There are plenty of ways to determine whether an equity-sector ETF is ripe for the picking. When Morningstar's ETF research team looks at sector funds, we consider all the possible variables including secular trends, macro-economic themes, and even sector momentum.
Though all of those factors are important, we think that the most important way to decide whether to invest in a sector ETF is based on fundamental valuation. ETFs are really just the sum of their underlying holdings. Investors could aggregate their implied fair value estimates for all of the stocks in a sector ETF to come up with a fair value for the entire fund. Of course, that would mean doing the valuation homework on literally hundreds of stocks, which generally isn't very practical for most investors.
Luckily, Morningstar has an equity research team covering more than 2,000 stocks with the unique ability to do just that. The ETF team can aggregate and weight our equity fair value estimates for just about any U.S.-themed sector ETF out there. From this aggregation we can provide a fundamental perspective on whether a sector is priced cheaply or dearly.
Full Story: http://news.morningstar.com/articlenet/article.aspx?id=287403 Five Sector ETFs Ripe for the Picking
There are plenty of ways to determine whether an equity-sector ETF is ripe for the picking. When Morningstar's ETF research team looks at sector funds, we consider all the possible variables including secular trends, macro-economic themes, and even sector momentum.
Though all of those factors are important, we think that the most important way to decide whether to invest in a sector ETF is based on fundamental valuation. ETFs are really just the sum of their underlying holdings. Investors could aggregate their implied fair value estimates for all of the stocks in a sector ETF to come up with a fair value for the entire fund. Of course, that would mean doing the valuation homework on literally hundreds of stocks, which generally isn't very practical for most investors.
Luckily, Morningstar has an equity research team covering more than 2,000 stocks with the unique ability to do just that. The ETF team can aggregate and weight our equity fair value estimates for just about any U.S.-themed sector ETF out there. From this aggregation we can provide a fundamental perspective on whether a sector is priced cheaply or dearly.
Full Story: http://news.morningstar.com/articlenet/article.aspx?id=287403 Will Leveraged ETFs Put Cracks in Market Close?
At 3 p.m., do you get queasy just thinking about the toll that the final hour of trading might take on your portfolio?
New research suggests that on days when the indexes make big moves, leveraged exchange-traded funds could trigger a trading cascade, turning the market close into a buying or selling frenzy.
To be fair, there has been no meltdown -- yet. But as the financial crisis has intensified since last fall, the final hour of the trading day has felt rougher than ever.
Leveraged ETFs offer double or even triple the daily return of a market index. Some of them, called "inverse" ETFs, move opposite to the market -- for example, going up twice as much as an index goes down. Each day, they all adjust their exposure by rebalancing, or "releveraging," their positions.
These funds are the hottest thing on Wall Street. In March alone, $3.4 billion of new money poured into ETFs that use leverage to magnify the returns on U.S. stocks.
Further amplifying the ETFs' actions: Every day, trading desks at big banks and brokerage firms blast out customized spreadsheets to favored clients. These tools, linked to live data feeds, predict whether the leveraged ETFs will be buying or selling as 4 p.m. approaches. That enables hedge funds and other big investors to trade ahead of the ETFs.
Full Story; http://finance.yahoo.com/news/Will-Leveraged-ETFs-Put-wallstreet-14963248.html?.v=5 How Discount Shoppers Are Helping Retail ETFs
Cheap is the new black. The changing face of consumerism is America is leading to a value-oriented shopper, leaving low-cost retailers in a position to prosper, and it is displayed in the performance of retail exchange traded funds (ETFs).
The Family Dollar Store (FDO) is a low-cost retail chain that has fared well in this down economy. It has outperformed other retailers such as Macy’s (M) and J.C. Penney (JCP), as consumers are trading down and wanting their dollar to go a lot further. Most items sell for under $10 in these shops.
Full Story: http://www.etftrends.com/2009/04/how-discount-shoppers-are-helping-retail-etfs.html Too Far, Too Fast?
The rally gets the benefit of the doubt for now.
SO MANY OF US HAVE BEEN LOOKING THIS GIFT HORSE OF A RALLY in the mouth, we enter the weekend with the smell of nag's breath in our noses.
It isn't simply a lack of gratitude that is leading many investors to find flaws with the Dow's 25% run-up in the past six weeks. Many plainly wish this move to be another ill-fated bear-market triumph of hope over experience.
This is another way of saying lots of folks wish they had bought in, want prices to fall and hope that if stocks oblige by cracking lower, they will have the fortitude to be aggressive bidders.
If this widely shared sentiment is reason enough for the market not to stumble, other aspects of the rally leave us scratching our head. For one, many stocks have had a great year in the past six weeks, auguring a rest or retrenchment at minimum. The equal-weighted version of the Standard & Poor's 500 -- a proxy for the average big stock, represented by the Rydex Equal-Weight S&P 500 exchange-traded fund (ticker: RSP) -- is up 40% since mid-March. The straight indexes to date have outperformed every lift-off rally that came after a major bear-market low. So even if March 6 represented a decisive low, which is unknowable now, this move has gotten awfully far, very fast.
Under the surface, this rally has been driven not so much by economic stabilization or banks' revival or government stimulus, or even short-covering, but the surge in buying of extremely low-priced stocks. So conclude quantitative strategists such as Matthew Rothman of Barclays Capital, who notes that in March stocks under $5 essentially doubled in price.
Rich Repetto, analyst at Sandler O'Neill, calculates that in March the five most active stocks on the NYSE had a volume-weighted average price near $5 and accounted for 25% of all volume, compared with 8% of volume and an average price close to $20 a year earlier.
Online-broker customer volumes were up around 15% last month. The Direxion Financials 3X Bull ETF (FAS), which delivers triple the daily move in the Russell 1000 financial sector, began trading 300,000,000 shares a day and more as the rally got underway.
Full Story: http://online.barrons.com/article/SB124000859852130569.htmlru=yahoo&mod=yahoobarrons
Sector higher, but Citi takes hit after earnings
Citigroup (C 3.65, -0.36, -9.0%) reported better-than-expected first-quarter results Friday to cap off a busy week for bank earnings. See earnings coverage.Citi shares had traded higher in pre-opening-bell action Friday but closed the session off about 9%. The stock is up more than 40% this month, as one of the prime beneficiaries of the dramatic rally in financial stocks.
The Financial Select Sector SPDR Fund (Why Contrarians Make Money And Trend Chasers Lose Money
Salmon have a reputation of "swimming against the stream." This often makes them easy prey for bears. Contrarian investors on the other hand are some of the few who've pocketed gains over the past months. What makes contrarians so successful? Is it too late to become a contrarian?
Don’t you hate being left out? Going against the grain is usually the unpopular direction to go. Nobody likes to be the oddball out. For the sake of popularity, humans tend to conform to the general trend eventually, especially if the trend continues to persist.
As it turns out, when it comes to investing, being the oddball is much more profitable. Oddballs in the investment community are considered contrarians and contrarian investors have been one of the few to actually book profits over the past year or so.........
.............Broad index funds such as the Dow Jones (NYSEArca: DIA), S&P 500 (NYSEArca: SPY) and Russell 1000 (NYSEArca: IWB) lost over 50% from top to bottom. Most actively managed mutual funds did even worse. Why? Because fund managers based their decisions on positive news.
In the fall of 2008, the Federal Pension Benefit Guaranty Corporation shifted most of its $65 billion in assets from bonds to stocks and real estate. This move came just before the bear’s attack intensified.
In 2007, companies belonging to the S&P 500 index spent a record $590 billion repurchasing their own shares. On average, this buy-back decision resulted in a 50% loss. Index components like General Electric (NYSE: GE) and JP Morgan (NYSE: JPM) did much worse than the broader market.
Full Story: http://www.etfguide.com/research/159/8/-Why-Contrarians-Make-Money-And-Trend-Chasers-Lose-Money/ Barclays Dominates List of Best-Rated ETFs
Barclays(BCS Quote) dominates the list of the 25 best-rated exchange-traded funds on the strength of its fixed-income funds during the longest recession in more than half a century.
Twenty-one of the 25 most highly rated ETFs are owned by Barclays or track a Barclays index. ...
...The three best-rated exchange-traded funds based on March 31 data are Market Vectors-Barclays AMT-Free Short Municipal ETF(SMB Quote), SPDR Barclays Capital Short Term Municipal Bond ETF(SHM Quote) and the iShares Barclays 10-20 Year Treasury Bond Fund(TLH Quote). In this time of financial uncertainty, the "buy"-rated fixed income ETFs listed below can be used to balance the overall risk in an investor's portfolio.
Full Story: http://www.thestreet.com/_aol/story/10487074/1/barclays-dominates-list-of-best-rated-etfs.html?cm_ven=AOL&cm_cat=Free&cm_pla=Feed&cm_ite=Feed Copper’s Climb, JJC, DBB ETF
Copper prices jumped 5% on Apr. 13, continuing a four-week rally. The metal—an economic bellwether because it is used for wiring in home appliances, buildings, and telecom networks—has an average price of $2.14 per pound, well below its 2007 high of $3.07. Josephine Jiménez, manager of the Victoria 1522 Fund, which focuses on emerging markets, expects prices to keep rising since production capacity is limited and demand is still robust from China, the world's biggest copper consumer. Plus, copper is a play on inflation since it's used for minting coins, says Jiménez—"and there is a serious shortage of coins." The purest copper play: The iPath DJ AIG Copper Total Return Sub-Index (JJC) exchange-traded note, which holds futures contracts, says Matt Hougan, editor of IndexUniverse.com. (Exchange traded funds—ETFs—typically mimic market indexes; ETNs are more like bonds and have credit risk.) Another option: the PowerShares DB Base Metals (DBB) ETF, with 40% in copper.
Full Story: http://www.businessweek.com/magazine/content/09_17/c4128moneyrepo365827.htm?campaign_id=rss_null Is It Time to Look at Technology ETFs?
The technology sector, along with related exchange traded funds (ETFs), have also been hit hard in this recession. But has it dipped low enough to entice investors back into this sector?
There are proclamations from Intel (INTC) that the PC market has “bottomed out,” according to Aaron Task for Yahoo! Finance.
Many tech stocks, like Intel Corp., have quite attractive valuations notes Scott Bleier, president of CreateCapital. Bleier particullary notes Intel as “the closet thing to a legal monopoly” in America and that tech stocks like this one are “dirt-cheap.”
Full Story: http://www.etftrends.com/2009/04/is-it-time-to-look-at-technology-etfs.html What to Short When the Rally Dies
I have been droning on for what seems an eternity (a few weeks) that I feel this market rally is just overdone and due for a fall. I still feel that way, but am getting to the point where I am going to put some money where my mouth is.
Now, don't get me wrong. I have been very happy to be wrong for the last month as the rally has been very good to me. Core large long holdings like Dow Chemical (DOW) (which I significantly added to at $6.80 in March and again at $9 in early April), AutoNation (AN), Sears Holdings (SHLD) and Wells Fargo (WFC) have all seen tremendous share price increases of at least 50% since the March lows (I am still down 10% in Wells Fargo overall though). This makes up for the gut-wrenching carnage in January and February, though Sears and AutoNation are up 50% and 60% YTD respectively.................
...............There are over 6 million folks without jobs now, the housing industry is simply in shambles and getting worse, foreclosures are surging, Q1 GDP is decidedly negative and Q2 looks only marginally - if any - better. Commercial Real Estate is the next time bomb to drop on banks and that fuse is only just beginning to burn, and the Federal Reserve is just about all out of ammo unless they want to start paying people to borrow. In short, not too much to be optimistic about.
Do I short CRE with the SRS ETF? Not for me. REITs are already on death's doorstep, so buying in there might be a bit like going hunting and shooting a deer caught on a trap - not very satisfying or meaningful.
Short financials with FAZ? Not too sure about that one either. While the rally there has been spectacular and unwarranted, it has become clear that the US Government will stop at nothing, including changing accounting rules, bogus "stress tests" and more capital infusions to make sure the banks are propped up. That said, I am hesitant to bet against the guy with the ability to change the rules of the game on a whim to make sure he wins.
Full Story: http://seekingalpha.com/article/131474-what-to-short-when-the-rally-dies?source=yahoo Gold steadies, ETF falls from record
Gold hovered near a one-week low on Friday, pressured by firming equities, while dealers took a drop from a record high in the world's largest gold-backed exchange-traded fund as a sign investor demand may be receding.
Holdings of New York's SPDR Gold Trust fell 0.7 percent from the record high it had climbed to on April 9, the biggest decline this year.
The holdings fell to 1,119.43 metric tons by April 16, down 8.25 metric tons from the previous day. The trust's holdings have fallen about 1 percent so far in April, versus a rise of roughly 4 percent in the comparable period last month.
For details, click on: http://www.exchangetradedgold.com/iframes/usa.php
Full Story: http://www.reuters.com/article/hotStocksNews/idUSTRE53G0OO20090417 Health Care ETFs Have Been Taking The Long Way Home
It's been rather startling to watch the equity markets make a run at 6 consecutive weeks of gains. Weren't folks all but promising Dow 5000 back at Dow 6500? Didn't the S&P 500's 666 mark seem so ominous... that the index appeared destined for 500?
Scores of bears haven't thrown in the towel. And pullback believers, including myself, are almost praying for a bit of profit taking. (Nothing truly wonderful ever seems to come from straight-line upward movement, just as nothing apocalyptic ever seems to come from free falling markets.)
Yet with Noubini predicting the S&P 500 to bottom at 600 as well as predicting the economy to be stuck in recession throughout 2010, market doom-n-gloom doesn't seem quite as "doomy-n-gloomy." Fits and starts... sure. Retesting and rethinking... it seems quite probable. But the idea of breaking the March lows feels less likely than setting higher lows in the 700s for the S&P.
Regardless of how it all shakes out, one has to question what happened to the health care sector. In the bear's 18-month reign of terror, health care had arguably held up the best. Take a look at Vanguard Health Care ETF (VHT) versus ETF sector funds like Tech (XLK), Energy (XLE), Consumer (XLY), Utilities (XLU) and Materials (XLB).
Full Story: http://www.etfexpert.com/etf_expert/2009/04/etf-expert-health-care-etfs-have-been-taking-a-longer-road-home.html ETF and ETP assets around the world have started to rise again
Barclays Global Investors' latest ETF Industry Preview, released earlier today, shows that ETF and ETP assets around the world have started to rise again, after a lengthy dip from the peak recorded at the end of 2007. Whether this is a sustainable trend is another matter, as Debbie Fuhr's team's figures show that 80% of global ETF assets were in equities at the end of March. With ETF assets worldwide totalling $634 billion at the latest count, Fuhr's oft-stated target of $2 trillion under management by 2011 seems heavily dependent on the share markets rebounding.
As BGI states elsewhere in the document, European ETF assets have grown more quickly than the US ETF market did during the earliest years of its development - something that's unsurprising. But there is one area where the US and European ETF markets have converged quite neatly - and that's in the level of fees charged.
BGI shows that the average total expense ratio ("TER") for US ETFs at the end of February 2009 was 31 basis points. In Europe the average TER was - 31 basis points.
Full Story: http://www.indexuniverse.com/blog/5704-fee-convergence-and-asset-levels.html
Related documents:
BARCLAYS ETF REVIEW FEBRUARY 2009: http://eu.ishares.com/publish/repository/documents/en/downloads/etf_landscape_february_09_en.pdf Potential launch of first U.S. ETF backed by Platinum holds promise
These ETFs would be a "huge boon for retail investment into the PGMs (platinum group metals)," said Scott Wright, an analyst at financial-services company Zeal LLC.
Indeed, the timing may be just right. Prices for platinum and palladium have been climbing from lows hit late last year.
Platinum prices have gained more than 60% from their low in October of last year to trade as high as $1,247 an ounce this week on the Comex division of the New York Mercantile Exchange. Palladium's up close to 50% from its December low to a high above $242 an ounce this week.
ETF Securities USA will sponsor the ETFS palladium trust and the ETFS platinum trust, according to separate Securities and Exchange Commission filings dated April 2.
The sponsor, the largest provider of exchange-traded commodities, declined to comment on the filings.
Still, it's easy to speculate over the reason behind the move.
Setting an example
In the U.S., the silver- and gold-backed ETFs have "ultimately reshaped the fundamentals of the precious metals markets," said Wright.
The launch of the iShares silver ETF "happened in the face of aggressive opposition from the industrial sector," he said. It was launched in April of 2006.
But now the ETF holds over 270 million ounces, "the equivalent of nearly half a year's worth of global mined production," said Wright.
And the SPDR Gold Trust, launched in late 2004, is now one of the largest ETFs in the world, he said. It's the sixth-largest gold owner and gold held in the trust recently surpassed the quantity held by the Swiss central bank, he said.
SPDR GLD ETF holds more Gold than Swiss, China, and Russia reserves
(original story March 2009) The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said it held a record 1,041.53 tonnes of bullion as of March 12, replacing Switzerland as the world's sixth-largest holder of gold.
SPDR's record stake, up 3.36 tonnes or 0.3 percent from the previous day, topped the 1,040.1 tonnes of gold listed as held
by Switzerland in December, the latest data from the World Gold Council showed. Switzerland ranked as the world's sxth-biggest official gold holder after the United States, Germany, International Monetary Fund, France and Italy.
"The most significant factor for the precious market this year is that long-term, stable funds have been entering the ETF
in a systemic way," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.
"Driven by worries about currencies, among others, ETF's increases have become symbolic of a market rise, and the market
is hoping that the ETF's resumed climb will help pull up prices."
Full Story: http://af.reuters.com/article/commoditiesNews/idAFT14717920090313 
