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Listen in as Tom Lydon joins in on a discussion about where exchange traded funds (ETFs) are headed.
Also featured on the panel are PowerShares CEO Bruce Bond and author/CEO of Portfolio Solutions Richard Ferri.
You can either click above to listen now or save it to your iPod to listen to on your afternoon jog!
Tom Lydon appeared on CNBC's "ETF Tracker" segment of Closing Bell earlier this afternoon to discuss how different ETFs may become beneficiaries of new presidential policy with the inauguration of a new president in 2009. Video of Tom's segment appears below:
Mutual funds don't seem to be stepping up to the challenge that a global economy presents, possibly creating a wide-open door for the exchange traded fund (ETF) industry.
The power of global business has arrived, with less anchored in the mindset of the nation-state and more concentrated in private enterprise. ETFs offer greater flexibility in accessing these global opportunities at a generally lower cost than mutual funds, reports Tom Pochari for World Affairs Monthly.
Have a listen to my discussion with Tom to hear about the future of the investment business as it relates to ETFs.
Happy Anniversary to the equal-weight exchange traded fund (ETF) strategy, which marked the beginning five years ago.
The Rydex S&P Equal Weight (RSP) started the trend on May 2, 2003, and has since opened the opportunity for ETFs to track an index measuring company weightings by factors other than market capitalization. Its five-year annualized returns is 13.4%.
David Hoffman of Investment News reports that at the end of 2007, there were at least 67 ETFs that tracked alternative indexes, by Morningstar's count. The five-year anniversary of the equally weighted ETF from Rydex opens debate, where some claim this is a form of active management. Rydex is still working on an equal-weight ETF lineup of 10 funds.
Another fund of the equal weight strategy is the First Trust Nasdaq 100 Equal Weight Index (QQEW).
Since the advent of the equal weighting, many advisors are looking at their allocations and coming to the conclusion that it is prudent to use equal-weighted ETFs. Some advisors say it's merely an attempt at building a better mousetrap.
For most advisors, equal-weight ETFs would be an excellent core holding.
Read the disclosure, as Tom Lydon is a board member of Rydex Funds.
Tom Lydon appeared on Neil Cavuto's show on Fox Business earlier this afternoon to discuss rising food prices. Video of Tom's segment appears below:
Market turmoil is leading to more and more investors turning to agriculture ETFs and exchange traded notes (ETNs), reports Hannah Glover for Ignites.
Especially in places such as China and India, a rising middle class is using that extra cash to splurge on more food, cars and other consumer goods. But many are wondering, too, if agriculture is going to be the next big bubble to burst.
Bubble or not, you can protect yourself on the downside by watching the trend lines. When your holding drops below its 200-day moving average or 8% off its high, it's time to let it go.
Tom Lydon appeared on CNBC's "ETF Tracker" segment of Closing Bell earlier today to discuss how near-record oil prices has been making oil ETFs look pretty attractive lately. Video of Tom's segment appears below:
Tom Lydon appeared on Fox Business Network earlier today with anchor Cheryl Casone. Tom discussed hot ETFs in Asia and Latin America as well as poorly performing ETFs in the retail sector. Video of Tom's segment appears below:
Bear Stearns Current Yield Fund (YYY), the first actively managed exchange traded fund (ETF) to hit the market, began trading Tuesday.
If JP Morgan Chase (JPM) takes over Bear Stearns (BSC), the company would enter the $569 billion ETF industry via the Bear Stearns fund, explains Marc Hogan for Ignites. The fund would be re-branded with the J.P. Morgan name, in fact.
Now some are wondering whether J.P. Morgan will jump into the ETF market with both feet once it has its toe firmly in the water. A spokeswoman for the firm says they don't have any plans to launch any and with details of the Bear Stearns takeover still being ironed out, it's been relegated to backburner status. Those big fish are taking up the bulk of the frying pan right now.
No doubt other Wall Street firms are watching the ETF market, and the mutual fund industry seems to be headed in the ETF direction, too.
For now, though, the question is whether the Current Yield Fund will survive at J.P. Morgan. That needs to be answered before anyone can think about adding even more funds into the fold.
Tom Lydon was a guest on CNBC's "Smart Money" segment of Power Lunch earlier today. He spoke with show host Sue Herera about agriculture ETFs. Video of Tom's segment can be seen below:
Tom Lydon was a guest on Fox Business Network earlier today and discussed some of the basics of exchange traded funds one-on-one with host Dagen McDowell. Video of Tom's segment appears below:
Tom Lydon appeared on CNBC's "ETF Tracker" segment last Thursday to discuss the Taiwan economy. While global markets around the world have been declining recently, there is one area -- Taiwan -- which has been showing positive numbers year-to-date. Video from Tom's segment appears below:
Tom Lydon appeared on CNBC's "ETF Tracker" segment last Tuesday and discussed how the falling USD is opening opportunities for individual investors to buy foreign currencies as a way to hedge against low yields in money market funds, bonds, and CDs. Video from Tom's segment appears below:
If you're thinking about retirement, whether it's in two years, 12 years, 22 years or beyond, there's an exchange traded fund (ETF) for you.
XShares Advisors launched a series of target date ETFs that definitely have a place in investors' retirement plans. But they aren't just for retirement, reports Billy Fisher for The Street. Michael Case Smith, director of Index and Allocation for Zacks Investment Research, says the funds are more than that: they emphasize goal-based planning, too.
The ETFs provide a glide-path investment approach that adjusts an allocation mix between equity and fixed-income investments based upon one's target date. The target audience for this kind of fund stretches far beyond the retirement set.
The line could soon face some competition from State Street Global Advisors, which filed with the Securities and Exchange Commission (SEC) for its own line of funds.
The current offerings from XShares include:
In a down market, short exchange traded funds (ETFs) gain popularity, but they need to be used with caution and education.
ProShares UltraShort QQQ (QID) is one of the more popular ETFs of this kind and it tracks the Nasdaq 100, while returning twice its inverse performance. The ETF has $1 billion in assets, and returned 38.8% year-to-date, but it is against a -5.1% return over the past year, says Jesse Emspak for Investor's Business Daily. It's benefited from the decline of the Nasdaq, which is 2.3% below its Jan. 22 low.
Among the strongest of performers is the ProShares UltraShort Semiconductor (SSG) which has given investors 39.5% year-to-date, with a one-year return of 10.4%. The semiconductor industry has been ailing so far this year.
Investors should consider two things when considering short ETFs:
1) Markets tend to go up over the long run, so shorting ETFs are not a long-term investment.
2) There is a strict limit on the gain any short can make. The value of the index should not go below zero.
UltraShorts can make a bad day in a particular sector - this morning's financials, for example - a good one for investors who hold short funds, says Will Swarts for Smart Money. ProShares says their Ultra funds family isn't targeted to the "mom and pop investors."
But for sophisticated investors, ProShares Chief Executive Michael Sapir says they can be a great way to capitalize.
Making sector calls can work, but just be sure you have your exit strategy in place before you get involved. We watch the 200-day moving average and put an 8% stop-loss on each ETF.
Yes, investors are flocking to gold exchange traded funds (ETFs) as the dollar weakens.
Case in point is streetTRACKS Gold Shares (GLD): after gold surged to a record $992 an ounce earlier this week, the fund traded nearly 11.5 million shares, reports Joanne Von Alroth for Investor's Business Daily. No one is particularly surprised, though.
What is surprising is the performance of white metals.
Platinum, in particular, has continually hit record highs. On Tuesday, it rose to $2,275 an ounce, and is up 50% year over year. The supply has also taken a hit from the continuing power supply problems in South Africa, which are interrupting mining activity. In addition to that, there has been a platinum deficit since 1999. Mining gets about 7 million ounces of platinum a year.
Why, with all of this shortage and growing investor demand, is there no platinum ETF available in the United States? We've been getting a lot of questions from our readers, so we put the question to Kevin Rich, CEO of DB Commodity Services.
"[Platinum] is not liquid enough to support an ETF," is the simple answer. "There are not enough players transacting it."
The last thing anyone would want, Rich says, is for a fund to take money in but find that it couldn't buy the underlying asset. Platinum is scarce enough that it's possible for an investment product to take away the supply. "When you bring in an ETF, you make sure the supply and demand of the commodity are still driving the market," Rich says.
The Commodity Futures Trading Commission (CFTC) is careful to make sure that trading activity doesn't lead to a situation in which investors corner the market.
The London Stock Exchange lists a platinum ETF from ETF Securities (PHPT), and its existence is likely just a matter of different rules and regulations. "They've done things that wouldn't be as easy to do here in the U.S. from a regulatory perspective," Rich says.
The largest silver ETF, iShares Silver Trust (SLV), is up 33.7% year-to-date.
The metal could be benefiting from its versatility. Not only is it used in jewelry and some is held for profit, but it has a number of industrial applications. It's the best conductor of both heat and electricity. It's used in batteries, conductors, fuses, contacts and a water purifier.
You'd think there would be a ton of the stuff lying around, but it isn't the case: the price bottomed in 1980, much of the existing stockpile was melted down and mining slowed down.
Metals, like any commodity, are volatile. They're doing great now, but be wary of sudden dips and watch the trends closely so you know when it's time to jump ship.
Exchange traded funds (ETFs) based on fundamental indexes are proliferating, but they are having a difficult time garnering assets.
Assets among 69 ETFs based on fundamental indexes totaled just over $7 billion at the end of 2007, the same year most were launched, according to Morningstar. Among all 629 ETFs, assets total more than $600 billion, according to the Investment Company Institute.
Fundamental indexes are those that use some measure other than market capitalization to determine company weightings. The study conducted by Morningstar focused in on three fundamental indexers: PowerShares, Rydex and WisdomTree, reports David Hoffman for Investment News.
Considering that fundamental ETFs haven't been around for long - WisdomTree, the largest such provider launched its first fundamentally based ETF last April - investor reluctance is natural. We have yet to see proof from a performance standpoint that fundamental indexing performs.
The recent triple-digit crude oil prices have impacted a certain type of exchange traded fund (ETF) and has pleased many investors.
Rob Wherry for Smart Money explains that a new breed of investor is buying ETFs that follow the price movements of crude oil, or ones that own firms that take it out of the ground and sell it at the corner gas station. United States Oil (USO) is up 53.6% in the past year and deals in oil futures.
One catalyst for price jumps is that we're in the middle of a commodities bull run. It's elementary supply and demand.
But bull markets always come to an end, and no one can predict when. Commodities are extremely volatile, prone to uncontrollable forces such as factory accidents, geopolitical upheaval and good old Mother Nature.
You need to keep your eye on these kinds of investments. And you don't want to get caught up in the buying once it's already run.
In the wake of Claymore's closing of 11 exchange traded funds (ETFs), many industry experts believe that's not the last of it.
Morningstar believes that up to 23 funds could be shut down, reports David Hoffman for InvestmentNews. Is this a warning sign?
Sonya Morris of Morningstar calls this a "shake-out" within the ETF industry. Because of the high volume of ETFs created and launched last year, and the fact that some are tied to the same indexes and niches, liquidations are bound to happen.
A good rule is if there is an ETF that has been out for a year or more and has less than $10 million in assets, it goes on the watch list, according to Matthew Hougan. Eleanor Laise for the Wall Street Journal says that this is a good lesson for investors to keep an eye on the staying power of certain ETFs.
Liquidations have a negative tax impact so this may give investors a cold shoulder toward ETFs, however, these types of closings are not unheard of. They happen in the mutual fund industry as well, and it is just part of the process.
If an ETF liquidation occurs, investors shouldn't worry too much. How much pain is there really? Especially if most of the assets are seed money from specialist firms.
Tom Lydon appeared on CNBC's "ETF Tracker" segment of Closing Bell yesterday to discuss the surge in demand for silver. Below is a video of Tom's appearance:
It is hard to determine what moves a broad group of stock so much that an exchange traded fund (ETF) will move sharply, but one factor could be that the major holdings are concentrated. This can lead to volatility.
Emerging market and country-specific funds are particularly prone to that correlated effect. iShares MSCI Brazil Index (EWZ) is an example, as just in the last 24 hours there have been multiple things going on in Brazil:
Will Swarts for SmartMoney reports that while ETFs are great vehicles for short-term traders, that doesn't necessarily make EWZ efficient for smaller-scale investors. Small investors shouldn't sweat the day-to-day movement so much.
By watching the 200-day moving average and seeing how an ETF is performing relative to that range, it's easy to set up stop-loss orders and avoid any sort of sudden collapse, which is a worry for emerging markets investors.
You have to take a longer view with an ETF as an individual investor. You're basically buying an index and that's a very easy way to get some diversification.
Brazil is hitting all the sweet spots right now, but that's not going to happen all the time. Emerging markets have had a great run and the growth in these regions will continue.
Latin America, overall, has been showing nice performance since Jan. 22:
Latin America Discovery Fund (LDF), up 13.8%
iShares S&P Latin America 40 Index (ILF), up 12.1%
iShares MSCI Mexico Index (EWW), up 10.5%
Tom Lydon was featured on CNBC's "ETF Tracker" segment of Closing Bell earlier this afternoon, where he discussed gaming-related ETFs and the Sin Index.
Competitive yields are suddenly giving municipal bond exchange traded funds (ETFs) a new level of attractiveness to investors.
Muni bond ETFs are the new kids on the block; the first ones didn't appear until last September.
On Feb. 1, the Market Vectors Lehman Brothers AMT-Free Intermediate Municipal Index (ITM) was yielding 3.49%. It targets the 6- to 16-year part of the yield curve, reports David Hoffman for Investment News. Another bonus: the yield paid out by munis is free from federal taxation, making their effective income greater than the taxable yield offered right now by Treasury bonds.
Other comparable muni ETFs tell a similar story: the PowerShares Insured National Muni Bond (PZA) had a yield of 4.2% yield, with a tax equivalent yield of 6.46%.The iShares S&P National Municipal Bond Fund (MUB) had a yield of 3.44%, but the tax equivalent yield was 5.07%. The SPDR Lehman Municipal Bond ETF (TFI) yielded 3.34%, with a tax equivalent of 5.14%.
James Colby, Van Eck's senior municipal strategist, says muni bond ETFs are a good option for those investors uncertain about what's going to happen in the Treasury markets. I don't see anything wrong with this strategy, and the municipal bond ETF environment appears relatively safe.
There's always risk, though, including with these types of bonds. That's because the governments behind them pay companies to insure them so that ratings agencies will give them a better rating. However, these companies are at risk of defaulting because they also insured subprime mortgage-backed securities and they're not as in sound financial shape as investors previously believed.
As a result, ratings agencies have started to downgrade bond insurers. At least one agency lost its AAA rating, reports Martin Z. Braun for Bloomberg. The default rate on municipal bonds in 0.1%, but Moody's Investors Service says state and local government debt is still tainted. The threat of more downgrades is something to watch out for.
Tom Lydon was on Fox Business Network's Opening Bell this morning and discussed silver ETFs, agriculture ETFs, and the advantages of ETFs versus mutual funds with hosts Connell McShane, Ray Hennessey, and Ashley Webster. Below is video from Tom's morning segment:
Tom Lydon appeared this morning on CNBC with Matt Nesto to talk about the top-performing exchange traded funds (ETFs) of the year so far. Click here to view the video.
One area of the entertainment industry that doesn't appear to be suffering in the wake of the writer's strike and the otherwise tough economic climate is gaming, and the exchange traded fund (ETF) industry is launching funds to cover the sector.
Murray Coleman for Index Universe breaks down the new Market Vectors Gaming (BJK), launched despite poor performance from two rivals: the PowerShares Dynamic Leisure & Entertainment (PEJ) and the FocusShares ISE SINdex (PUF).
Las Vegas remains a draw. The Super Bowl is coming up, and Sin City is a major destination for conventions. So far, there isn't a whole lot of evidence that the recent correction has put a hit on Vegas. For exposure to casinos, BJK is the purest play on the sector.
Tom Lydon appeared on CNBC's Squawk Box this morning to discuss ETFs with host Becky Quick. A video of this morning's segment with Tom is below:
As stocks and exchange traded funds (ETFs) tumbled on Wall Street on Tuesday, the phone calls began in Orange County financial managers' offices. The question on everyone's lips was, "Now what?"
Mary Ann Milbourne for OC Register polled Orange County financial advisors and got the scoop.
In summary, if you sell now, you may be getting out at the bottom, but it could get worse. Take a piece off the table, especially in your more volatile positions. Global Trends Investments (our management company) has had a large cash position since early December as most major market indicators and their corresponding ETFs have hit their sell points.
Setting stop-loss points for equity positions, either 8% off the recent high or if the holding declines below its 200-day moving average. Currently, this puts most funds in a sell mode. In an effort to not sell at the bottom, consider selling one-third of equity holdings and buy when the stock goes back up above its 200-day moving average.
Not only will this help emotionally, it does something to help avoid a larger impact if the markets continue to decline.
But what if you missed the 8% drop, and you're down much further than that? The question was posed to us by a reader this weekend in response to this post.
Missing the sell point creates the conundrum above. That's when I recommend the following:
A new listing for an actively managed exchange traded fund (ETF) was filed last week, making 2008 the year investors may get to invest in one. AdvisorShares Investments filed with the Securities and Exchange Commission (SEC) for an two actively managed ETFs: a sector allocation ETF and a country allocation ETF, reports David Hoffman for InvestmentNews.
We are getting much closer to an actively managed ETF. Where index-based ETFs don't necessarily need to have a track record because investors can just look at the record of the underlying index, actively managed ETFs will have to prove that they can add value. Some industry experts thin the actively managed ETF will be a harder sell than the index-based funds that are already trading.
Exchange traded funds (ETFs) are becoming more popular and as this happens, they are becoming more complex.
The line between the 15-year old industry and mutual funds is blurring as providers are jockeying to register the first truly actively managed ETF, says Stan Choe for the Associated Press. Such ETFs may beat their benchmarks, but with higher expenses - like a mutual fund. Another problem facing providers is the update of holdings. Mutual funds update quarterly, and some ETF providers are willing to disclose these daily, however, another fund manager can mimic a funds moves this way.
When actively managed ETFs hit the market, they're going to hit with a great big thud. Most investors look to ETFs to simply track a market or sector, and they don't want a manager doing their research for them.
If they're smartly played, country-specific exchange traded funds (ETFs) can deliver rewards.
Country-specific ETFs, such as iShares Austria (EWO), give investors a great way to take advantage of growth in regions such as Eastern Europe. Two years ago, we made a small bet on EWO because we liked the exposure to Austria as well as the fast-growing emerging markets elsewhere in the area. We knew this ETF was a gamble because of its highly concentrated two-dozen stocks, making it susceptible to price swings. We watched the ETF jump 28% before selling it in 2006.
After walking through the streets of cities such as Prague with my family last Summer, I took notice of bank branches filled with customers and the numerous ads for cell phones, many of which were offerings from companies in EWO's portfolio.
Advisors are using these country-specific ETFs in a variety of ways, reports Rob Wherry for SmartMoney, from a substitute for individual stock picking to getting boosted returns away from a generic, broad-based ETF. Such strategies can hold the hopes of big returns but they are also carrying different levels of risk, so be sure to do your research.
Virginia Zart was on Opening Bell on Fox Business Channel earlier this morning to discuss ETFs. Below is video of the segment featuring Virginia.
Bright and early this morning, Tom Lydon appeared on CNBC to discuss the five hottest exchange traded funds (ETFs). Have a look at the video and share your thoughts!
Tom Lydon appeared on CNBC's ETF Tracker segment this afternoon and discussed President Bush's subprime rate freeze plan and what it could mean for ETFs and the economy in the long run. Two large financial ETF plays include ProShares Ultra Financials (UYG) and Financial Select Sector SPDR (XLF). Video of Tom's segment appears below:
So many exchange traded funds (ETFs), so little time. The ETF market is ripe with choices, but for many the choices are overwhelming. The advent of a flooded market also brings the availability of a small group of web sites with screening tools and educational resources, for investors, reports Lawrence Carrel for TheStreet.com.
Carrel lists some sites he found helpful and ETF Trends made the list. Others include:
Financial blogging is catching more eyeballs and we're happy to be a part of it. Mike Hogan reported for Barron's from the BlogWorld Expo about the growing popularity in blogging and how a few financial blogs are gaining attention.
In addition to ETF Trends, "The Best of Financial Bloggery" included:
Our site traffic has increased nicely in 2007 and we plan to increase news coverage and add portfolios and tools in 2008. Thank you for your continued support.
Tom Lydon appeared on CNBC's weekly "ETF Tracker" segment of Closing Bell yesterday and discussed German, Malaysian, and Austrian single-country ETFs with Melissa Francis. Video of Tom's segment appears below:
Tom Lydon appeared on CNBC's weekly "ETF Tracker" segment of Closing Bell earlier today and discussed BRIC ETFs with Melissa Francis. Video of the segment appears below:
Is there opportunity in housing exchange traded funds (ETFs) in the current market? After reading our post in August about housing ETFs falling on home sales news, Selena Maranjian for The Motley Fool went looking to see if it all spells trouble. Maranjian uses some of our points to illustrate how in the midst of a downswing in the housing market there are things to keep in mind:
As we mentioned in our post, SPDR S&P Homebuilders (XHB) has been suffering from the lower home sales. It is still down 40% year-to-date, although it had a good day on Friday.
Exchange traded funds (ETFs) can be more like a specialty, organic foods market than a general marketplace. While the organic store has the main items found in a supermarket, they tend to focus in on just organic items. The same can be true for ETFs, there are smaller ETFs focusing on niche markets as well as ETFs that cover broad areas of the market. With more than 500 ETF options available, Karen Bluementhal for the Washington Post likens the choices to be just as overwhelming as the variety of peppers in the produce section. Individual investors should be discerning and choose funds that will complement their portfolio and investment needs. Education and research should be incorporated when investing in niche or specialty ETFs because they invest in various, specific sectors other than the broad market.
What kinds of ETFs will work for you depend on how often you invest and trade, how much you invest and what you prefer in your portfolio. For example, ETFs offer a great way to buy a global position. They also tend to be much more cost efficient than mutual funds when investing large sums of money, such as $10,000.
The latest market swing has uncovered a caution to consider when investing in exchange traded funds (ETFs). It appears that wide trading spreads are a problem because ETFs trade on exchanges like stocks. "Bid-ask" spreads are the gaps between the price buyers are willing to pay and sellers are willing to accept. A wide spread can take away from an investment, and they are an unanticipated cost.
The popular, widely traded ETFs haven't been susceptible but the specialty, niche products have. Diya Gullapalli for The Wall Street Journal explains that just as spreads on regular stocks vary, they do so with ETFs as well. Investors, of course, want the smallest spreads possible. But if you happen to be selling, and it's on a day the market is deteriorating, you have to choose between accepting the bigger spread, or risking a bigger loss by sitting on the sidelines. The issue could worsen as hundreds of new ETFs are in the pipeline. Many will focus on narrow market niches, so beware. Low trading activity can contribute to wider spreads too.
"Green" exchange traded funds (ETFs) seem to be benefiting from investors' growing environmental conscientiousness. For example, PowerShares WilderHill Clean Energy (PBW) has been one of the top performing ETFs for the year so far. It's up 19.8% year-to-date. However, green ETFs can be affected by the demand for traditional energy. Also, some experts worry that the interest in alternative energy funds is outpacing demand and could lead to a bubble in certain sub-industries, reports Farnoosh Torabi for Entrepreneur Magazine.
Exchange traded funds (ETFs) are an essential tool in every investor's toolbox because they offer another option for portfolio diversification, which helps protect against market volatility. The advantage of ETFs is that they allow investors to buy a sector or region and not be exposed to the market via one stock, says Mary Ann Milbourn for the Orange County Register. Unlike mutual funds, ETFs can be bought or sold throughout the day, and they provide transparency. Whether it's stocks, fixed income, commodities, currencies or regions, there's an ETF for it.
ETFs are not immune when rough market conditions occur like they have lately. That's why it's important for investors to have an exit strategy. Our plan is simple: Whenever an ETF goes below its 200-day moving average or drops 8% from its high, sell.
Tom Lydon appeared on CNBC's Power Lunch earlier today to discuss big oil plays with Simmons & Company International's energy analyst Robert Kessler and show host Sue Herera. Below is a video of the segment.
Ethically-minded investors have more options as exchange traded funds (ETFs) cross over into the wealth-building, world improving categories. During the past few years, around a dozen ETFs with a socially responsible focus have debuted in the market, reports G.Jeffery MacDonald of The Christian Science Monitor. For instance, two launched in June: PowerShares Global Clean Energy Portfolio (PBD) and the Claymore/KLD Sudan Free Large Cap Core (KSF).
MacDonald notes short term traders don't usually invest in socially responsible ETFs and hedge fund traders aren't going in and out of these funds. These socially responsible ETFs offer investors the ability to take a diversified position without the need for single stock picking.
On the whole, advisers are using ETFs in a range of ways to help socially conscious investors address unique circumstances and achieve highly specific goals. And investors can expect options in this domain to keep expanding in coming years. The way ETFs are structured allows them to give more specialized offerings, especially in areas where average investors have not had the opportunity to invest before, such as commodities, currencies and precious metals. They are popular for their transparency, liquidity, and tax efficiency. Because of this, providers are offering more for investors.
Tom Lydon was on CNBC's Power Lunch with Sue Herera earlier today. Below is a video of Tom's segment.
Worth Magazine reached out to us in response to reader's interest in exchange traded funds (ETFs). In the July issue, our article, Spinning the SPDRs, addresses the growing popularity of ETFs and takes a look at new indexing strategies used for many of the newer ETFs. There is much speculation on when an active ETF will come to market. When they do, the question remains - will they cease being an ETF? There are certain conditions that must be met for an ETF to be an ETF.
You can read the full article by clicking here.
Tom Lydon discusses oil ETFs on CNBC's Power Lunch.
There was a lot of feedback on our interview with Jonathan Burton at MarketWatch, regarding investing in commodities versus the producers with exchange traded funds (ETFs). This weekend, Burton followed up with a more detailed report from our meeting.
This week global markets took a Shanghai sell-off of stocks in stride, as the Chinese government attempted to cool the soaring Chinese stocks and exchange traded funds(ETFs) that hold them. Kirk Shinkle for Investor's Business Daily reports China's Ministry of Finance tripled its transaction charge on share trading, aka the stamp tax, to 0.3%, previously at 0.1%.This triggered a 6.5% drop in the Shanghai composite last Wednesday, which is the second largest one-day decline this year. Selling only spread mildly in Asia, and U.S. markets opened lower but soon recovered to end the day still ahead. This resilience is a welcomed change after the February 27th sell-off. China ETFs were flat for the day. iShares MSCI Xinhua/China 25 Index (FXI) is down 0.2% year-to-date, while PowerShares Golden Dragon Halter USX (PGJ) is up 10%. SPDR S&P China (GXC) began trading mid-March.
You can hear my CBS Radio interview addressing this subject this week: Download cbs_lydon_530_part_1.wav, Download cbs_lydon_530_part_2.wav
There is a battle over 401k money and exchange traded funds (ETFs) are doing what they can to get in. Once in, ETFs could claim a big portion of the retirement marketplace. BenefitStreet joined Barclays to distribute ETFs to corporate sponsors of 401k's. By moving 401k's into the ETF marketplace there is a huge cost reduction for employees, reports Murray Coleman for MarketWatch.com. The move has been slow because of brokerage fees, and obstacles regarding record keeping, as ETFs are traded throughout the day. BenefitStreet has created a system to work around these obstacles with a more pure access to ETFs.
We're still not at the point where 401k participants can handle their own asset allocation strategies with ETFs. This will be a huge step in the evolution of ETFs as they become a bigger part of corporate retirement plans.
Exchange traded funds (ETFs) have gone farther down the food chain than traditional index funds. The wide array of funds available make it easier to own different types of investments and ride trends in the market. Ian Salisbury for Wall Street Journal writes one of the main criticisms facing ETFs is that they may lead Main Street investors down the wrong path by betting on narrow areas of the market that are hot at the moment. We should give investors a bit more credit and what about all of the other "hot" investments investors can get in trouble with? It's not just narrow focused ETFs that could potentially get investors in trouble. A positive to this targeted investing is that ETFs provide exposure to alternative assets like gold and foreign currency.
ETFs currently track indexes, there is no manager picking the stocks, which allows lower fees for ETFs. The trading flexibility of ETFs allows the funds to be traded all day, throughout the day without the fees and redemptions associated with regular mutual funds. But it is important to note commissions are charged through your broker for the trades. Another area where ETFs look good is with their tax advantages. Capital gains taxes are of a limited amount.
