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.

Gold Miner ETF Hits Low on Dollar's Strength

The dollar's renewed vigor is good news for most, but not for the gold miner's exchange traded fund (ETF).

Yesterday, the Market Vectors Gold Miner (GDX) hit its lowest point since Sept. 18 of last year, reports Wanfeng Zhou for Thomson Financial. Year-to-date, the fund is down 7%.

Gold is weakening, too, closing yesterday at $848.50. As the metal loses ground, so do the ETFs that hold futures: both streetTRACKS Gold Shares (GLD) and the iShares COMEX Gold Trust (IAU) year-to-date are up 2% and 1.7%, respectively. They both currently sitting at their lowest points since Dec. 31.

Lately, it doesn't seem like gold has done much of anything but go down. Even though commodities have been hit lately, and some more so than others, with ETFs it's easier to carve out those areas that are performing. Be sure to check in regularly with your funds and have your stop-loss points firmly in place if you choose to invest in commodities.

Meanwhile, the dollar hit a five-week high against the euro today and a two-month high against the yen after the government announced that fewer jobs were eliminated than expected, report Ye Xie and Bo Nielsen for Bloomberg.

One-year chart of the dollar vs. both the yen and the euro:

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.

Telecommunications ETFs on Line One

Few sectors have taken as much of a beating as telecommunications and its related exchange traded funds (ETFs). But is a turnaround in the offing?

Some analysts seem to think so. One for Citigroup upgraded telecom to "overweight," since analysts appear to be done slashing their estimates.

Telecoms have a history of underperforming the markets, reports Dan Burrows for Smart Money. If we are, in fact, at the bottom, says one analyst, telecom could be poised to outperform.

Global telecommunications is undergoing a transformation. India is the fourth largest telecom market in Asia, after China, Japan and South Korea, reports the Centre for Telecom Policy Studies. The quality of service is improving, as well as the overall accessibility.

Telecom ETFs that might be worth a look:

• iShares Dow Jones US Telecom (IYZ), down 19.2% year-to-date
• iShares S&P Global Telecommunications (IXP), down 10.5% year-to-date
• Vanguard Telecom Services (VOX), down 17.1% year-to-date

Everyone, Welcome the New ETF Provider Northern Trust (Hi, Northern Trust)

The exchange traded fund (ETF) industry has a new provider. It's Chicago-based Northern Trust, and the launch of their funds have been anticipated since last winter.

Murray Coleman for Index Universe reports gives the lowdown on the first batch of funds, which will have an expense ratio of 0.47%:

• NETS FTSE 100 Index Fund (LDN): Invests in the largest companies by market-cap on the London Stock Exchange.
• NETS S&P/ASX 200 Index Fund (AUS): It will compete against the iShares MSCI Australia (EWA), which is one of the oldest international ETFs around.

Four more ETFs will follow soon:

• NETS DAX Index Fund (DAX): Tracks the major exchange in Germany.
• NETS TOPIX Index Fund (TYI): Covers Japan
• NETS CAC-40 Index Fund (FRC): Tracks France's market
• NETS Hang Seng Index und (HKG): Follows stocks in Hong Kong

Missing from the list are Northern Trust's anticipated entries into the all-world ETF segment, which was recently joined by both Vanguard and iShares.

The timing of the France-focused single country ETF could bring good things, as France's economy has been holding up well against the international credit crisis. Helen Beresford for Thomson Financial News reports that on the flip side, the GDP growth forecast was cut by the government to between 1.7-2%. The iShares MSCI France (EWQ) is up 8.7% in the last month, although it's down 5.4% year-to-date.

The German economy has been growing, but it needs to make changes if that growth is going to continue. Paul Carrel for Reuters reports that the German economy needs reform to refresh the labor market and education systems, both vital parts of the country's economy.  The iShares MSCI Germany (EWG) is up 6.9% in the last month, but it's down 9% year-to-date.

Vanguard Wants to Put Its Arms Around the World With New ETF

On the heels of iShares' new all-world exchange traded fund (ETF), Vanguard is trying to enter the fray with its own similar kind of fund.

They've registered with the Securities and Exchange Commission (SEC) for the Vanguard Global Stock Index Fund, which would offer three share classes: investor shares, institutional shares and ETF shares. It's anticipated to launch in the second quarter of 2008.

The fund aims to track the FTSE All-World Index, a market-cap weighted index of large- and mid-cap global stocks in 48 countries. About 55% of the index will be made up of stocks outside the United States.

Vanguard's new fund will join the iShares MSCI ACWI Index Fund (ACWI) as the first two true all-world ETFs. The country breakdown for the iShares fund has the as its top five countries the United States, 41.8%; the United Kingdom, 9.6%; Japan, 8.6%; France, 4.7%; Germany, 4.1%.

Across the sectors, it's most heavily weighted in financials at 22.5%. Energy is 11.7% and Industrials are 11.2%. Exxon Mobil (XOM) is the largest constituent, representing 1.6% of the holdings. General Electric (GE) is 1.2%.

It'll be interesting to compare the two funds side-by-side once Vanguard's is up and running.

Playing the Waiting Game With ETFs

  Some believe we're in a full-blown recession, but no matter what they believe, exchange traded fund (ETF) investors shouldn't panic.

Chris Fichera for Consumer Reports suggests staying put and weathering the storm, while making some tweaks to your portfolio:

• While he does suggest that large-caps are attractive and relatively expensive, it's actually the small- and mid-caps that have been outperforming in the last two weeks. Large-caps are up about 1.7%, mid-caps are up about 2.9% and small-caps are up about 5%. There are a variety of small- and mid-cap funds out there, among them:
  • iShares Russell 2000 Growth Index (IWO)
  • iShares Russell 2000 Value Index (IWN)
  • Vanguard Small Cap Value (VBR)
  • iShares S&P MidCap 400 Value Index (IJJ)
  • PowerShares DWA Technical Leaders (PDP)

• International is still attractive. Europe and Japan are slowing down, but there are still emerging markets out there that are growing rapidly, with still more room to grow. Emerging markets can be volatile, so having an exit strategy here is paramount.
  • iShares MSCI Spain (EWP), up 10.3% since March 10
  • iShares MSCI Malaysia (EWM), up 10.5% since March 10
  • iShares MSCI Mexico (EWW), up 8.3% since March 10

• Go with short- or intermediate-term bonds, as long-term bonds don't have the most attractive yields right now. They would also feel the effects if the Federal Reserve were to cut interest rates further.
  
  • SPDR Lehman Short Term Municipal Bond (SHM)
  • iShares Lehman MBS Bond (MBB)
  • SPDR Lehman Aggregate Bond (LAG)
  • iShares Lehman Intermediate Credit Bond (CIU)
  • iShares Lehman Government/Credit Bond (GBF)
  • Market Vectors-Lehman Brothers AMT-Free Short Municipal Index ETF (SMB)
  • PowerShares Insured National Muni Bond (PZA)

Whatever you do, whether you decide to tweak your portfolio or just sit and wait, stick to your investment plan. Once investors are guided by their emotions is when the real trouble begins.

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

U.S. Credit Crisis Delivers a Punch to Some Global ETFs

The problems aren't just here in the United States: the credit crisis is also hitting markets in other countries and taking some of their exchange traded funds (ETFs) down with it.

Investors are wary of the acquisition of Bear Stearns by JPMorgan, reports Toby Anderson for the Associated Press. One bank was saved, but what does it mean for the banks that are still standing? The challenge now for investors is knowing if the bottom has been reached, or if the markets will continue to fall even further.

While the Federal Reserve scrambles to prevent an all-out meltdown, global markets still reflected a nervous sentiment:

• iShares MSCI United Kingdom Index (EWU): down 3.7% intraday, down 11.2% year-to-date
• iShares MSCI France Index (EWQ): down 2% intraday, down 12% year-to-date
• iShares MSCI Australia (EWA): down 2.8% intraday, down 12.8% year-to-date

Asian stocks fell today, as well. Japan's benchmark index lost 3.7% to hit its lowest point in more than two and a half years. Interestingly, the iShares MSCI Japan Index (EWJ) was up 2.5% intraday. The fund is down 12.8% year-to-date. Hong Kong's Hang Seng index fell 5.2%, and the iShares MSCI Hong Kong (EWH) was down 1.9% intraday. Year-to-date it's down 22.3%.

Ugly Prices for Gold and the Dollar Are Pretty for ETFs

Gold-related exchange traded funds (ETFs) were higher in intraday trading as gold futures seemed to be trying out for high jumping in the Olympics.

April futures reached a record $1,001.50 an ounce, continuing its steady climb that's been going on since 2001, reports Allen Sykora for the Wall Street Journal.

The rising price of gold is only accelerated by the falling value of the dollar and the rising cost of oil, which hit a record $111 a barrel today. Oil ETFs such as the Oil Services HOLDRs (OIH) and United States Oil (USO) so far haven't shown much movement in trading.

streetTRACKS Gold Shares (GLD), iShares COMEX Gold Trust (IAU) and Market Vectors Miners (GDX) are all benefiting from the Ripley's Believe-It-Or-Not prices:

Meanwhile, the dollar hit new lows against the yen, says Yuka Hayashi for the Wall Street Journal. For the first time in 12 years, it dropped below 100 yen, threatening Japan's exporters and increasing the chances that the world's number two economy would slow. It also hit new lows against the euro, at $1.56.

The dollar vs. the yen:

CurrencyShares Euro Trust (FXE) and CurrencyShares Japanese Yen Trust (FXY) were up slightly in intraday trading.

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

Even In These Markets, You Can Still Find ETF Movers and Shakers

Yesterday, the markets delivered outstanding performance and some exchange traded funds (ETFs) finished up in the double digits.

But one good day doesn't mean we're out of the slump yet. It's still time to take a defensive stance with your portfolio and make sure you've got that exit strategy firmly in place. But while it seems as though everything is in a downward spiral, but there are still some buying opportunities, believe it or not.

At our asset management firm, we track a list of about 100 ETFs and review it daily to see how things are performing and if there are any trends emerging. Of particular interest to us is which funds are above their 200-day moving averages. We never buy something sitting below that line.

Once we own an ETF, we keep an eye on it to make sure it's still above that line and continuing to perform. Once it dips below the trend line or falls 8% off its high, we sell. No ifs, ands or buts. A sell strategy from which emotions are entirely removed is the only kind that will benefit any investor.

It can be hard to let go of a little mover and shaker you've always had that soft spot for, but if you want to protect your money, you have to. It's like your parents always said when they were grounding you every other week: "This hurts me more than it hurts you." But sometimes it has to be done for everyone's good.

There are no guarantees that when you let a fund go, it's not going to turn around and deliver the numbers again. But that doesn't mean it won't, either. It's exactly why you have to remain as stoic as possible and stick to the plan and rationalize nothing.

There are a number of ETFs sitting well above their trend lines. Take a look at them, keep an eye on them and if they fit into your overall portfolio and are moving in an overall upward direction, they could be well worth considering:

• iShares MSCI Taiwan Index (EWT), 6.2% above
• Claymore/BNY BRIC (EEB), 5.9% above
• iShares S&P Latin America 40 Index (ILF), 10.1% above
• iShares MSCI Brazil Index (EWZ), 13.7% above
• Market Vectors Russia (RSX), 8.1% above
• iShares S&P GSSI Natural Resources (IGE), 6.8% above
• PowerShares DB Commodity Index Tracking Fund (DBC), 27.7% above
• iShares S&P GSCI Commodity-Indexed Trust (GSG), 23.9% above
• United States Oil Fund (USO), 28.3% above
• iShares Dow Jones US Oil & Gas Exploration Index (IEO), 14.4% above
• Energy Select Sector SPDR (XLE), 6.7% above
• iShares Dow Jones US Energy (IYE), 6% above
• Market Vectors Steel (SLX), 14.4% above
• iShares COMEX Gold Trust (IAU), 21.2% above
• streetTRACKS Gold Shares (GLD), 21.1% above
• Market Vectors Gold Miners (GDX), 16.5% above
• iShares Silver Trust (SLV), 30.3% above
• SPDR S&P Metals & Mining (XME), 11.5% above
• PowerShares DB Base Metals (DBB), 8.5% above
• PowerShares DB Agriculture (DBA), 30.8% above
• Market Vectors Global Agribusiness (MOO), 11.4% above
• CurrencyShares Euro Trust (FXE), 6.9% above
• CurrencyShares Swiss Franc Trust (FXF), 10.2% above
• CurrencyShares Japanese Yen Trust (FXY), 8.5% above

For full disclosure, some of Tom Lydon's clients own shares of EWT, IEO, DBB and DBA.
Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

U.S. Malaise Spreads to Malaysia's ETFs and Beyond

Has the economic downturn in the United States finally hit Malaysia and its exchange traded fund (ETF)?

For awhile, the iShares MSCI Malaysia Index (EWM) was one of the few single-country funds exhibiting decent performance despite the woes that seem to have affected other global regions in one way or another. In the last two weeks, though, it's down 5.5%. Year-to-date, it's down 2.3%.

What's going on?

According to Thomson Financial, investors in Malaysia are reacting to, among other things, the recent bad news from Wall Street and the Dow's loss of more than 300 points on Friday. The mood in Malaysia is expected to remain downbeat because of uncertainty about the general elections, which will take place this Saturday.

The ruling coalition is guaranteed to win, but increasing ethnic tensions and a rising cost of living have many believing that there will be a reduced majority.

Will Malaysia overcome its challenges?

Other Asian markets and ETFs are feeling the pinch from Wall Street, too, and experienced sharp drops on Friday:

• iShares MSCI Australia (EWA), lost 4.5%
• iShares MSCI Singapore (EWS), lost 3.4%
• iShares MSCI Japan (EWJ), lost 1.1%
• iShares MSCI Hong Kong (EWH), lost 3.1%

U.S. Dollar Falls Further and Currency ETFs Rally

It could be just what exchange traded fund (ETF) investors who are bearish on the U.S. dollar want to hear: another day, another low.

After two days of setting records, the euro once again set one on Thursday, reports Erin Conroy for the Associated Press.

The dollar's decline could complicate the Fed's decision-making progress in regards to the economy. That's because when the Fed cuts rates in an attempt to jump-start the economy, those cuts also drive the dollar lower.

Currency ETFs rallied on Wednesday thanks to the weakness of our money, says Wanfeng Zhou for Thomson Financial. Most CurrencyShares funds have been seeing positive territory this week:

• CurrencyShares Euro Trust (FXE), up 3% in the last week
• CurrencyShares British Pound Sterling Trust (FXB), up 2.2% in the last week
• CurrencyShares Swiss Franc Trust (FXF), up 3.8% in the last week
• CurrencyShares Japanese Yen Trust (FXY), up 1.8% in the last week

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

CurrencyShares Celebrates $1 Billion In Assets For Yen Trust

Rydex Investments announced that the exchange traded fund (ETF) tracking the Japanese yen has passed the $1 billion milestone.

The year-old ETF CurrencyShares Japanese Yen Trust (FXY) tracks the price movements of the yen against the U.S. dollar and has attracted assets amid the U.S. market's trepidation and a declining dollar. FXY has since become one of the most popular ETFs in the CurrencyShares lineup.

The company offers eight CurrencyShares products and gives investors a convenient, cost-effective means to gaining currency exposure. Currency has a low correlation to stocks and bonds and is a good diversification tool for a portfolio.

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

Malaysia ETF Looks Like a Port in a Storm

Little Malaysia is full of big surprises, as evidenced by their single country-focused exchange traded fund (ETF).

iShares Malaysia ETF (EWM) has shown strong performance to date and the small country is ranked the 34th largest economy in the world, reports James Brumley for Seeking Alpha.

The growth is being ignited by free trade. The Malaysian government has amped up its trade with other countries; specifically, Australia, New Zealand and the United States. The new trade agreements are also in effect with Pakistan and Japan, and the multi-year plan has also helped the currency, the ringget, reach its strongest level in a decade.

Also, consider that Malaysia is protected from the global economic contraction. Resources are plentiful, such as oil, timber, rubber, minerals and other materials. Malaysia is proving to be a nice alternative to American stocks.

Sector Rotation In A Global ETF Portfolio

  Adapting your investment strategy with exchange traded funds (ETFs) is important when economies around the world are becoming more interrelated.

Doing so will add value and increase the chance of outperforming benchmarks, reports  Carl Delfeld for Index Universe. The wheres of a company is also becoming less important as the industries and sectors which it operates is taking center stage.

The basics of global indexing, says Delfeld, are take the S&P Global 1200, a composite of seven indexes that represent leaders in their respective regions. The market values of the 1200 companies in the indexes represent around 70% of the world's capital markets with a market value of $28 trillion or more. Here is a brief breakdown:

• The S&P 500 covers 75% of U.S. markets.
• The S&P Europe 350 covers 70% of the region's market cap across 17 countries.
• S&P/TOPIX 150 covers 70% of the Japanese market.
• S&P/TSX 60 offers exposure to 60 large-cap, liquid Canadian companies.
• S&P/ASX All Australian 50 is comprised of 50 liquid, domestic-oriented Australian companies.
• S&P Asia 50 covers 50 leading companies in Asia ex-Japan domiciled in Hong Kong, South Korea, Taiwan and Singapore.
• S&P Latin America 40 is a basket of 40 companies from Argentina, Brazil, Chile and Mexico which offers exposure to 70% of the regions' market cap. It is heavily weighted to Brazil and Mexico.

By using a top-down macro analysis of studying market-cap global sector weightings, a global sector rotation method can be useful in a growth portfolio. The weakness is that smaller countries get less weighting, and the traditional market-cap weighting which gives trademark exposure to emerging markets.

Japan's Outlook Stronger, but Can the Economy and ETFs Keep It Up?

Do Japan's exchange traded funds (ETFs) finally have a chance to pull ahead? After a period of economic weakness in the country, Japan's economy grew at a faster pace during the fourth quarter, at 3.7%. Analysts, however, are warning that this jump may not be enough to guarantee a continuation.

The Associated Press' Yuri Kageyama explains that the main growth driver over the October through December period was an increase in corporate capital investment.

This is considered great news, because Japan relies heavily on the health of the U.S. economy. A slowdown would decrease demand for Japanese goods. Japan is expected to continue its growth for much of this year, at a rate of 1%.

But later this year, the woes of the U.S. economy could cave a ripple effect and hurt the country's growth.

But for now, economists seem to feel that Japan is having some good times.

• ProShares Untrashort MSCI Japan (EWV)
• iShares MSCI Japan Index (EWJ)
  
• WisdomTree Japan SmallCap Dividend (DFJ)
• SPDR Russell/Nomura PRIME Japan (JPP)
• PowerShares FTSE RAFI Japan (PJO)

G-7 Summit Keeps Financial Market Hopeful

The G7 Summit meeting takes place this weekend and we'll have to wait and see what effect decisions made there will have on the economy and exchange traded funds (ETFs).

The dollar was slightly weaker while holding onto recent gains made earlier in the week while investors awaited the meeting, where finance leaders from the world's most industrialized nations get together, according to Dan Molinski for The Wall Street Journal.

Topics of interest at the Summit meeting:

• how to handle recent financial market turmoil
• health of the U.S. economy
• necessary steps to ensure sustained growth in the U.S.

G-7 financial leaders are, in particular, seeking to calm credit fears. Discussions will be about how to disclose and enhance finance-related information by institutions along with how to compensate for losses caused by the U.S. home loan crisis, reports DPA for EarthTimes.

Nations must work together to keep the global economies growing and to stabilize the financial markets. Climate change will be discussed in Hokkaido at the Group of Eight summit.

Meanwhile, finance minsters of Britain, Japan and the U.S. asked officials from other countries to join in an initiative to help developing nations cut greenhouse emissions through clean-energy technologies. The World Bank reports that by pooling efforts to support a new clean technology fund, administered by The World Bank, developing nations can cut their emissions.

Several ETFs could feel the impact of decisions made at the meeting:

• Financial Select Sector SPDR (XLF)

• iShares Dow Jones US Financial Services (IYG)

• PowerShares Global Clean Energy (PBD)

• PowerShares Wilderhill Clean Energy (PBW)

You Can't Always Judge an ETF By Its Name

In December, Barclays added another international exchange traded fund (ETF) to its lineup: the iShares MSCI Kokusai Index Fund (TOK).

 TOK covers 1,203 holdings in 22 developed markets, minus Japan, with the United States taking the most holdings at 50%. The second-largest constituent is the United Kingdom, at 12%. There are also holdings in Austria, Belgium, Ireland, Italy, New Zealand, Spain, Sweden and Switzerland.

The largest holding is ExxonMobil Corp. (XOM) at 2%. It's most heavily concentrated in financials, at 24.7%. When the fund launched, Matt Hougan for Index Universe wondered if it wasn't a strange product to launch on a U.S. exchange since, after all, most U.S. investors are already invested in this market and would instead want exposure to Japan in their portfolios.

But the most intriguing thing about the fund, we think, is its name: "kokusai" is the Japanese word for "international." It's an interesting choice of word for a fund with no holdings in Japan.

Which Way Will Japan's ETFs Swing?

Japan's exchange traded funds (ETF) have been having a time of it lately.

In 2007, bankruptcies rose to a 4-year high and the country was gripped by a housing slump. Corporate bankruptcies rose for the second consecutive year and construction insolvencies rose to a 4-year high. Few people can seem to agree on what the future holds.

But Carl Delfeld for ETFXRay says that in spite of the bad news, Japanese stocks and ETFs are rebounding off 26-month lows as investors begin to notice some values. Will the weaknesses continue, or will Japan fight its way back?

A few of the ETFs that cover Japan are:

• iShares MSCI Japan Index (EWJ)
• WisdomTree Japan SmallCap Dividend (DFJ)
• SPDR Russell/Nomura PRIME Japan (JPP)
• PowerShares FTSE RAFI Japan (PJO)
  

Investing in Dharma With ETFs

Dow Jones Indexes, together with Dharma Investments have launched the Dow Jones Dharma Indexes to underlie exchange traded funds (ETFs).

They will measure the performance of selected companies according to value systems and principles of Dharmic religions, mostly Hinduism and Buddhism, reports HedgeWeek. Companies that can participate are in compliance with the Dharmic religious traditions. The series also has four country-specific indexes: the United States, United Kingdom, Japan and India.

The ETFs that are created to follow these indexes should be interesting.

South Korea's ETF Market Has Strong Showing in 2007

The exchange traded fund (ETF) market showed growth in varying degrees all over the world in 2007.

Korea saw impressive change, reports Park Hyong-ki of the Korea Times. There, the net assets grew 55% to $2.6 billion and they nearly doubled the number of ETFs listed from 12 in 2006 to 21 at the end of last year.

What's next for the Korea Exchange (KRX)? It plans to list even more ETFs that track socially responsible and fundamentally sound companies, as well as index funds overseas. The goal is to list as many as 50 funds by 2010.

Singapore's growth wasn't chopped liver: the number of assets in ETFs grew by 113%, to $1.8 billion. Japan's growth was the slowest, at 2%. The United States remains the biggest market for ETFs, followed by Europe.

Evolving Smartphone Techology Gives Telecom ETFs a Lift

Even though the U.S. seems to be bringing up the rear with telecommunications technology among developed countries, related exchange traded funds (ETFs) don't appear to be suffering. You would think with the launch of the iPhone this year, we'd finally be caught up. But Japan is way ahead of us and using their phones for things that still exist only in our collective imaginations.

How far ahead are they? According to a report on NPR, phones in Japan can broadcast live television, shoot photos with 5 megapixels (most U.S. phones only shoot with 1 or 2 megapixel resolution), be aimed at a restaurant to get instant reviews and they can be used to pay for things like coffee or trips on the subway.

Don't despair. The U.S. is slowly but surely catching up. The launch of the iPhone of the Verizon Voyager (although it has no television capability and its camera is 2 megapixels) certainly haven't hurt. But if Japan's cell phones are any indication, bigger and better things are on the way here. Among the several ways to catch the telecommunications wave, both domestically and abroad:

• Wireless HOLDRs (WMH), up 22.7% year to date. Verizon (VZ) is 9.9% of the fund.
• iShares S&P Global Telecommunications (IXP), up 25.0% year to date. AT&T (T), which partnered with Apple (AAPL) on the iPhone, is 14.7% of the fund. Verizon (VZ) is 7.9%.
• WisdomTree International Communications (DGG), up 26.9% year to date

Digging Deeper Into International Small Cap ETFs

International small-cap exchange traded funds (ETFs) are the latest frontier that providers have captured. There are now five choices in this space and ETFs that have the same asset class are not always the same underneath. Matthew Hougan for Index Universe takes us on an expedition, to dig deeper into these small-cap ETFs and discover what is behind the ticker symbols and their index returns.

iShares MSCI EAFE Small-Cap (SCZ) launched last week and has an expense ratio 0.40%. Industrials make up 23.5% of the ETF, followed by financials at 20.7% and consumer discretionary at 16.1%. Top countries represented are Japan at 24.8%, the U.K. at 19.8% and Australia at 8.9%.

iShares FTSE Developed ex-U.S. Small-Cap (IFSM) began trading last month with an expense ratio 0.50%. Top sectors represented in this ETF include industrials at 28.5%, financials at 22.4% and consumer services at 12.9%. The U.K. makes up 24.1% of the ETF, followed by Japan at 15.9% and France with 6.1%.

PowerShares FTSE RAFI Developed ex-U.S. Small-Mid (PDN) hit the market in September with an expense ratio of 0.75%. Consumer discretionary makes up 18.3% of this ETF, while consumer staples is 9.4% and energy is 3.8%. Japan is the top country represented with 34.4%, the U.K. is 11.9% and Hong Kong makes up 7.0%. PDN also includes mid-cap companies.

SPDR S&P International Small-Cap (GWX) launched earlier this year in April and has an expense ratio of 0.60%. GWX consists of industrials at 25.8%, consumer discretionary at 19.4% and financials at 16.9%. Japan is again the top weighted country at 24.0%, followed by the U.K. at 12.0% and Canada at 10.9%.

WisdomTree International Small-Cap Dividend Fund (DLS) was the first to launch in June 2006. It has an expense ratio of 0.58%. The top sectors are industrials at 25.3%, consumer non-cyclical at 18.1% and financials at 17.8%. Japan's weight in DLS is 22.6%, Australia follows with 18.5% and then the U.K. at 18.3%.

This illustrates that there can be many choices within a certain asset class. The conclusion is to dig deep to find out what the differences are and what fits with your portfolio and your financial goals.

ETFs Caught in the Middle of Japan's Economic Forecast Tug-of-War

It looks like there's some disagreement about the future of Japan's economy and the exchange traded funds (ETFs) that track it. Yesterday, we wrote a post saying that Japan's economic council sees the economy ready to grow, but not everyone sees it that way.

The central bank's chief says the economy is actually slowing because of housing investment weakness and cautious corporate sentiment, the Associated Press reports, and as a result, kept interest rates unchanged. That, coupled with the risk of an economic slowdown in the U.S., makes for a gloomy forecast. The government also revised its forecast for real gross domestic product growth for the year ending March 2008 down to 1.3% (it had been predicted at 2.1%), says the Financial Times.

Overall, the Bank of Japan downgraded its view of the state of their economy for the first time in three years. It had previously said that the economy was expanding moderately, without qualification. They're now saying the economy is expanding moderately, but that the pace of growth is slowing overall.

Only time will tell who's right. Depending on how you see it, there are ETFs for both sides of the argument:

• iShares S&P/TOPIX 150 Index (ITF), down 7.4% year to date
• WisdomTree Japan Total Dividend (DXJ), down 9.2% year to date
• SPDR Russell/Nomura Small Cap Japan (JSC), down 13.1% year to date
• UltraShort MSCI Japan ProShares (EWV), up 6.9% since its inception in November
   

Japan's Economy Could Grow - Will The ETFs Follow?

It hasn't been the easiest year for Japan and its exchange traded funds (ETFs). Its largest ETF by trading volume is the iShares MSCI Japan Index (EWJ), and it's down 6.8% year to date. But the Japanese government is predicting that things will pick up some in 2008, according to the Associated Press.

The forecast is that the economy will grow 2% next fiscal year -- although the economy minister said the target could be a challenge to reach if oil prices remain high. If the U.S. economy keeps slowing, it could hurt, too, because Japan is the U.S.'s largest export market.

If Japan's top economic council puts reforms on the fast track, as was reported earlier this week, the country could be primed for a turnaround sooner rather than later.

A few other Japan-related ETFs and their recent performance:

• iShares S&P/TOPIX 150 Index (ITF), down 7.4% year to date
• WisdomTree Japan Total Dividend (DXJ), down 9.2% year to date
• SPDR Russell/Nomura Small Cap Japan (JSC), down 13.1% year to date

Japan Seeks to List More ETFs to Boost Its Ailing Economy

Japan's top economic council said that the country needs to speed up reforms to its exchanges and list more exchange traded funds (ETFs) to improve the market environment. Recent turmoil has stressed the need for the country to improve its economic situation.

According to the Daily Times, the Tokyo Stock Exchange (TSE) is the world's second-largest bourse behind the New York Stock Exchange, yet it's struggling to keep up with the other major exchanges in Asia.

Right now, the Financial Services Agency must approve all new ETFs before they're listed. The economic council welcomes the moves to allow them to be listed on the TSE in an effort to link the exchanges of various countries and make Japan's capital markets more competitive.

Could this be the beginning of a brighter future?

ETFs in Market Segments

Asset classes are important to most investors and exchange traded funds (ETFs) are helping progress within specific market segments. Matthew Hougan for Seeking Alpha reports that there are some areas of the market that are worth monitoring.

• Small-Cap International: Correlations between large-cap stocks are tightening all over the world, and will continue to do so. Small-cap international stocks will continue to retain diversification benefits as they are tied to local economies. WisdomTree International Small Cap Dividend Fund (DLS) and the SPDR S&P International Small Cap ETF (GWX) are two ETFs that will give this exposure.
• China: China should continue to be a long-term boom, and global indexes tend to be underweight China thanks to the hegemony of free-float investments. SPDR S&P China ETF (GXC), iShares FTSE/Xinhua China 25 Index (FXI) and PowerShares Golden Dragon Halter (PGJ) can help access this country.
• Japan: One of the best things Japan has in its favor now is its proximity to China. Valuations point to upping exposure to Japan.
• Bond Diversification: New bond ETFs are pouring into the industry, and they should fit into portfolios some how, many are just not sure how yet.
• Thematic Asset Classes: Water, timber, energy efficiency- these are all available for investors through ETFs and the great ideas keep coming. The Claymore Timber ETF(CUT) is the latest.
• Coming down the pike: There is no doubt 2008 will bring lots of interesting ETFs, and the pipeline is full of funds waiting for registration. Stay tuned...

ETFs Reflect Japan's Slower GDP Growth

Third quarter growth for Japan was stunted more than anticipated causing less than satisfactory results for stocks and exchange traded funds (ETFs). A downward revision in business's capital investment fogged up the outlook for the world's second largest economy, reports Associated Press. During the July-September quarter, growth was at a 1.5% annual pace, worse than the anticipated 2.6% estimate.

Part of the problem may be due to the U.S. economic slowdown and credit slump. Another reason may be due to higher raw materials prices. iShares MSCI Japan Index (EWJ) has underperformed all other Asian markets, only up 0.1% year-to-date. Likewise, iShares S&P/Topix 150 Index (ITF) has reflected the sluggish growth with no gains or losses year-to-date.

Rising or Setting Sun for Japan ETFs?

The Japanese markets and exchange traded funds (ETFs) have been the worst performing of the developed markets for the past two years.  So far this year, the Nikkei has lost about 3.5%.  Although the performance has not been so great, there are those who believe the country is on the cusp of turning around, reports Daniel Thomas of the Financial Times.

Japanese exporters are benefiting from proximity to growing emerging markets and corporations have posted six years of rising earnings.  In the midst of a global credit crisis, Japanese companies are well placed, as they tend to have low levels of debt and are conservatively run.  With the economy out of a depression, low unemployment and rising wages, consumers are apt to spend.

The fundamentals may be there, but there is still concern about the Japanese market.  Japan depends on the U.S. consumer and if a recession hits the U.S., then Japan will certainly feel the pain.  The market is also lacking a major catalyst and needs strong U.S. growth or a loosening monetary policy.

The ETFs remain below their long-term trend line, but if the Japanese market does turn around, we should see the ETFs moving upward.

• iShares MSCI Japan Index (EWJ) down 0.7%
• iShares S&P/Topix 150 Index (ITF) down 0.6%

Market and ETF Facts to Consider

There's a lot going on in the markets and exchange traded funds (ETFs).  Matt Hougan for Index Universe looks at 10 interesting market facts and we've added some ETF related information.

1. The U.S. stock market is uneasy. Volatility is the best performing index this year, up 138.7% on the CBOE Volatility Index, compared to a year ago.
2. Technical analysis aside, the Dow Theory says "If the train slows down, the economy soon follows." iShares Dow Jones Transportation Average (IYT) is up 0.4% year-to-date.
3. Utilities are going off, as you may know from those huge checks you write each month. Utilities Select Sector SPDR (XLU) is up 15.7%.
4. Some indexes following Europe aren't as pretty as you may think, even with a strong currency.  Although we find the iShares S&P  Europe 350 Index (IEV) is up 14.7%. Isn't the euro worth more than gold right now?
5. European countries and their markets aren't always in sync. Performance ranges up and down, depending which country you're in. iShares MSCI Germany Index (EWG) is up 32% and iShares MSCI Belgium Index (EWK) is down 0.5%.
6. The China/Japan dichotomy, with such proximity, what gives? iShares MSCI Japan(EWJ) is down 1.3% and iShares MSCI Xinhua/China 25 Index (FXI) is up 66.9%.
7. Understanding contango in commodity investing is important.  It's confusing and has investors angry.
8. One of best domestic sector ETFs is Aerospace & Defense -PowerShares Aerospace and Defense (PPA) is up 24.6%. The worst sector is homebuilding - SPDR S&P Homebuilders (XHB) is down 53.4%.
9. Small-cap growth is doing well, maybe not as well as in recent past, but they are holding their own. iShares S&P SmallCap 600 Growth (IJT) is up 5.4%, compared to the S&P 500 which is up 3.6%.
10. Dividends aren't offering the safe haven thought of through tough markets. iShares Dow Jones Select Dividend Index (DVY) is down 6.0%.

What Will Save Japan's Market and Its ETF?

Aggregate corporate earnings are aggravating Japan's exchange traded funds(ETFs) along with the Japanese market. iShares MSCI Japan (EWJ) is down 4.1% year-to-date and iShares S&P/Topix 150 (ITF) is down 4.3% this year and is continuing to disappoint investors although trading has been on the low end of historical valuations, reports Carl Delfeld for ETFXRAY.

Year-on-year operating profits for top-tier companies rose 6% in the first half, and full-year forecasts are expected to be lower. Non-manufacturers, except banks, have an especially sad outlook where profits fell 3.4%. Domestic consumer finance is a bigger problem than sub-prime exposure.

What will be the saving grace for Japan? A catalyst for growth and higher stock prices could come from the Japanese stock market getting cheaper. Exports to China are slowing and if U.S. consumption slows down the yen will make a superior way to play Japan's stock market.

Northern Trust Readies to Enter the ETF Marketplace

There's a new kid on the block of exchange traded funds (ETFs). Northern Trust is entering the  market with a big splash, by offering 19 foreign-market funds, according to Jesse Emspak at Investor's Business Daily.  There is not a domestic to be found in the mix, and according to a filing with the Securities Exchange Commission, the ETFs will track indexes using American, euro and global depositary receipts.

The firm plans for its ETFs to represent 19 countries, with eight of them focused on emerging markets: China, Hong Kong, Israel, Malaysia, Russia, Singapore, South Africa and Taiwan. The rest will track indexes in Europe, Australia and Japan.

There are a few other firms that have ETFs tracking some of the same countries Northern Trust is proposing, including Barclays iShares and State Street Global Advisors' SPDRs.

When it comes to the booming international markets, the more the merrier!