A new “smart grid” industry is coming about and First Trust/Clean Edge Smart Grid ETF (NasdaqGM: GRID) aims to be the first to target the emerging sector, according to Maureen Brody for Ignites. GRID seeks to reflect the NASDAQ OMX Clean Edge Smart Grid Infrastructure Index, which includes companies engaged in all components of the smart grid. (More plays for Obama’s energy plan).

The fund will have a higher weighting, around 80%, for companies that are smart grid “pure plays” and a lower weighting, about 20%, for big companies that only have a smaller vested interest in the smart grid enterprise.

The ETF is made up of 29 companies. Companies are required to have a minimum float-adjusted market capitalization of $100 million and a three-month average daily trading volume of $500K.

The top 10 holdings include: SMA Solar Technology AG, 11.6%; Schneider Electric S.A., 9.0%; NGK Insulators, 7.4%; ITC Holdings Corp. (NYSE: ITC), 7.3%; Quanta Services Inc. (NYSE: PWR), 7.2%; Itron Inc. (NasdaqGS: ITRI), 4.3%; Echelon Corporation (NasdaqGM: ELON), 3.9%; EnerNOC, Inc. (NasdaqGM: ENOC), 3.8%; American Superconductor Corporation (NasdaqGS: AMSC), 3.6%; Power-One Inc. (NasdaqGM: PWER), 3.6%. (“Smart Grid” plans power up tech sector).

For more information on utilities, visit our utilities category. The evolution of the smart grid can also be played with other utility ETFs, including:

• iShares Dow Jones U.S. Utilities (NYSEArca: IDU): up 4.2% year-to-date

• Vanguard Utilities ETF (NYSEArca: VPU): up 3.4% year-to-date

• iShares S&P Global Utilities (JXI): up 2.0% year-to-date

Max Chen contributed to this article.

The International Monetary Fund (IMF) stated that Poland’s “limited reliance on exports, flexible exchange rate and contained external and internal balances” allowed the country to avoid a recession this year, reports Meena Thiruvengadam for The Wall Street Journal. The IMF estimated that Poland’s economy may expand 1.1% this year and 1.9% in 2010.

The Organization for Economic Cooperation and Development (OECD) expects the Polish economy to grow 1.4% this year and 2.5% in 2010, according to Warsaw Business Journal. The economy was aided by a sound banking sector, unleveraged private sector, tax cuts as well as  other fiscal measures and infrastructure investments. But activity will remain below potential and the government deficit will greatly distend, says the OECD.

Van Eck announced its intent to launch a Market Vectors Poland ETF (PLND), which is expected to come out later this month, writes Don Dion for TheStreet. The fund will focus on small- and mid-cap companies, with an index made up of stocks that have a market cap of at least $150 million and daily trading averages of a minimum of $1 million. PLND’s most heavily weighted sectors are reported to have allocations of financials at 40%, energy at 14% and industrials at 11% within the fund’s portfolio.

Country-specific ETFs are useful in diversifying an international portfolio, or tracking short-term trends in international economies that would otherwise not be available to an average investor. However, investors should note that narrowly themed and emerging market ETFs have greater volatility.

While there currently isn’t a Poland single-country ETF, there are a selection of emerging market/frontier market ETFs that do have Poland as a large component. These types of region-specific ETFs also have the added benefit of spreading risk between the economic outcomes of countries included in the ETFs. (How to play Poland’s handsome recovery).

For more information on Poland, visit our Poland category.

• Claymore/BNY Mellon Frontier Markets (NYSEArca: FRN): up 55.7% year-to-date; Poland is 15.1%

• SPDR S&P Emerging Europe (NYSEArca: GUR): up 79.1% year-to-date; Poland is 12.2%

• iShares Emerging Markets Eastern Europe Index Fund (NYSEArca: ESR): up 14.7% since inception; Poland is 12.9%

Max Chen contributed to this article.

The latest ETF from Index IQ is another passageway for investors to take an alternative route to diversification within their portfolios. The ETF MNA is designed to give investors exposure to global corporate merger & acquisition activity, which is rapidly increasing. (More ways to play mergers and acquisitions).

Index IQ CEO Adam Patti says that, “It’s pretty well recognized that M&A activity has increased significantly this year and is expected to continue pretty rapidly.” He notes that a lot of non-financial companies have a lot of cash on their books. That, combined with a low-interest rate environment, could spark even more activity.

“Depending on what sector you’re looking at,” Patti says, “there are a lot of bargains out there.”

MNA seeks to provide capital appreciation by investing in global companies for which there has been a public announcement of a takeover by an acquirer, a strategy generally known as “merger arbitrage.” This strategy generally seeks to take advantage of any price differential between the current trading price of a stock and the price of that stock at the time the deal is completed.

The product will rebalance monthly, and it’s a 100% rules-based ETF.

For more stories about New ETFs, visit our New ETFs category.

The U.S. 12 Month Natural Gas Fund (NYSEArca: UNL) has gotten the green light from regulators to issue about 30 million shares, which will purchase natural gas futures for delivery over the next 12 months. Asjylyn Loder for Bloomberg reports that it will sell the near-month contract as it approaches expiration and replace it with a contract for delivery in 12 months.

The ETF comes from U.S. Commodity Funds LLC, which also manages the popular $3.5-billion U.S. Natural Gas Fund (NYSEArca: UNG) and the $1.96-billion U.S. Oil Fund (NYSEArca: USO). (Natural gas ETF shifts strategy).

UNG differs from UNL in that UNG buys the near-month contract, then sells it each month as it nears expiration and buys the next month.

In terms of natural gas prices and futures, what’s the difference between UNG and UNL? UNL can help mitigate some of the impact of contango, which is when the front-month contract is higher priced than the contracts further out. By using the 12-month approach, the impact of contango is, on average, about two-thirds less than it would be in a fund that simply uses a front-month approach.

Which fund an investor chooses depends on what’s trying to be accomplished. When the markets are in contango, it’s no guarantee that a 12-month fund would do better. On the other hand, it could be beneficial for investors  looking to lessen the impact contango can have. On the other hand, if someone is trading frequently and heavily, there might not be as much concern about contango. As the energy markets shift, it could be more advantageous to be in one fund over another – but it’s no guarantee in the volatile energy space. Many have learned that a single hurricane can change conditions rapidly.

Natural gas futures were wavering today. Below-normal temperatures in the Midwest and Northeast are anticipated to boost natural gas demand, but there’s only been modest growth in industrial production, reports Christine Buurma for Dow Jones Newswires. Until today, many traders had been betting that natural gas prices would fall in the coming months.

For more stories about natural gas, visit our natural gas category.

PIMCO Enhanced Short Maturity Strategy Fund (NYSEArca: MINT) is an actively managed ETF that will primarily invest in short duration investment-grade debt securities.

The portfolio’s average duration varies, depending on PIMCO’s economic forecasts and active investment process decisions. Normally, though, maturities will not exceed one year. Holdings will be disclosed daily. The expense ratio will be 0.35%.

The fund’s portfolio manager is Jerome Schneider, an executive vice president in PIMCO’s Newport Beach, Calif., offices. He joined PIMCO in 2008 and has 14 years of investment experience.

Read the prospectus here.

Invesco PowerShares’s ETF, PowerShares Build America Bonds Portfolio Fund (NYSEArca: BAB), will be the first to invest in taxable municipal bonds issued by the government’s American Recovery and Reinvestment Act of 2009. BAB will have a net expense ratio 0.28%. (PowerShares’s Build America ETF).

The Act will establish a Direct Payment Bond, which BAB will invest in. The federal government will give the bond issuer a direct payment of 35% of the interest rate on the bond, allowing municipalities to compete with the corporate bond markets. The bonds could entice nontaxable investors like pension plans and attract investors who are looking for corporate bond-style interest rates without the risk of defaults, writes Cinthia Murphy for IndexUniverse. (Why are muni bonds appealing?)

BAB will seek to reflect the BofA Merrill Lynch Build America Bond Index, which includes investment-grade bonds with a minimum one-year remaining term to maturity, fixed coupon schedule and a direct pay federal subsidy. BAB uses an optimization strategy that holds a sample of the index’s 1,800 issues.

Ben Fulton, executive vice president of global product development with Invesco PowerShares, believes BAB will be attractive because municipalities are looking for capital to invest in the country’s vast infrastructure projects.

The Build America Bond program is slated to mature at the end of 2010, Fulton notes, but there’s been discussion about the possibility of extending it. The prospectus is written to reflect the impact any potential changes to the program may have on the fund, whether it’s expanded or ended. Fulton says that nearly $50 billion in Build America Bonds has been issued to date, and estimates are it could reach close to $100 billion by the end of next year.

“BAB bonds have a life of their own. First they were viewed as tools for the government’s stimulus plan only. Now they are also marketed as a fixed income investment focused on rebuilding USA’s aging infrastructure. We believe this is a product that will appeal to the masses compared to only the highest tax bracket focus of tax free municipal ETFs,” Fulton says.

For more information on municipal bonds, visit our municipal bonds category.

Max Chen contributed to this article.

Schwab, based in San Francisco, announced that not only were they entering into the ETF industry, they are offering their funds commission-free. (All about Schwab’s new ETFs). Brooke Southall of RIA Biz spoke with the broker, us and others to suss out what their entry means for the business. Some of the highlights include:

• Although a late entrant into the ETF game, Schwab is no stranger to them. 11% of ETF assets in the United States are held through Schwab; it holds 22% of the ETF assets held by retail investors.
• Schwab’s ETF move may just be a warm-up act for a much bigger play in the market. The company pioneered the no-transaction-fee mutual fund supermarket, OneSource, and it’s conceivable that it could pull off a similar innovation with ETFs.
• Chuck himself loves ETFs and he owns them. Schwab’s foray into ETFs will benefit from the total buy-in of its chairman and founder, Charles “Chuck” Schwab.
• 43% of RIAs are planning on foraying into ETFs this year. It’s a huge number of relationships still stuck in conventional mutual fund land.
• Advisors still have a lot of cash on the sidelines in the wake of the economic downturn. The ETF program may be Schwab’s way to encourage advisors to bring some of that cash back into the market.

For more stories about new ETFs, visit our new ETFs category.

Investors appetite for socially responsible funds may be satisfied with the advent of a genocide-free ETF. The fund would rely on a third-party index provider to help weed out companies around the world that are strongly connected with genocide, reports Svea Herbst-Bayliss for Reuters.

This ETF would join a lineup of other iShares ETFs that deal with socially-responsible investment themes. No other details about the fund’s portfolio were provided. (Other socially responsible ETFs). As people become more aware of human rights abuses around the worlds, funds that screen out such companies could gain traction.

Vanguard is working on an ETF offering overhaul and is currently screening its 157 funds to spot companies that may be involved in egregious patterns of human rights abuses that might warrant divestment.

A special interest group known as Investors Against Genocide has been pushing Vanguard and Fidelity Investments to exit positions in companies such as PetroChina Co, which has strong links to Sudan. (Read about other ETFs themes that are socially responsible).

For more stories about New ETFs, visit our socially responsible category.

Emerging Global Shares has filed to launch a group of ETFs aimed squarely at the BRIC economies, according to Cinthia Murphy for Index Universe:

Emerging Global Shares INDXX India Infrastructure Index Fund

• Emerging Global Shares INDXX India Infrastructure Index Fund
• Emerging Global Shares INDXX China Infrastructure Index Fund
• Emerging Global Shares INDXX Brazil Infrastructure Index Fund
• Emerging Global Shares INDXX India Mid Cap Index Fund
• Emerging Global Shares INDXX China Mid Cap Index Fund
• Emerging Global Shares INDXX Brazil Mid Cap Index Fund
• Emerging Global Shares INDXX Growing Asia Large Cap Index Fund

Every single company within these funds will have no more than a 10% weighting. Net operating expenses are pegged at 0.85% for each fund. ALPS Advisors is the advisor for each fund, with Emerging Global Advisors LLC the subadvisor. (Read about the widening wealth shift between the United States and emerging markets).

Each fund will invest in securities, ADRs and GDRs of various companies to replicate their respective indexes. A fully replicating strategy will be used to assemble the funds, however, representative sampling may be used, if needed. (The ultimate guide to the BRIC ETFs). You can read the prospectus for the funds here.

The BRIC economies have been standouts this year as the world recovers from the global financial crisis, gaining about 110% since the market’s low. Russia has been one of the strongest, gaining 137% year-to-date. Brazil has gained 117%, China is up about 60% and India has added about 90%.

For more stories about BRIC ETFs, visit our BRIC category.

One of the most well-known commodity ETF providers, U.S. Commodity Funds, especially felt the wrath of the CFTC when two of their commonly traded funds, United States Natural Gas (NYSEArca: UNG) and United States Oil (NYSEArca: USO) came under the microscope.  The primary reason these funds were looked at was concern that the growing popularity of futures-backed commodity ETFs were causing the volatility in oil and gas prices, leading to a huge surge in prices last year, states Max Frumes of Medill Reports. (How to play commodity ETFs).

After overcoming CFTC regulators, the ETF provider has further expanded its offerings by introducing the United States Brent Oil Fund LP, whose prospectus was filed Sept. 18, and the already-approved United States 12 Month Natural Gas Fund LP.

The two new funds offered by U.S. Commodity Funds are the United States Brent Oil Fund LP, whose prospectus was filed Sept. 18, and the already-approved United States 12 Month Natural Gas Fund LP.

The reason behind this expansion is simply that commodity ETFs have enormous appeal:

• ETFs have simplified commodities investing for the average Joe. Now you don’t have to be a financial giant to capitalize on commodity trends.
• As the U.S. economy still continues to show signs of weakness, inflationary concerns loom over investors’ heads. Commodities are one way to hedge rising prices. (Other ways to hedge against inflation).
• The supply vs. demand picture is favorable. Emerging markets continue to develop and prosper. As they continue to do so, demand for commodities will increase. This could potentially lead to higher prices.
• The U.S. dollar is weak right now. This makes commodities priced in dollars cheaper for overseas investors. (Why commodities could go higher).

For more stories on commodities ETFs, visit our commodities category.

Kevin Grewal contributed to this article.