All ETF Daily News Articles

ProShares Files For 3X Leverage On 94 New ETFs

3x1Despite warnings that speed can kill, another leading alternative exchange-traded funds sponsor is preparing to jump into the super-leveraged exchange-traded funds race. ProShares is requesting that the Securities and Exchange Commission allow it to provide up to 300% leverage and 300% inverse exposure to 37 different indexes. Although it's seeking so-called 3x approval for a list of some 94 new ETFs, it's highly unlikely the leading leveraged and inverse provider will launch all in the near future.  But even if only a handful on the new list are brought to market, the filing opens the door for ProShares to at least enter the most juiced-up leverage game in ETFs at the moment. And that has proved to be quite a lucrative undertaking for the lone sponsor to make the leap from 200% coverage—the previous high among leveraged ETFs.  Rival Direxion upped the ante late last year by becoming the first to offer ETFs that aim at taking 300% leverage and inverse positions. (See story here.) The other major player in the leverage ETF field, Rydex, also is awaiting government approval for its 3X proposals. Meanwhile, as ProShares and Rydex sit on the sidelines, Direxion is gaining significant first-mover status in the field. Full Story:
ETF BASIC NEWS April 22, 2009 12:37pm

Ticking Triple Levered ETF Bombs?

This video was produced 5 months ago, although we feel you may find it useful.
ETF BASIC NEWS April 22, 2009 10:48am

Why Africa Could Be the Region to Watch With ETFs This Year

africaRisk-loving, intrepid investors looking into frontier markets and related exchange traded funds (ETFs) may also take a gander at markets in Africa, if the International Monetary Fund has any say in the matter. Economists predict that 15 of the 20 fastest-growing countries for 2009 will be in Africa, reports Stefanie Eschanbacher for fundstrategy. According to the IMF, some African countries may become the “second generation of emerging markets” with macroeconomic performances on par with those of Asia countries’ back in the 1980s. Africa has the untapped potential for growth and could result in increased income per head with a new middle class. The political and social environment is becoming more stable, and there are institutional reforms that have set interest rates and sound monetary policies. Make no mistake, though: Africa is still a volatile continent and there are risks involved when looking to frontier markets for investment. Full Story:
ETF BASIC NEWS April 22, 2009 10:31am

Oil ETF’s Hit As Crude Inventory Keep Rising (USO, OIH)

black-goldThe Department of Energy released its weekly oil inventory data and again we saw another build-up of black gold.  This increase has started to hit the United States Oil (USO) and the Oil Services HOLDRs (OIH) ETS’s on the news.  We also saw a build-up in all of the sub-stes measured as well.  What is interesting is that we are also starting to see a rise in refining capacity. Crude oil inventories rose by 3.857 million barrels to 370.6 million barrels; and we were expecting a build of around 2 million barrels.  The gasoline inventories rose by 0.802 million barrels to 217.3 million barrels.  Distillates rose by 2.682 million barrels and now sits at a level of 142.31 million barrels. Full Story:
NYSE:USO April 22, 2009 10:26am

These Investments Just Don’t Work

get-richSchemes that offer people the chance to get rich quick never seem to go out of style. And while the market has historically offered investors the chance to earn steady, solid returns over the long haul, some folks just don't want to wait. That explains the appeal of exchange-traded funds that let you multiply your returns over those of particular indexes or sectors of the market. And while you might think that magnifying your gains could only help your cause in the long run, the reality proves much more disappointing. Great for short-term plays What's behind this fundamental misunderstanding of these ETFs? The problem is that while the leveraged ETFs hold themselves out only as delivering on their promises over very short periods of time -- typically a single trading day -- some investors misuse them by holding them for longer periods. At first, that seems to run counter to the Foolish idea of holding investments for the long run rather than trading frequently. But to be a good long-term holding, an investment has to be designed to be held for a long time -- and that isn't the case for these ETFs. Full Story:
ETF BASIC NEWS April 22, 2009 10:25am

Sibling Rivalry: Mutual Funds Vs. ETFs

sibMutual funds and ETFs have always made for strange bedfellows. While they compete for investor dollars, they may share the same corporate parent. And fund shops that don't offer ETFs are justifiably worried about losing business to exchange-traded investment vehicles. (ETFs are similar to mutual funds in that they hold many stocks, but ETFs trade as a unit throughout the day, whereas mutual funds are priced just once a day, according to their holdings.) ETFs now hold more than $500 billion in assets, including net inflows of $176 billion last year. And according to a recent report by Strategic Insight, ETF assets are on track to top $1 trillion by 2011. "The ETF world is slowly pushing the mutual fund world out of the picture,” says Robert Pavlik, chief market strategist for Banyan Partners LLC, an investment advisory firm in Palm Beach Gardens, Fla. If mutual funds are getting to be a tougher sell, in fact, it's because fund companies are undercutting their own business with similar ETFs. Vanguard, for instance, offers 33 ETFs that are essentially just alternative share classes of their mutual funds. But the ETFs have annual expense ratios that are a fraction the mutual funds’, and the differences, while small, can add up over time. Vanguard recently launched a foreign stock ETF — the FTSE All-World ex-US Small Cap fund VSS with annual expenses of 0.38%, or $38 for every $10,000 invested — versus 0.6% for a Vanguard mutual fund that tracks the same index. Sure, the ETF only saves $22 a year, but compounded over time it can add up to thousands of dollars coming out of investors’ pockets Full Story:
ETF BASIC NEWS April 22, 2009 10:10am

Investing For The Short Term

ideaSure, we all like to think long term, but sometimes you need to shorten your focus. Here are some places to look.

Even though we investors are trained to think long term, which typically means several years, sometimes a lot of things can change in just a few months. As an example, look to the performance of the Standard & Poor's 500.

Over the past year it's down 39.8%, which is quite a steep tumble. But if you go back six months the picture starts to look a lot more manageable, even if it doesn't quite look good yet, with markets down 15%. Those who have gotten into the markets more recently, in other words, have found smoother sailing than those who have been in longer. This leads us to try to find some attractive areas for investment for the next six months to one year. It's all well and good to be in it for the long haul, but if your investments are killing you there's an excellent chance you may never reach that promised payday. You might want to consider what could work in the market we have, not the market we want. The Forbes Investor Team applied their various areas of expertise to this very question and came back with some interesting and diverse answers. John Osbon, the head of Osbon Capital Management, feels that over the next year, or so, investors should look to the developing world. But he feels that trying to pick individual stocks here is to miss the larger play, so he recommends the Vanguard Emerging Market ( VWO - news - people ) exchange-traded fund. Full Story:
NYSE:VWO April 22, 2009 10:01am

Are ETFs the Philosopher’s Stone?

toxic-assetWithin the medieval pseudoscience of alchemy there was a centuries-long search for a tool, the philosopher's stone, that could turn worthless lead into ever-desirable gold. There has been a similar quest in the ETF world for the past few months: Could an ETF of toxic bank assets help the current financial crisis by converting impossible-to-sell securities into a transparent, market-priced portfolio? After all, ETFs have already brought exceptional liquidity for individual investors to previously obscure areas of the bond, commodity, and global equity markets. If liquidity really presents the main difficulty in valuing the toxic assets weighing down on bank balance sheets, could the millions of investors on major equity exchanges help? Here at Morningstar, we do not believe so for a multitude of reasons, involving both the nitty-gritty of how to build an ETF of toxic assets and the very nature of the complex securities that caused all this trouble in the first place. Unfortunately, we have to defer the latter points to another article that delves into the rise and fall of structured finance, and how it led to such a large amount of precarious assets that now endanger the banks who created them. For now, we will just take as given that banks hold these complex assets, which are essentially deeds entitling the banks to a share of the payments on a variety of mortgage, business, and consumer loans. However, those shares of the payments have been sliced and diced multiple times, pass through several intermediaries, and have such a confused paper trail that no one in the banking world quite knows how much they're worth anymore. If the prospects for these assets already sound pretty hopeless, you're getting a pretty good idea of why we are so skeptical. Full Story:
ETF BASIC NEWS April 22, 2009 9:02am

Will Hedge Fund ETFs Outperform Hedge Funds?

hedge-fundOn paper, the hedge fund industry is one ripe for a challenge from the ETF industry. Hedge funds have high manager risk, and were previously out of reach for many investors due to high minimum investment requirements and exorbitant fees. Enter the hedge fund ETF. The First Ever Hedge Fund ETF: QAI The IQ Hedge Multi-Strategy Tracker (QAI) began trading last month as the first ever hedge fund ETF. Of course, it’s not the first time someone has used ETFs to mimic hedge funds. Many people have utilized ETFs to build their own hedge funds, so to speak. Though, this strategy requires active research and management, and wouldn’t necessary track the publicly available hedge fund activity, which QAI does. QAI is also unique in that it doesn’t try to execute a particular hedge fund strategy, but rather tries to to replicate the returns of the IQ Hedge Multi-Strategy Index, which tracks the entire hedge fund universe. Essentially, it buys the entire hedge fund market, which includes long/short equity hedge funds, global macro hedge funds, market neutral hedge funds, event-driven hedge funds, fixed income arbitrage hedge funds, and emerging markets hedge funds. It doesn’t invest in hedge funds directly, but instead in other instruments which can allow it to mimic their returns. Full Story:
NYSE:QAI April 22, 2009 8:50am

First Eagle U.S. Value fund favors agriculture ETF, 3M, Omnicom

commoditiesThe oft-repeated notion these days that "buy and hold is dead" is a welcome sound to the ears of Abhay Deshpande, a co-manager of First Eagle U.S. Value Fund: It just means more treasure is there to be found, abandoned by those too panicked about near-term performance.
"We say buying stocks at reasonable multiples, of companies that don't have questionable business models, that have strong balance sheets, and have low risk of impairment can be quite profitable over the long term," says Deshpande. Over the past year, buffeted by the downturn that began in earnest in September 2008, the $336 million First Eagle U.S. Value Fund (FEVAX) has lost 22%, but year-to-date its return has been 1.16%. In the past four weeks, it has posted a return of nearly 9%. Food for thought One stock the fund favors is the PowerShares DB Agriculture Fund DBA an agricultural commodity ETF. Deshpande likes the appeal of food commodities as "real assets" at a time when the debasement of currency is a major problem around the world. "Also, farm financing -- as with all financing right now -- is very tight, and that's creating a supply imbalance," Deshpande said. Another thing favoring agriculture right now is that in China, with hundreds of millions of people growing their incomes and moving into the middle class, meat will be much more in demand. "And where there's a need for beef, there's a need for grain," Deshpande explained. The ETF has fallen to the low $20s from the mid-$40s range last July. It closed Monday at $23.67, off 3.4%. Full Story:
NYSE:DBA April 21, 2009 4:17pm

History Says Pullback From Stock Market Rally a Solid Bet

correctionThere's more where that came from. That's what some market watchers are saying about Monday's sharp selloff, following a stunning-yet, some say, suspect-run-up of well over 20 percent from the standing bear market low of March 9.  "Whenever you get that kind of move in that short a period when news is still mixed, you're vulnerable to a setback," says money manager Jim Awad, managing director at Zephyr Management. "We've gone from the bear market to the never-never land." Caution and skepticism has been building in some quarters recently, particularly as the Dow Industrials hugged a 200-point trading range over the 11 sessions going into Monday. To some, however, the writing was already on the wall late last week, even as the major indices edged to new highs Friday in their spring sprint. "This thing is due," veteran market watcher and UBS floor operations director Art Cashin told CNBC early Friday. "I'm betting we're going to see that pullback in the rally." Cashin, among other things, cited the narrow nature of the rally and how many of the stocks attracting interest were "low-priced stocks," often a sign of indiscriminate bottom fishing.  Sam Stovall, chief investment strategist at Standard's & Poor, says technical data and historical trends pointed to an April 17 high, followed by the typical retreat and retesting of the bear market low. In his March research note, Stovall said the S&P 500 could post a rally in which it recovered some 22 percent of what it lost during the bear market in a 39-day period, the historical rule. "If history repeats itself, we would probably go through a retest," said Stovall. "We're just at the beginning of the retest today." Full Story:
ETF BASIC NEWS April 21, 2009 3:06pm

TDX Independence Files For New Family Of ETFs “X Funds”

etf-news7The asset management arm of TD Ameritrade has been quite active recently. And it appears to be ramping up for a bigger presence in the exchange-traded funds market. In a filing dated April 20, the company has amended past requests for new ETFs through its TDX Independence Funds group. Among the main changes is the creation of a new family of ETFs to be marketed and operated as the X Funds family. Earlier this month, TDX Independence Funds asked the Securities and Exchange Commission to make Amerivest Investment Management the investment adviser to its series of five target-date ETFs. The filing also made it clear that struggling XShares Advisors could be removed from the family in the future. (See story here.) A spokeswoman for TD Ameritrade declined to comment on Tuesday about action regarding any pending filings. The most recent document explains that X Funds is an open-end management investment company organized as a Maryland corporation. X Funds filed with the SEC a registration statement last October. But it hasn't been approved yet. "X Funds ... will offer a number of different series of funds with distinct investment strategies in an exchange-traded fund format," said the filing. It added that X Funds currently has two portfolios. Presumably, those two portfolios would be the first X Funds out of the gates. Those are:
  • The Nations Large Cap Enhanced Covered Call ETF. It's expected to be subadvised by Esposito Partners LLC, according to the filing.
  • The CRB-Research Global Energy Efficiency ETF.
Full Story:
ETF BASIC NEWS April 21, 2009 2:32pm

Exchange traded funds: the City’s best kept secret.

secret(UK ETF NEWS) If you believed the hype you would believe that exchange traded-funds (ETFs) had become the investment choice of private investors. But while overseas investors, particularly in the US, have embraced this cheap and flexible way of investing, private investors on these shores have been more reluctant to join in, accounting for fewer than 10pc of ETF trades. Deborah Fuhr, the head of ETF research at Barclays Global Investors, blames lack of remuneration for financial advisers for the difference. "In the US a decade ago, sales were low because advisers expected a rebate or commission, but that has changed. Once American advisers started using them they realised how useful they could be for their clients. Now 40pc of ETF trades in the US are made by private investors." Yet the British could be missing a trick because many professionals reckon EFTs add to an investor's armoury. Justin Urquhart-Stewart of Seven Investment Management said he could build a fully balanced and diversified portfolio using only ETFs. "They have great flexibility – and if they are good enough for Warren Buffett they should be enough for you or me." Adrian Lowcock of Bestinvest, the financial adviser, said: "We use ETFs as they are a cheap and effective way to track a market and can provide a core holding to a sector with other satellite holdings being used to add value to a portfolio." Full Story:
ETF BASIC NEWS April 21, 2009 12:21pm

Commodities a golden investment opportunity

australiaExchange-traded funds have emerged as a cost-effective and popular way to gain exposure, as they allow the purchase of specific commodities in small lots, without taking delivery. "Actual delivery, however, does take place by the fund, which means it's only available in more liquid markets such asgold, silver and oil," the ANZ's Pervan says. Apart from buying bars and coins, gold ETFs offer the most direct route and way to track the price of gold. While popular in the US and across Europe, Australia has only one gold ETF, launched by ETF Securities in 2003. The GOLD fund has about $700million invested, up from about $330 million six months earlier. The GOLD ETF trades like any other ASX-listed security, says Jonathan Morgan, business development manager at ASX Listed Managed Investments. It is bought or sold on the Australian Stock Exchange in the same way as shares, and posts several thousand trades a day. While other listed ETFs have market makers in place, a professional securities dealer who has an obligation to buy when there is an excess of sell orders and to sell when there is an excess of buy orders, such as the international ETF range and the newly listed metal ETCs, the GOLD ETF does not need one because it has a sufficient spread of shareholders. The advantages of an ETF are that they are cheap, there's no storage cost and they are easily exchangeable. They are good for retail investors because they do not require the investment of large sums of money. The minimum investment is one GOLD security, which costs about $150, representing one-tenth of an ounce of gold. The annual management fee is about 0.40 per cent, and as the security is bought in the same way as shares, normal brokerage fees still apply. Full Story:,28124,25347678-5001942,00.html
NYSE:GLD April 21, 2009 12:01pm

3 Ways To Stop Cannibalizing Your Portfolio

cannibalBy definition, cannibalizing describes an act where a person's attempt to improve a condition backfires against an existing situation. Not willingly, nevertheless very effectively, investors have been cannibalizing their own portfolios. Enticed by a multi-decade bull market, many investors tried to improve their portfolio's return. Based on the almighty wisdom of the risk/reward principle, we know that high returns and a high degree of safety cannot co-exist. Even though it has been thought that portfolios can be milked for extra return without giving up safety, deep down we know that one has to be sacrificed for the other. Many opted to cannibalize safety for higher returns and got neither. A quick glance at a chart reveals that the Dow Jones (NYSEArca: DIA - News), S&P 500 (NYSEArca: SPY - News), Nasdaq (Nasdaq: QQQQ - News) and many other indexes trade at levels not seen for well over a decade. When it comes to investing, time is money and the last decade has been a 'lost decade.' The 'lost decade' Lost, why? $100,000 invested in the S&P 500 from April 1989 to April 1999 would have mushroomed into $426,000. $100,000 invested in the S&P 500 from April 1999 to April 2009 would have shrunk to less than $6,500. $100,000 invested held from 1989 all the way to 2009 would be worth $284,000 today. This translates into a 20-year average annual return of 5.3% before taxes and inflation. Full Story:
ETF BASIC NEWS April 21, 2009 11:58am

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