"The IQ® Hedge Multi-Strategy Tracker ETF brings together two of the most significant developments in the investment business over the last several years – the growing importance of alternative investments and the convenience, low cost, liquidity and transparency of ETFs," said Adam Patti, chief executive officer at IndexIQ.

"Our hedge fund replication strategies have continued to represent a strong investment alternative in this period constituting one of the worst market environments in history. From the start, our goal has been to help democratize access to the alternative investment asset class by making these products broadly available to all investors with full liquidity, transparency and low cost. Today’s rollout is another giant step along that road, Patti added."

 

IndexIQ utilizes its unique Rules-Based Alphaphilosophy to design and build innovative investment products, combining the benefits of traditional indexing with the riskadjusted return potential sought by the best active managers. The IQ® Hedge Multi-Strategy Tracker ETF is the first in a planned series of alternative investment ETFs that are to be based on proprietary indexes developed by IndexIQ. Unlike traditional market indexes, which track the performance of publicly-traded issuers representing a market or industry sector, the IndexIQ indexes provide exposure to alternative investment asset classes, including the IQ Hedge family of indexes, which track the returns of distinct hedge fund investing styles.

The constituents of the IQ® Hedge Multi-Strategy Tracker ETF are existing ETFs currently available in the marketplace, essentially making the ETF a "fund of funds." The ETF and underlying index are rules-based and the portfolio weights of the underlying components are rebalanced monthly. The fund’s expense ratio will be 0.75%.

"A large body of academic research shows that one need not necessarily invest directly in a hedge fund to capture much of the potential benefits of the various hedge fund strategies," said Professor Robert F. Whitelaw, chief investment strategist of IndexIQ, and Chairman of the Finance Department at NYU’s Stern School of Business.

"Hedge funds remain an excellent source of diversification, as evidenced by the fact that, while they were down for 2008, in aggregate they still managed to outperform the broad equity market benchmarks, such as the S&P. Gaining access to that diversification without having to meet traditional hedge fund thresholds, such as long lock-ups on investor capital and lack of portfolio transparency, or pay the exorbitant hedge fund fees, is an important advance for investors, whether large institutions or retail investors," continued Whitelaw.

About IndexIQ
 

 
 
 
 

Based in Rye Brook, New York, IndexIQ is the leading developer of index-based alternative investment solutions that combine the benefits of traditional index investing with the riskadjusted return potential sought by the best active managers. The company’s philosophy is to democratize investment management by making innovative alternative investment strategies available to all investors in low cost, liquid, transparent and tax-efficient products. IndexIQ strategies are marketed through the company’s proprietary investment products and select partnerships with leading global financial institutions.

Additional information about the company and its products can be found at www.IndexIQ.com.

 

ETF BASIC NEWS March 25, 2009 6:36pm

Creative Ways To Help Fix The Housing Market?

immigrants Just think how nice it would be for the government to allow illegal immigrants to purchase homes in the US.  This would solve the housing crisis right?  I think this decision would create disastrous debates!  Bet on the housing market long or short with ETF's "SRS" & "URE".  Whether or not you think immigration reform is the key to soaking up the surplus in the housing market, makes you wonder if the housing market has bottomed.  Existing housing sales are up, new home starts are increasing, and foreclosures are slowing . There are good red blooded americans that have been on the sidelines waiting to see an indication that the time has come to get out and buy. With a nudge by the government to give rebates for first time home buyers, it is only a matter of time for the market to mend. But hey, throw the immigrants in and game on. ;)

Fixing immigration policy to help fix housing problem

 
From Richard LeFrak's op-ed in the Wall Street Journal:
 
As consumers retrench, production is cut, payrolls are slashed, and consumer confidence, incomes and spending are savaged in a self-feeding downward economic spiral. But if the government buys surplus houses and sells them at low market-clearing prices, other house prices will drop, destroying more home equity and driving many more mortgages under water. Bulldozing excess houses would be an inefficient end for perfectly habitable structures.
 
A better idea is to offer permanent residence status to the many foreigners who are clamoring to get into the U.S. -- if they buy houses of minimal values (not shacks). They wouldn't need to live in those houses, but in order to remove the unit from the total housing market, they couldn't rent them. Their temporary resident status granted upon purchase would become permanent after, perhaps, five years, if they still owned the houses and maintained clean records. The mere announcement of this program might well stop the ongoing collapse in house prices, especially in cities such as Las Vegas, Miami, Phoenix and San Francisco, where prices are down 40% -- but where many foreigners like to live.
 
Each year, 85,000 H-1B visas are granted for foreigners with advanced skills and education, and last year, 163,000 petitions were filed in the first five days after applications were accepted. The Ewing Marion Kauffman Foundation estimates that as of Sept. 30, 2006, 500,040 residents of the U.S. and 59,915 individuals living abroad were waiting for employment-based visas. Many would buy homes if their immigration conditions were settled.
 
NYSE:SRS March 25, 2009 5:07pm

WATCH YOUR TAX LIABILITIES ON SHORT ETF’s

tax There's an undeniable appeal to investments that promise to make money when the market drops. Perhaps that's why so-called short ETFs have attracted $9 billion. When the market goes down, these exchange-traded funds are supposed to rise. But in the recent crash, some investors who used the ETFs to bet against the market were shocked to find they lost money anyway -- and took a nasty tax hit, too. Short ETFs -- also called bear or inverse -- use complicated futures and derivatives to provide the opposite return (or even two or three times the opposite return) of an index. It can be tempting: Who doesn't want to be up 30 percent when the market is down 10 percent? Not so fast. Last year, when most major indexes fell by double digits, several bear-market ETFs also lost big. The MSCI Emerging Markets index fell 54 percent in 2008, so you might think the double-short ETF that tracks it would have gained 108 percent. Wrong: It lost 25 percent. The Dow Jones U.S. Real Estate index fell 43 percent last year; ProShares' double-short real estate ETF fell 50 percent. Don't blame us, says ProShares Chairman Michael Sapir. "It's the math." The funds match the opposite returns of an index on any given day, but the results compound daily. So even if the index is down over, say, a two-week period, an investor who held on through daily ups and downs could lose money. That's why Sapir and other ETF execs say their products are for sophisticated investors and daily traders. "Joe Buy-and-Hold? Please don't invest in our funds," says Direxion Funds' Marketing Director Andy O'Rourke. "They're not appropriate." Even worse, some of the bear ETFs that did make money last year came with a big tax bill. For most investors, one of the benefits of ETFs is their tax efficiency. But because of the leverage used in these ETFs, investors are often saddled with higher short-term capital gains taxes, even if they don't sell any shares. Ugh, says Morningstar strategist Paul Justice. If you're still tempted, he says, trade the short ETFs daily. Or find a bear mutual fund that involves less complicated math. Source: www.smartmoney.com
ETF BASIC NEWS March 25, 2009 12:45pm

THE PARTY IS OVER FOR BEAR ETF’S

bull1 When everyone is buying real estate, and every channel on your tv is another rookie flipper making big money on their first flip, be scared. When everyone is investing in bear ETF's be scared. In looking over the performance of all of the ETF's available by class one thing stands out like a neon sign. The only clear winning categories are those who are market bears. With grade school reasoning, one could assume they could just place their money in one of these funds and boom you are making money. I try to learn lessons from my past. How about the penny stock craze of the late 1990's that coincided with the internet boom. Everyone was an expert, there were no mistakes to be made.  Following that, just a few years back,real estate dominated the national news, HGTV TLC, I could go on and on. The media LOVED the fact that real estate was a money mill. The news started gently and built into a boiling frenzy. It was making me sick that every time I turned on the tv there was some absolute knucklehead flipping a property for a handsome profit. People that clearly had no idea what they were getting into, but hey everyone was doing it. They could not lose. Well, that market came crashing down, and it came crashing down fast. It seemed as though someone just flipped a switch. Trust me, I was involved having been luered into the Florida real estate market at the end of 2006 despite my gut telling me it was too good to be true. After that switch was flipped the ensuing news was about a possible recession. Possible recession? The recession was a fact and as the data came in the news built and built. The depth of which the free flowing money that fueled the real estate market would effect the economy as a whole was gravelyunderestimated. We have experienced massive layoffs and a financial meltdown. Now a few years later the water is boiling once again with all media outlets concentrating souly on this fouled economy. This doom and gloom of the economy, and a frozen credit market are all we read about daily. I am a student of history and trends, and see the writing on the wall. There are many differing opinions about where the market is going and many people will disagree with me, however consider the following. With the amount of bad news we have had to swallow: (the automotive industry, AIG, Lehman Brothers, staggering unemployment etc.) what news is it that will send us spiraling down yet further. I think we have taken our medicine as and the party is over. The bulk majority of our losses have been taken, and there are in fact people out there that are still working and making money. There are still people who have disposable income. Even with unemployment in the range of 10-15%, there are still upwards of 85% of people still earning. This money is on the sidelines, and is poised to enter back into the market to swallow up the stock deals of a lifetime. My past lessons tell me that we have indeed bottomed out and now are on the path to recovery. I feel we will be finding the easy money in bear etf's will end. Look to see IWF, IVW as some of the early movers on our path to recovery. I see other issues such as inflation that will affect other markets, but that will be in an upcoming post. Look long term, see the writing on the wall and adjust your portfolios accordingly. By: Greg Cullen ETF Daily News
ETF BASIC NEWS March 25, 2009 11:18am

INVEST WITH THE BIG BOYS!

scam An new ETF is rolling out today to invest in Hedge Funds?  Is this another Bernie Madoff scam?  Sounds a little suspicious that hedge funds are trying to raise capital through ETF's?  Buyer beware of these ETF's, and invest at your own risk!
World's first hedge fund ETF launches as investors seek liquidity The world's first exchange traded fund based on actual hedge funds has launched, run by Deutsche Bank's ETF index tracking platform, db x-trackers, as demand for more sophisticated ETFs grows. Stephane Farouze, global head of hedge fund derivatives at Deutsche Bank said: “For investors wanting access to hedge fund returns, this ground-breaking ETF offers unprecedented transparency and as well as intra day liquidity compared to at best monthly or even quarterly liquidity for a traditional hedge fund investment.” Thorsten Michalik, head of db x-trackers said: “For the first time, investors will have liquid, UCITS III access to the hedge fund industry. Market participants will also be able to base their financial products on the ETF, as Deutsche Bank will be the market maker and will offer two way prices on and off the stock exchange.” The bank said all hedge funds on the managed account platform are Jersey unit trusts listed on the Irish Stock Exchange, managed and administered by legally separate Deutsche Bank affiliates. Third party hedge fund managers are sub-contracted to each platform fund as a trading adviser and their responsibility is to manage the portfolio for a given fund. db x-trackers is the third largest ETF provider in Europe with over €19bn of assets under management since 2007. At present there is $800bn in assets under management in ETFs worldwide and this is expected to grow as inflows from Europe, Asia and the Middle East offset slower growth in the traditional ETF market in the US. Source: Tara Loader Wilkinson www.wealth-bulletin.com
ETF BASIC NEWS March 25, 2009 10:38am

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