Dealing With Correlation Via ETFs

Where can an exchange traded fund (ETF) investor find shelter? Once upon a time, foreign markets and energy moved independently of stocks, but these days, they tend to move in the same direction, writes Trang Ho at Investor’s Business Daily.

One place to look is in foreign bond ETFs, which can provide good returns while shunning the trend. Two offerings are:

• SPDR Lehman International Treasury Bond Fund (BWX) 
• PowerShares Emerging Markets Sovereign Debt Portfolio (PCY)

Other ways to hedge inflation, deflation and a falling dollar are through currencies, foreign dividends and the traditional gold.  Some ETFs focusing in on these areas include:

• CurrencyShares Japanese Yen (FXY)
• streetTRACKS Gold Shares (GLD)
• WisdomTree International SmallCap Dividend Index (DLS)
• WisdomTree DEFA High Yielding Equity (DTH)

For full disclosure, Tom Lydon is a member of the board of Rydex Investments.