Insurer AIG's Losses Leave ETFs Mixed; Citigroup Making Changes

Insurance exchange traded funds (ETFs) were mixed in early trading today after insurer American International Group Inc. (AIG) announced larger-than-expected losses.

The company lost $7.81 billion, the second consecutive quarterly loss. The losses did send anxiety through the general markets, though, and sparked more concerns about the global financial system, reports Tim Paradis for the Associated Press.

AIG is the world's largest insurer. It's a component of both the iShares Dow Jones US Insurance (IAK, 16.1%) and KBW Insurance (KIE, 7.1%). Year-to-date, the funds are down 12.2% and 8.2% respectively.

Meanwhile, Citigroup (C) said today that it plans to shed $500 billion in assets and grow its revenue by 9%. That would bring the bank's total assets down to $1.7 trillion, reports Madlen Read for the Associated Press. Growing the assets will include, in part, job cuts in addition to the 13,200 that have already taken place since last summer.

Citigroup is 5.9% of the Financial Select Sector SPDR (XLF), as well as 2% of the iShares S&P Global Financials (IXG). XLF is down 8..4% year-to-date, and IXG is down 5.8%.

Power Shift Seems to Agree With Russia ETF

On May 7, Vladimir Putin stepped down and Russia's new president became Dmitry Medvedev - is it any coincidence that in one day, the Russia exchange traded fund (ETF) rose 4.4%?

Market Vectors Russia (RSX) seems to be a beneficiary of the surge in energy prices in particular, as 43.1% of the fund is allocated in the sector. It's up 6.4% year-to-date.

Foreign investors, attracted by the record-high oil prices, are turning a blind eye to the country's expulsion of U.S. diplomats and threats of a war with Georgia, reports Peter Apps for Reuters. The expulsions were ordered on April 28 after the United States expelled three diplomats earlier in April. The back-and-forth is bringing back Cold War memories.

Some investors might be deterred by Russia's issues, especially when compared with other emerging markets such as Brazil, which has the growth without the political risks. And those investors who are concerned with the oil and energy sector in Russia are focusing on other sectors such as construction and retail.

An ETF is a good way to get exposure to several sectors - the diversification means you could potentially benefit from any growth, while avoiding too much risk if it doesn't pan out.

Exposure to Russia can also be had through the SPDR S&P Emerging Europe (GUR), which also contains exposure to Poland, Turkey, the Czech Republic and Hungary. Year-to-date, it's down 5.2%.

A closed-end fund (CEF) contains Russia exposure, too: the Central Europe and Russia Fund (CEE), which is down 5.1% year-to-date. It holds 27.7% of the country.

For full disclosure, some of Tom Lydon's clients own shares of RSX.

Israel Emerges As A Strong ETF Industry Leader

Tucked away in the heart of the Jewish country is Tali 25, an exchange traded fund (ETF) that is already 8 years old. It was Israel's first fund to market.

Since then, the Israel ETF industry has grown considerably, with a ratio of ETFs to mutual funds of 25%. The ratio in the U.S. is 15%, reports Sarit Menaham for Haaretz.

The most notable aspect of  the Israeli ETF market is the number of ETFs in various indexes.  In the United States and other countries, or or a few ETF providers may have exclusivity over an index. This abundance is great for local investors as it creates competition, and has providers striving to be the best.

American investors seeking to invest in this market can do so with the iShaers MSCI Israel Cap Invest Mkt Index (EIS). This ETF launched on March 28, and is up 10.1% since.

The economy is growing at 5% for the fifth consecutive year, with high-tech companies leading the way. Voice mail technology and other innovations actually have their roots in Israel, who has more listings on NASDAQ than any country aside from the United States and Canada, reports Abraham Rabinovich for The Australian News.

Socialism is a thing of the past, however, the gap between the rich and the poor is one of the deepest among developed nations. Investment in the land of one of the oldest civilizations could prove fruitful for American investors today.

Winners of Second ETF Contest Announced

Two students at York University in Toronto, Canada, are the winners of the second exchange traded fund (ETF) contest.

Clear Indexes sponsored the contest, and Sean Vrbica and Vlad Berbece joined forces in their idea: an ETF that invests in international sports. The concept focuses on publicly-traded equities of holding companies that own professional sports teams and clubs. The idea is to capitalize on the large and devoted fan base of those teams, which typically grow even when there's an economic downturn.

Vrbica and Berbece will win $5,000, a paid internship and the chance to participate in a bell ringing ceremony for the ETF based on their concept.

The winner of the first contest was James Baker, a student at NYU. His idea was a U.S. Exporters Index that seeks to benefit from a growing global economy, along with the reduced value of the dollar. It is made up of large-to mid-cap companies that obtain a material portion of their revenue outside the U.S.

Clear Indexes is now coming up with plans for its fall competition.