Barclays' New Currency ETNs Evolve

Barclays is expanding its line of exchange traded notes (ETNs) with three new currency-related filings. Despite the IRS ruling that these notes should be taxed as debt, and that gains from interest income and currency appreciation will be taxed as regular income tax, Barclays Capital went forward with the launch.

The new ruling will put ETNs at a slight disadvantage because noteholders will be required to pay taxes on implied interest each year. Matthew Hougan for Index Universe says the new ETNs are:

• Asain and Gulf Revaluation: Gives exposure to five Middle Eastern and Asian market currencies that are tied to the U.S. dollar and comes with a 0.89% expense ratio.
• Barclays GEMS Strategy: GEMS stands for global emerging markets strategy. The fund is a 15-currency money market account that covers five geographic zones, including Eastern Europe, Africa and Latin America. It has a 0.89% expense ratio.
  
• The Carry Trade ETN: The carry trade involves borrowing money in low-yielding currencies and investing it in high-yield currencies. This fund involves using long and short forward positions in G10 currencies to execute the trade. Among others, the index has holdings in the Norwegian krone, New Zealand dollar, Swiss Franc and Australian dollar. The fund has an expense ratio of 0.65%.

ETNs trade like stocks or exchange traded funds (ETFs), but they're debt instruments, meaning that investors are exposing themselves to risk that the issuing bank will go bankrupt.

Global Exchanges And ETFs Remain Abuzz

Many country-specific exchange traded funds (ETFs) had a heyday in 2007, rising 70% to record trading volumes.

This year, the Dow Jones Global Exchanges tell a different story as the index has so far lost 15% this year, according to Carl Delfeld for ETFxray.

Jump starts and the like aren't turning these funds over, as evidenced by Deutsche Borse, which announced a tax break that would enhance this year's earnings by an estimated 10%. Its shares have remained flat.

Recently, global exchange shares have rallied, attracting investors because it is a fixed-cost business. Opportunities may be knocking in high-quality countries such as iShares MSCI Singapore (EWS) or the Netherlands (EWN).

The global exchange market remains alive with mergers and consolidation activity, which can give good price support, but be careful: valuations of exchanges is murky and tricky.

ETF Provider Barclays Backs Down from ABN AMRO Deal

Exchange traded fund (ETF) provider Barclays has revoked its bid to buy Dutch bank ABN AMRO after a six-month battle. The withdrawal clears the way for a takeover of ABN AMRO by a rival Royal Bank of Scotland-led consortium, which outran Barclays with a higher offer, reports Sky News. If the deal goes through, it will be the largest takeover in the history of the financial industry, signaling the likely end for one of Europe's largest banks, according to Toby Sterling for the Associated Press. Barclays is one of the largest ETF providers, and ABN AMRO is the top holding at 16.1% in the Netherlands ETF iShares MSCI Netherlands Index (EWN). Currently, EWN is up 23.0% year-to-date.

Netherlands ETF (EWN) Eyes ABN AMRO Deal

The Netherlands' exchange traded fund (ETF) could see increased activity as the country's largest companies continue to expand globally. Currently, the iShares MSCI Netherlands Index (EWN) is up 12.9% and is above its long-term trend line. ABN AMRO, the country's largest bank and EWN's largest holding at 16.5%, could soon be under foreign control. The country's Prime Minister Wouter Bos already has given approval for an $82 billion takeover offer for ABN by Barclays and is scheduled to decide on a rival bid by the Royal Bank of Scotland within the next couple of weeks, according to Gilbert Kreijger for Reuters.

The Latest with the Netherlands ETF

When we last looked at the iShares MSCI Netherlands Index (EWN) exchange traded fund (ETF) it was up 13% for the year. Although EWN, along with most of Europe and the rest of the world, has been hit hard by the recent market decline, it's still up 9.8% year-to-date. However, it is skimming its trend line. EWN is heavy in the service sector that makes up more than 53.6%. Financials make up 39.4% of the ETF; business services 8.7% and consumer services 5.5%.

Carl Delfeld of ETF XRAY notes that the Netherlands has a prosperous and open economy that welcomes world trade. It's economy is noted for stable industrial relations, moderate unemployment and inflation, according to the 2007 CIA World Factbook. It's GDP grew 2.9% in 2006.

Dutch ETF-Netherlands Best Kept Secret

The Netherlands exchange traded fund (ETF) is often overlooked although it has displayed consistent performance and boasts high quality multinational companies.  The Kingdom of the Netherlands is an open economy that tends toward world trade.  iShares MSCI Netherlands Index (EWN)  is a basket of 27 high quality, multi-national, Dutch companies, writes Carl Delfeld for ETFXRAY.com. Holdings include ING, ABN Amro, Phillips Electronics, Unilever and Aegon. Sectors include diversified financials, food, beverage and tobacco, banks and consumer durables.

Like many of the ETFs, EWN was affected by last week's market decline, but the ETF is still up 13% for the year.