South Korea's ETF Boosted By Retail Numbers

South Korea's exchange traded fund (ETF) shot up a nice 3% in trading yesterday, possibly owing in part to expanding department store sales.

They expanded for the fourth consecutive month, reports Seyoon Kim for Bloomberg. Consumers snatched up luxury items, clothes and food, which sent sales up 6.5% from a year earlier. March sales rose 6.7%.

One of those stores, Shinsegae, is 2% of the iShares MSCI South Korea (EWY). Year-to-date it's down 10%. The consumer goods sector makes up 26% of the fund.

On the flip side is that the country's vice finance minister said the economy is in a downturn much like the rest of the world. The jobless rate rose to a five-month high in April as manufacturers, builders and retailers let workers go. This could be an indication that department store sales may cool.

Britain's biggest retailer is planning to purchase 36 discount stores from South Korea's E-Land for $1.9 billion, report Rhee So-eui and Rachel Sanderson for Reuters. This acquisition could challenge Shinsegae, which runs the top-ranked E-Mart chain.

The country is Tesco's second most profitable market after Britain, and this expansion might be seen as a sign that Tesco has faith in the strength of the South Korean economy.

Everyone Is Talking About the Dollar. Let's Talk About Currency ETFs.

Exchange traded fund (ETF) investors are fully aware of the value of the dollar these days as they snap up products that allow them to hedge its losses. But now more than ever, even the average Joe knows what the dollar is (or isn't) worth.

It's invaded pop culture: you've got Jay-Z waving euros in a video. McDonald's commercials talk about how the dollar is "dropping like a lead balloon." Model Giselle Bundchen was rumored to be asking to be paid in euros awhile back.

Since when are exchange rates the subject on the minds of so many? People are becoming increasingly aware of the fact that it's possible to spend your dollars on other forms of currency, says Rob Walker for the New York Times. Some point to the internet and the wide choices of financial news sources.

One bank has sold foreign-denominated certificates of deposit (CDs) for years, and they're more popular today than ever.

Don't count out foreign currency ETFs and exchange traded notes (ETNs) - there are more choices than ever, and more are likely to come along. Investors can hedge the falling dollar against the euro or the Japanese yen and a number of other currencies, or they can simply bet on a bullish or bearish dollar.

Among the many currency ETFs and ETNs:

• CurrencyShares Euro Trust (FXE)
• PowerShares DB US Dollar Index Bullish (UUP)
• Market Vectors Rupee/USD ETN (INR)
• WisdomTree Dreyfus Brazilian Real (BZF)

Read the disclosure, as Tom Lydon is a member of Rydex Funds.

Good Morning! A Vietnam ETF Is In Registration

There seems to be great interest in a Vietnam exchange traded fund (ETF), if the search engines are any indication. Week after week, "Vietnam" turns up as one of our top ten search words.

Market Vectors has gotten in line to meet the demand, it seems. Last week, the ETF provider filed for five new ETFs with the Securities and Exchange Commission (SEC), and one of them includes a Vietnam fund, reports the Euromoney Institutional Investor Online Network. The fund will seek to replicate the Vietnam index, which is made up of companies with market capitalizations greater than $200 million. Most of the companies in the fund are headquartered in Vietnam, or generate a majority of their revenue there.

Vietnam has been experiencing steady growth in recent times, although there has been a surge in inflation. But for the last three years, the economy has grown by more than 8%, reports Duncan Currie for the Daily Standard. Economic reforms were put in place in 1986, and since then, millions of the country's inhabitants have emerged from poverty. The country also has a wealth of natural resources, including coal and offshore oil and gas deposits - that's pure gold in these days of high energy prices.

The other ETF filings include:

• Market Vectors Global Frontier: Tracks the Global Frontier Index, which holds companies with market caps greater than $100 million.
• Market Vectors Gulf States: Tracks the Gulf Corporation Council (GCC) Index, which comprises companies with market caps greater than $100 million.
• Market Vectors Africa: Tracks the Africa Index which holds companies with market caps of more than $200 million. The companies are either headquartered there or make most of their revenue on the continent.
• Market Vectors Emerging Europe: Tracks the Emerging Europe & Commonwealth of Independent States (EE & CIS). The companies have a market cap of greater than $1090 million, and among the countries that will be seen in the funds are Kazakhstan, Belarus, Poland, Slovakia, Lithuania and Hungary.

State Street Goes Down The International ETF Road

State Street Global Advisors is going down the real estate and mid-cap road on an international scale, with new exchange traded funds (ETFs) that invest overseas.

The new funds, according to Reuters, are:

• SPDR DJ Wilshire Global Real Estate (RWO), based on 240 commercial and residential real estate companies in 23 countries, including the United States.
• SPDR S&P International Mid-Cap (MDD), based on an index of 850 companies whose market caps are between $2 billion and $5 billion. The companies are located in 25 countries, including the United States.

Their global real estate fund will join these other international real estate ETFs:

• SPDR Dow Jones Wilshire Intl Real Estate Index (RWX), down 2.7% year-to-date
• First Trust FTSE EPRA/NAREIT Global Real Estate (FFR), up 0.7% year-to-date
• iShares FTSE EPRA/NAREIT Asia (IFAS), down 7.1% year-to-date
• iShares FTSE EPRA/NAREIT Global RE ex-U.S. (IFGL), down 5.3% year-to-date

The other international mid-cap ETF is the WisdomTree International Mid-Cap Dividend (DIM), which is a dividend-paying fund. Year-to-date, it's down 2.5%.

Individual Investors Seem to Gravitate to ETFs

The stock rating system on the Motley Fool is slowly seeing exchange traded funds (ETFs) making up the top ten. And now, six of the top ten stocks are actually ETFs.

Before we proceed, CAPS is the Motley Fool's rating system where investors work together and pool all their information to help you identify which stocks are the best to buy and when, along with which stocks to avoid.

Players rate stocks and predict which will under perform or outperform all the while The Fool keeps score and rates them. In turn, players receive ratings and based on the performance of their picks. The system is updated every five minutes, so the news is all current.

Todd Wenning for The Motley Fool gives us the top six ETFs as of May 13th, and reminds us that these are not formal recommendations, just start-ups to further your own research. In respective order:

• iShares MSCI Canada Index (EWC), up 6.7% year-to-date
• iShares MSCI Taiwan Index (EWT), up 10% year-to-date
• iShares MSCI South Africa Index (EWA), up 6.7% year-to-date
• SPDR S&P Emerging Middle East & Africa (GAF), up 1.5% year-to-date
• iShares MSCI Sweden Index (EWD), up 5.5% year-to-date
• PowerShares Global Water (PIO), down 6% year-to-date

It only underscores the popularity that ETFs have acquired with individual investors.

Wenning points out that some of the individual stocks in the ETF will outperform the ETF, but that's the trouble: how do you choose which stock to go after? Hindsight is 20/20. By investing in ETFs, you remove picking and choosing from the equation.

For the month of April, we had ETF industry growth. Will it keep up?

Northern Trust Launches Three More International ETFs

Northern Trust is providing more choices for investors who want international exposure in their exchange traded fund (ETF) portfolios with the launch of three more funds.

The new funds, which cover Italy, South Africa and Singapore, are:

• S&P/MIB Index Fund (ITL): tracks the price and yield of publicly traded companies in the Italian equity markets. Stocks are traded on the Borsa Italiana and are free-float adjusted, with a market-cap weighted index.
• NETS FTSE/JSE Top 40 Index Fund (JNB): tracks the price and yield of publicly traded companies on the South African stock exchange. Focuses on the top 40 companies on the Johannesburg stock exchange.
• NETS FTSE Singapore Straits Times Index Fund (SGT): consists of 50 of the most liquid stocks, based on average daily trading volume, traded on the Singapore stock exchange.

Northern Trust began rolling out its line of international ETFs last month, and there are more yet to come, including an Ireland ETF.

Run On Food Prices, Agriculture ETFs, Leads to a Tiff

The rising cost of food that has benefited agriculture exchange traded funds (ETFs) seems to have led to a squabble between India and the United States over who's to blame.

Indian politicians, economists and academics are upset that top U.S. officials have said India's growing prosperity is the reason for food inflation, reports Heather Timmons for the New York Times.

India countered that Americans should rethink their energy policy and go on a diet.

Zing!

One official said that if Americans slimmed down to the weight of middle-class Indians, many people in sub-Saharan Africa would find food on their plates.

India isn't the only country being blamed for the rising cost of food. China has been fingered as a source of greenhouse gases and rising commodity prices, as well. Many emerging markets that have seen a growing middle class in recent years are slowly adopting more Western diets (which is probably just a nicer way of saying "burgers, fries and milkshakes").

India has a point, though: the average American eats 3,770 calories a day. It's the highest caloric intake in the world. India consumes 2,440 a day per capita. It takes 3,500 calories to gain one pound.

The United States and Canada also lead the world in oil consumption per person.

Whatever side you find yourself on, you can at least capitalize on the growing demand by taking a look at some agriculture ETFs and exchange traded notes (ETNs):

• PowerShares DB Commodity Index Tracking Fund (DBC), up 26.5% year-to-date
• PowerShares DB Agriculture (DBA), up 12.7% year-to-date
• Market Vectors Global Agribusiness (MOO), up 7.6% year-to-date
• BS E-TRACS CMCI Agriculture (UAG), launched on April 4

China Plans To Launch Planes of Their Own, Denting Aerospace Stocks And ETFs

The newly-created Commercial Aircraft Corp. of China is planning to assemble jets on their home turf in an attempt to lessen the nation's dependency on Western-made planes - might the move put a dent in the aerospace and defense exchange traded fund (ETF) if it takes flight?

So far, China's track record building planes hasn't gotten any air. The first Chinese-made jet, the Shanghai Y-10, was retired five years after its launch because local airlines refused to purchase it, reports  Chi-Chu Tschang for BusinessWeek. They preferred the more fuel-efficient Boeing (BA) and McDonnell Douglas jets instead.

Twenty years later, China is giving it another go; this time around the demand is stronger with more customers flying than ever, and the country is more motivated to keep profits in their homeland.

PowerShares Aerospace and Defense (PPA) has 7.1% in Boeing and is down 5.8% year-to-date. If the Chinese can get their plan off the ground, could it wind up in the fund?

Will China's Inflation Halt Bull Run of ETFs?

China wasn't just rattled by a major quake today: inflation is also shaking up the country and its exchange traded funds (ETFs).

Trade in the shares of 45 listed Chinese companies will be suspended tomorrow. They're in the Sichuan province, where the earthquake that has killed thousands hit, reports Scott Tong for Marketplace.

Within hours of the quake, the central bank also announced steps to tighten liquidity in the banking system, and numbers continue to show that inflation is near a 12-year high. Consumer prices in April shot up 8.5% in April over last year. The Chinese currency is up 15% against the U.S. dollar.

There's a new exchange traded note (ETN) on the market for investors looking to hedge the dollar if the Chinese Renminbi continues to rise in value: Market Vectors Chinese Renminbi (CNY).

Many economists believe that the days of low-cost goods coming out of China are coming to a close as China passes on the rising cost of material and energy.

China's ETFs were down slightly in trading today.

• iShares FTSE/Xinhua China 25 Index (FXI), down 10.9% year-to-date
• SPDR S&P China (GXC), down 12.6% year-to-date

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

As the Dollar Ticks Up, Picking An ETF Can Be a Challenge

After months of a downhill slide, the dollar is making gains again and it's benefiting some exchange traded funds (ETFs).

It lost a little ground last week, but so far in trading today, it seems to have resumed its climb. The gains have helped calm some worries about inflation, reports Tim Paradis for the Associated Press. When the dollar is weak, it can heighten price increases. Commodities like oil then become more attractive to investors who are looking to hedge inflation.

With that, oil retreated from its record high and fell to $125.41. Last week, it gained $10.

Jack Crooks for Money and Markets points to the G7 meeting in early April as the kick-off point for the dollar's about-face. Traders began to dissect the events of the meeting and perhaps became concerned that a bottom had been hit, and now there's a battle between the dollar bulls and bears.

There are many ways to play your sentiment on the dollar and other currencies around the world. Rydex's CurrencyShares allow investors to hedge the falling dollar relative to a variety of currencies. Market Vectors has two new exchange traded notes (ETNs) that allow investors to go double long or short on the euro. And PowerShares has two ETFs that capitalize on either bullish or bearish sentiment on the dollar.

There's also an all-in-one ETF if you find it hard to pick and choose: the PowerShares DB G10 Currency Harvest (DBV). It contains exposure to the dollar, euro, yen, Canadian dollar, Swiss francs, British pound, Australian dollar, New Zealand dollar, Norwegian krone and the Swedish krona.

Among your other options:

• PowerShares DB US Dollar Index Bearish (UDN)
• PowerShares DB US Dollar Index Bullish (UUP)
• CurrencyShares Australian Dollar Trust (FXA)
• Market Vectors Indian Rupee (INR)
• CurrencyShares Swiss Franc Trust (FXF)

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

New ETF Provider Comes Bearing International Real Estate Fund

A new global real estate exchange traded fund (ETF) is in town, along with a new ETF provider.

The Cohen & Steers Global Global Realty Majors (GRI) from ALPS Advisors provides exposure to the global real estate market with 75 companies in developed markets including North America, Asia Pacific and Europe. It rebalances quarterly and has an expense ratio of 0.55%.

This fund joins a number of other international real estate ETFs, including:

• iShares S&P World Ex-US Property Index (WPS), down 4.6% year-to-date
• SPDR DJ Wilshire International Real Estate (RWX), down 1.2% year-to-date
• WisdomTree International Real Estate Fund (DRW), down 10.2% year to-date

The U.S. housing crisis has been taking its toll on the markets of other countries lately, but perhaps when this sector experiences a rebound here, it will spread overseas.

BRIC ETFs Were Anything But In April

BRIC exchange traded funds (ETFs) showed themselves to be solid in April. Investor interest and enthusiasm for the funds has peaked over the past several years, with outstanding sector-leading performances in 2007.

Richard Widows for The Street researched the BRIC ETFs for the month of April, some of which posted impressive performance numbers.

SPDR S&P China (GXC) was up 17.97% in April, and was the top performer for the month. iShares FTSE/Xinhua China 25 Index (FXI) advanced 17.5% with a net $6 billion in assets.

Brazil fared well with a pair of ETFs: iShares MSCI Brazil Index (EWZ)  up 17.3% and HOLDRs TeleBras (TBH) up 14.2% in April.

First Trust ISE Chindia (FNI) was up 16.6%, as a blend of China and India, and Claymore/BNY BRIC (EEB) was up 11.1%. An honorable mention was given to iPath MSCI India Index (INP), as the ETN gives a hard-to-access passage to India. The fund rose 7.1% in April.

There's still more BRIC exposure to be had, though, both in single-country and broad-based form.

• Market Vectors Russia (RSX), up 3% in April
• SPDR S&P BRIC 40 (BIK), up 9.7% in April
• iShares MSCI BRIC Index (BKF), up 9.8% in April

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

Steel ETF Is Getting Hot to the Touch

Describing something as "steely" is usually a synonym for "coldness," but not when it comes to the steel exchange traded fund (ETF).

Market Vectors Steel (SLX), which launched in October 2006, is at record highs thanks primarily to booming global demand for the metal. Year-to-date, it's up 19.6%.

In the Middle East, the steel industry is said to be undergoing a transformation. It currently accounts for only 2% of the global steel trade, AME Info reports. In 2006, the region produced 21.1 million tons of raw steel and consumed 41.6 million tons of finished goods. Those numbers are respectively forecast to rise to 35 million and 60 million tons by 2010.

In China, the number of steel factories has doubled in the last few years. Even on our home turf, steel demand is up about 30% ahead of its supply.

Think You're Diversified Enough With ETFs?

How diversified is your exchange traded fund (ETF) portfolio? No matter how well you think you have your bases covered, every portfolio is vulnerable to something, cautions Roger Nusbaum for The Street.

Many investors who invest in broad-based ETFs or actively managed mutual funds end up too heavy in the financials. Individual stocks and sector funds also tend to have the same problems. An example of the correlation between two broad-based funds can be seen in two market segments that tout increased growth and unstoppable demand.

iShares S&P Global Materials Index Fund (MXI) and the BLDRs Emerging Market 50 ADR Index (ADRE) have a tight correlation, especially in times of stressful corrections. The increased demand for natural resources in places like China and India have also triggered demand from countries with the natural resources like Brazil and Chile, according to Nusbaum.

The infrastructure buildup is still in its infancy, and needs more time and dollars to take off. Right now China is off its peak 40%, so think about what this could do for related sectors, ETFs and countries. Think about the China decline, and how easy emerging markets, and materials could go down, too. Also, remind yourself of the true total exposure to these sectors and how a decline would affect your portfolio.

The time to come up with your exit strategy is now. It's wise to know your plan and stick to it, regardless of emotion. When a fund drops below its 200-day moving average or 8% off its high, sell it. Once you begin rationalizing your movies or hoping for a turnaround is when you get into trouble.

Northern Trust Enters ETF Arena With First ETFs To Track Major Foreign Market Indexes

With its new line of exchange traded funds (ETFs), Northern Trust opted to stay true to their principles while traveling around the world.

Is it a sign that ETFs are slowly entering the mainstream and gaining acceptance as more than just a passing fad? An institution as old and well-known as Northern Trust entering the market could be a sign.
 

"We know who we are. We knew what we needed to bring to the market, something that was consistent with our notions of asset management overall," says Peter Ewing, the managing director of Northern Trust's ETF group.

The first batch of funds, the first to track major foreign market indexes, were a year in the making. Ideas were kicked around as the world's third-largest asset manager of institutional index-based assets felt it needed to seriously consider an ETF product line. In 2007, the management committee gave the go-ahead and they filed with the Securities & Exchange Commission (SEC).

"Our opening salvo is traditional," Ewing says. But the provider isn't averse to more inventive ETFs and strategies. But for now, "We want to stay true to our principles."

Northern Trust's ETFs, which all have an expense ratio of 0.47%, are:

• NETS S&P/ASX 200 Index Fund (AUS): Represents Australia
• NETS DAX Index Fund (DAX): Tracks Germany's major exchange
• NETS FTSE 100 Index Fund (LDN): Invests in the largest companies by market cap on the London Stock Exchange
• NETS CAC40 Index Fund (FRC): Represents France
• NETS Hang Seng Index Fund (HKG): Represents Hong Kong
• NETS TOPIX Index Fund (TYI): Represents Japan

At a later date, there will be funds issued that cover Belgium, Ireland, Portugal, South Africa and more.

How to Invest in Single-Country ETFs

Exchange traded funds (ETFs) that track a single country have have been a boon to many long-term investors. They allow investors to reduce their exposure to specific regional disruptions, such as the recent credit crunch, and they up the exposure available to countries that are profiting more than the United States or other distressed nations.

Global growth has been outpacing that of the United States' for some time now. Evidence of this can be seen just by looking at the performance of the S&P 500: year-to-date, it's down 5%. Its five-year average return is 10.6%, and the ten-year average is 3.9%.

Investors can't be blamed for considering looking abroad for places to put their money. Single-country funds offer more flexibility than mainstream equities, says Alan Farley for The Street.

Overnight gaps that can occur in single-country ETFs can subject them to volatility.

iShares MSCI Mexico (EWW) is an example, as it fell nearly 3% on April 25 because of weak earnings from America Movil (AMX). However, over the past decade, EWW has benefited from Mexico's steady growth in the last decade. Year-to-date, the fund is up 3.6%.

Other ETFs with a strong year-to-date performance include iShares MSCI Brazil (EWZ), which is up 12% and has an annualized return of 55.4% over the last five years;  iShares MSCI Taiwan Index (EWT), up 10.2% so far this year, with an annualized return of 18.6% over the last five years.

Brazil was upgraded yesterday by Standard & Poor's to "investment grade."

These uptrends over time with single-country ETFs are all well and good (hindsight is 20/20, right?), but what if you had bought Brazil in November and sold it in January? You would have been down 50%.

But each single country needs to be evaluated on its own merits. Not all of them are going to go up. When it comes to these funds, educate yourself and monitor the trends closely. Have your sell points set for each, letting it go when it either drops below its 200-day moving average or 8% off its high.

If you stick to the plan, hopefully you will achieve your goal of doing well on the uptrends while avoiding the volatility that occurs from time to time.

Does The China ETF Rally Signal Things To Come?

So far in 2008, it seemed as though China and its related exchange traded funds (ETFs) were yesterday's news.

After all, the iShares FTSE Xinhua/China 25 Index (FXI) is down 7% this year, while the SPDR S&P China (GXC) is down 9.6%. 

But with a recent burst of activity that began last week, many investors are wondering if China's recent corporate gains are going to start growing again. Since April 21, FXI is up 6.3%, while GXC is up 7.2%.

Since Dec. 31, the Shanghai index has corrected 45%, says Joanne Von Alroth for Investor's Business Daily.

China's economy is enjoying a multi-year boom with huge economic growth. Some thought the good times would continue this year as the country plays host to the Beijing Summer Olympics.

But political unrest over China's actions in Tibet, inflation, bad weather and China's poor environmental record threw the ETFs into reverse.

Chinese government officials refuse to accept a slowdown for long. Officials cut the stamp tax rate - tax on the purchase or sale of stocks - from 0.3% to 0.1%. Institutional investors buying or selling 100,000 or more shares are now required to do it privately to reduce volume moves.

These moves kicked off the rally that has lasted into this week. Whether it will stick is open to debate, but if China begins to head lower, have your exit strategy in place.

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

BRIC ETFs Have Many Access Points for Investors

A reader wrote in recently wanting to know more about BRIC and the related exchange traded funds (ETFs). We're here to help!

BRIC stands for four of the fastest-growing emerging markets out here: Brazil, Russia, India and China. In 2007, these countries delivered some of the biggest returns of any ETFs or exchange traded notes (ETNs) around. So far for 2008, BRIC ETFs and some of the single country funds have been fairly quiet.

But make no mistake: these countries are still growing, and could have plenty to offer down the line.

Mexico and Its ETF Has One Caliente Decade

Nine out of the top ten exchange traded funds (ETFs) with high yearly returns actually tracked overseas markets, with one of the hottest markets and funds just south of the border. That's according to Lipper data.

iShares MSCI Mexico (EWW) gained an annualized 16.99% through April 17, compared to the S&P 500 which returned 3.88% over the same time period.

Jesse Emspak for Investors Business Daily reports that the fund tracks the Bolsa Mexicana, the country's stock exchange. EWW is concentrated, with 25% tracking America Movil (AMX). The company is the largest wireless provider in Latin America, and serves 147 million customers in 16 different countries.

Like so many Latin economies, Mexico has had a steady, modest growth in the past 10 years.

The country is exporting more to Europe and Asia as trade ties have solidified and the peso has fallen alongside the dollar.

Foreign Currency ETF Offerings to Pour In Next Month

Exchange traded fund (ETF) providers Dreyfus and WisdomTree are teaming up to offer five actively managed foreign currency ETFs next month.

They will include the WisdomTree Dreyfus Euro Fund, Japanese Yen Fund, Indian Rupee Fund, Chinese Yuan Fund and the Brazilian Real Fund. These will be the first of 12 to be launched under the WisdomTree Dreyfus banner. Two others include two U.S. current income funds, reports Mariana Lemann for Ignites.

Later this year, more funds will launch and cover the Australian dollar, British Pound sterling, Canadian dollar, New Zealand dollar, South African rand and South Korean won. Several of these funds will be a first in currency ETFs.

When they launch, they'll join a growing lineup of both currency ETFs and exchange traded notes (ETNs), including:

• CurrencyShares Euro Trust (FXE)
• CurrencyShares Japanese Yen Trust (FXY)
• Market Vectors Indian Rupee (INR)
• Market Vectors Chinese Renminbi (CNY)
• PowerShares DB G10 Currency Harvest (DBV)

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Gold ETFs Are the Squeaky Wheels, But Other Metals Might Deserve Some Grease

Gold and its exchange traded funds (ETFs) are real attention hogs. Sure, the metal is pretty to look at. It's shiny. But it's also being outperformed by other decidedly less sexy metals.

streetTRACKS Gold Trust (GLD) and iShares COMEX Gold (IAU) are not too shabby: they're up year-to-date by 6.3% and 5.7%, respectively.

That's all well and good, but consider:

• Market Vectors Steel (SLX) is up 14% year-to-date
• iShares Silver Trust (SLV) is up 12.7% year-to-date
• PowerShares DB Base Metals (DBB) is up 17.2% year-to-date

So, why does gold get the lion's share of the headlines, even as it's retreated from record prices? It dipped below $900 on Thursday, falling almost 15% off those records, reports Atul Prakash for Reuters. The metal rose slightly today but it's expected that more downward pressure lies ahead, as some concerns about the credit crisis have eased.

Growth in emerging markets is fueling much of the demand for steel and other metals with industrial applications, such as silver and copper (futures for which are held in DBB, along with aluminum and zinc).

Yesterday, we noted that China has doubled its number of steel factories in the last few years. Silver is scarce, as well, with dealers paying a premium over the spot price. A strike at a Chilean copper mine run by the world's largest copper producer also raised concern that prices will increase as supplies fall, reports Claudia Carpenter for Bloomberg.

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

Rationing Leads to Hoarding of Rice and Possibly ETFs, Too

The commodities craze spread to exchange traded funds (ETFs) awhile ago - now it's reached Sam's Club.

A worldwide rice shortage has led the warehouse unit of Wal-Mart (WMT) to start rationing some types of it, reports Cotten Timberlake for Bloomberg. Where allowed by law, customers are going to be restricted to four bags a visit.

Shrinking supply and rising prices have led to hoarding. Rice is a food staple for half the world, including in China, Vietnam, India and Egypt, countries that have also started restricting sales. Thailand is also considering restricting shipments.

Some of Costco's (COST) stores are putting limits on sales of flour, in addition to those of rice.

The good news is that both stores have extensive distribution systems, enabling them to redistribute supplies.

The rice shortage is just the latest in a long line of commodities that have become more scarce and expensive recently. Rice futures have risen 26% this month. Wheat, corn and soybeans are also at record prices, which has led to riots in Haiti and Egypt.

A spokesman for the USA Rice Federation says the rice shortage should ease up with the June harvest, and may be resolved by the end of 2009.

But if you were mulling a low-carb diet, now might be the time.

Agriculture ETFs are becoming a popular way to hedge those rising prices. Some of them include:

• MLCX Grains Index ETN (GRU): The fund has 46.7% wheat, 35.4% corn, 10.1% soy meal and 7.9% soybeans.  
• Market Vectors Global Agribusiness (MOO): Tracks an index of global companies primarily engaged in agriculture.
• PowerShares DB Agriculture (DBA): Tracks corn, wheat, soybean and sugar futures.
• iPath Dow Jones Agriculture (JJA): Composed of seven futures contracts, including wheat, cotton, soybean oil, coffee and sugar.

Deutsche Bank also issued a line of long/short agriculture exchange traded notes (ETNs) last week:

• DB Agriculture Double Short (AGA)
• DB Agriculture Double Long (DAG)
• DB Agriculture Short (ADZ)
• DB Agriculture Long (AGF)

Oil Prices May Get Worse; Steel and Natural Gas ETFs Are Keeping Pace

The price of oil has slipped some over the last few days, but it's projected to soar even higher - what will it mean for its exchange traded funds (ETFs)?

The reports on fuel got more dismal this morning, as many wonder just how much worse it's going to get. According to an energy report from the Canadian Imperial Bank of Commerce today, oil could hit $225 a barrel by 2012.

Cars are blamed for the continually rising prices: 90% of the demand growth in the last few years has gone to transportation. Car sales globally soared last year, growing 60% in Russia, 30% in Brazil, 20% in China. Sales were flat in Europe and dropped in the United States.

Meanwhile, the oil ETF isn't the only one performing. Steel and natural gas are nothing to turn up one's nose at, either. Gary Gordon for ETF Expert reports that funds for both of the commodities have at least kept pace with United States Oil (USO), if not leaving it in the dust.

In the last month, USO is up 18.6%. Year-to-date, it's up 25.6%. Not too shabby.

United States Natural Gas (UNG) is blowing right past oil, though: it's up 20% in the last month, and 45.2% year-to-date. Market Vectors Steel (SLX) is keeping up: it's up 17.9% in the last month and 17.6% year-to-date.

The question on everyone's minds is whether the U.S. slowdown will eventually catch up to the global markets and put the brakes on demand for these commodities. Gordon says it's possible for some commodities, but he doesn't see steel demand slowing. In China, the number of steel factories has doubled in the last five years.

Global demand for natural gas is also high, but the supplies are plentiful. That begs the question: why has the price been rising? It all traces back to the price of crude oil; it's so expensive that natural gas is one of the alternatives under consideration. It's the cleanest burning carbon-based fuel (unlike coal), and cars powered by natural gas are getting attention from major car makers such as Honda.

Do you find it daunting to focus on a single commodity? Another option is picking a fund diversified over several commodities, such as the Dow Jones Total Commodity Index ETN (DJP) or the iShares S&P GSCI Commodity-Indexed Trust (GSG), which is allocated about 67% in energy, 16% in agriculture, 7% in industrial metals, 7% in livestock, and 3% in precious metals.

Government Tax Cuts on Stocks Make China ETFs Soar

China's exchange traded funds (ETFs) are making a big rally today after the government lowered taxes on stock transactions.

The share-trading stamp tax was cut by the government from 0.1% from 0.3%, reports John Spence for Market Watch. The move is viewed as an effort to give the Chinese stock market a shot in the arm. After the cut was made, some of the Chinese ETFs shot up by as much as 6.8% midday.

China's exchange traded funds (ETFs) have had a rocky year, but could the economy have turned a corner?

Tony Sagami for Money and Markets reports that the country's gross domestic product for 2007 rose 11.9%, ahead of the 11.4% projections. It's the fastest growth in 13 years.

China definitely has some political and social obstacles to overcome: its poor environmental and human rights records, the PR disaster of the Beijing Olympic Games and riots in Tibet. But Sagami says that when it comes to the Chinese economy, things are looking up.

Retail sales rose by 20.2% in the first two months of this year. There has also been a 33.8% increase in auto sales, and demand for luxury vehicles is expected to grow between 40%-45% this year. The trade surplus grew by $41 billion in the first quarter, as well, so China isn't hurting from any U.S. slowdown yet.

Foreign investment seems to be pouring into China, as well: in the first quarter, it increased 61.3%.

Retail sales are up, foreign investment is flowing, and the Chinese trade surplus seems to be unaffected by a U.S. economic slowdown. China is actually the second largest economy when measured by purchasing power.

Sagami suggests that buying China on the dips can be a profitable move for an investor to make. We would wait until this fund crosses above its trend line (200-day moving average) before diving in.

It's been a rough few months for these funds. Will the tax rate cut help sustain today's momentum?

• iShares FTSE/Xinhua China 25 Index (FXI), down 12.9% year-to-date
• PowerShares Golden Dragon Halter USX China (PGJ), down 20.2% year-to-date
• SPDR S&P China (GXC), down 15.5% year-to-date

Renewed Cooperation Between Singapore and Malaysia Can Help ETFs

Malaysia and Singapore have been working together to benefit their economies and, in turn, their exchange traded funds (ETFs).

Carl Delfeld for ETFfolio feels investors have finally begun to appreciate that Malaysia offers attributes that are similar to its neighbor to the south, Singapore.

Malaysia has a diversified economy: 43% of its gross domestic product (GDP) is in the service sector, while agriculture is 8%. One-third of its population is under the age of 15. Economic growth last year was 6%.

Malaysia's improvements have given the country power to improve its political and economic relationship with Singapore. In the past, the two countries have had a rocky relationship. By teaming up, though, it could be a win-win situation.

The iShares MSCI Malaysia (EWM) and the iShares MSCI Singapore (EWS) are two ways to get exposure to these countries. EWM is down 5.4% year-to-date, while EWS is up 0.3%.

Singapore's fund is most heavily allocated in the service sector, at 67.5%. Another 20.5% is in information. Malaysia's fund is split between the service (49.2%) and manufacturing (44%) sectors.

 

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

Could Spreading Wealth Make China's ETFs Go 'Vroom'?

Could China's economy and exchange traded funds (ETFs) be faltering like some think? Perhaps not. One sign: sport utility vehicle sales are taking off.

Two of the fastest growing segments in the Chinese market, in fact, are luxury cars and SUVs, reports GM China's vice president for sales and marketing. Analysts are expecting auto sales growth between 15% and 20% this year, reports Joe Mcdonald for the Associated Press.

Demand for the behemoths of the road and luxury vehicles is expected to grow by 40%-45%. China's economic growth has topped 10% for five consecutive years, and a spike in real estate and stock prices has created some freshly minted billionaires looking to spend.

The Chinese don't have to worry about the price of gas, either: pump prices have been frozen, and they're among the world's lowest.

While wealth is spreading in China, the country needs to remain vigilant about inflation, Reuters reports. Prices for food and other products are rising, and consumer inflation is running near 12-year highs. Food prices alone rose 21.4% from January to March this year.

China's ETFs have lost much of their huge gains from 2007. A turnaround for this country is eagerly awaited.

• iShares FTSE/Xinhua China 25 Index (FXI), down 13.7% year-to-date
• PowerShares Golden Dragon Halter USX China (PGJ), down 22.1% year-to-date
• SPDR S&P China (GXC), down 16.7% year-to-date

South Korea's ETF Hit By Samsung Head's Troubles

Samsung's chairman is in hot water, and it's weighing on South Korea's exchange traded fund (ETF), which counts the company as a major component.

Chairman Lee Jun-hee was indicted on tax evasion and breach of trust charges, reports Jae-Soon Chang for the Associated Press. However, tycoons in South Korea are considered "indispensable," so prosecutors chose not to arrest him, saying it would cause "enormous disruptions" to Samsung's corporate management and impact the economy.

Samsung is particularly important to South Korea's economy: it employs about 250,000 people in 60 businesses, and its sales make up almost one-fifth of the country's gross domestic product.

Lee has hinted that he might step down.

iShares MSCI South Korea (EWY) is down 9.2% year-to-date. Samsung is the fund's largest component, with 15.3% of assets.

The Asian Tiger ETFs Aren't Roaring As Loud

Many Asian-country focused exchange traded funds (ETFs) are giving back their 2007 gains. Are the Asian tigers of 2007 going to become the sleeping tigers of 2008?

A standout such as iShares MSCI Singapore (EWS) has given back much of  2007 gains all during the first quarter of 2008, says Gary Gordon for ETFExpert.

iShares Xinhua China 25 Index (FXI) finished 35% off its highs last Friday, giving back 50% of its 2008 gains, within 14 days, and Gordon reminds us that a 35% loss requires a 50% gain to get back to your starting gate.

One tiger remains standing, however: The iShares MSCI Taiwan Index (EWT) is still up 14% over the same time period. It's quite a turnaround for the fund. In 2007, it gained only 3.8%. So far this year, it's up 11.5%, leaving other Asian countries in the dust.

If you believe that the Asian markets are merely in a slump and will eventually make a turnaround, Gordon suggests getting a little more diversification across Asia with funds such as iShares S&P Asia 50 Index (AIA), which invests in the top 50 companies from the leading tigers: Taiwan, Singapore, South Korea and Hong Kong. Taiwan is the only single Asian country outperforming the fund at the moment, which is down 6.2% year-to-date.

Another diversified fund is the BLDRS Asia 50 ADR Index (ADRA), which is down 9.3% year-to-date.

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

If Investment Remains Solid, Infrastructure ETFs Could Gather Strength

An exchange traded fund (ETF) can be a better proxy for a sector than a single stock. It takes the guesswork right out of investing.

Diversification is another element that is added when using ETFs instead of a single stock within a portfolio. An example is the GE (GE) stock that missed its numbers by a long shot late last week. While media has been a weak performer so far this year - PowerShares Dynamic Media (PBS) is down 10.4% year-to-date - and the financials are tough, there could be other reasons to own GE. The company, after all, wears many hats.

How about infrastructure?, asks Roger Nusbaum for Seeking Alpha. The infrastructure sector can cover a wide range of things, including roads, airports, utilities, information technology and other channels of communication. Breakdowns in some of these areas can lead to major disruptions in a country, as seen when China experienced a record snowfall this winter.

Globally, billion upon billions will be spent on infrastructure over the next decade or two. It is reasonable to assume that stocks in this sector will do well, wait until these funds move back above their trend lines before diving in. Countries and regions such as South Africa, Latin America and China are making infrastructure improvements a particular focus in the coming years.

Build up your portfolio's inner strength with:

• iShares S&P Global Infrastructure Index (IGF), year-to-date down 10.1%
• SPDR FTSE/Macquarie Global Infrastructure 100 (GII), year-to-date down 5.8%

International Markets, ETFs Catching U.S. Housing Disease

The U.S. housing crisis is taking its toll on other countries, and it could hit their exchange traded funds (ETFs) if it persists for long.

Real estate prices are plummeting in the Irish countryside, the Spanish coast and even parts of Northern India, reports Mark Landler for the New York Times. Some property analysts abroad are expressing fear of a wholesale collapse. Western European once were buying investment properties in places such as Warsaw and Estonia - but no longer. In India, prices have dropped 20% in the last year.

The International Monetary Fund cut its global economic growth forecast last Wednesday, and said the downturn could carry through to 2009.

The SPDR DJ Wilshire International Real Estate (RWX) could feel the pinch if the crisis continues to spread. Year-to-date, the fund is down 7.8%. Some single-country funds may also experience some bruising:

• The New Ireland Fund (IRL), down 2.9% year-to-date
• WisdomTree India Earnings (EPI), down 13.6% since Feb. 26 inception
• PowerShares India (PIN), down 6.7% since March 5 inception
• iShares MSCI Spain (EWP), down 3.1% year-to-date

The troubles stateside aren't getting much better. J.W. Elphinstone for the Associated Press reports that home foreclosures jumped 57% in March. A rash of adjustable-rate loans are also scheduled to reset in May and June, as well, meaning yet more foreclosures are likely in the third and fourth quarters.

How will real estate ETFs react in the long run?:

• iShares Dow Jones US Real Estate (IYR), down 0.3% year-to-date
• iShares Cohen & Steers Realty Majors (ICF), up 2.8% year-to-date
• DJ Wilshire REIT (RWR), up 2.4% year-to-date

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

Just In Time for Warm Weather, Claymore Launches Solar ETF

While there are several clean energy exchange traded funds (ETFs) out there, none of them have focused solely on one aspect of the sector until now.

Claymore this morning launched the Claymore/MAC Global Solar Energy Index (TAN) on the NYSE Arca. Claymore President Christian Magoon told us the potential for growth in the solar industry is huge. Currently, it accounts for less than 1% of global electricity.

ETNs Elbowing Their Way Into Competition With ETFs

Exchange traded funds (ETFs) could have another competitor if things keep going the way they are: exchange traded notes (ETNs).

The industry was once small, but has slowly been picking up steam. The first ETNs launched in 2006, by Barclays Bank PLC of London, says David Hoffman for Investment News.

They're so attractive primarily because they give investors access to hard-to-reach markets. It also gives investors that access while they wait for an ETF equivalent. For example, India was covered by the iPath MSCI India Index ETN (INP) for a couple years before two India ETFs were launched earlier this year: the WisdomTree India Earnings (EPI) and the PowerShares India (PIN).

Of course, that doesn't mean that just because there's an ETN there will automatically be an ETF.

While they might share similar names and an acronym that differs by only one letter, ETNs aren't exactly like ETFs. They are backed by the issuer of the ETN, meaning that if the issuer goes under, the ETN does, too.

ETNs also receive slightly different tax treatment that's currently the subject of much debate.  ETNs that cover foreign currency