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Ron Ryan says there’s a problem with bond indexes that are tracked by exchange traded funds (ETFs). In fact, the CEO of Ryan ALM says that there are several problems and he’s out to fix them.
Continue reading "Bond Indexes Are Broke, and He Says His ETFs Can Fix It" »
A recent study released by Barclay's Global Investors tells that baby boomers set to retire may not be as well-prepared as they think, possibly causing some to reconsider how they use their exchange traded funds (ETFs) and stocks as they plan for their golden years.
Financial Advisor Magazine reports that some bright and sunny outlooks for those heading into retirement are based on erroneous assumptions. The studies often fail to take into account that the current benefit levels for Social Security and Medicare are unsustainable. The studies also tend to assume that current costs will remain stable over time.
Under current conditions, only the top half of pre-retirees look reasonably well-prepared but remain vulnerable to future changes. Perhaps ETFs within your retirement or 401(k) plan could help and set you up for future security. First, the retirement system, and ETF industry, must break ground to incorporate the funds into these plans.
Add your voice to the growing chorus of people who are asking why ETFs aren't more readily available in 401(k) plans. With Social Security no longer a certainty, the situation has become more urgent than ever.
To see if you're properly on track for a comfortable retirement, plug the numbers into Yahoo's retirement calculator.
The debate over exchange traded funds (ETFs) in 401(k) plans is intensifying. Many people want, even demand, a law that balances the cost and benefits of the transparency of investment and transaction fees. Experts say the law must be crafted in such a way that disclosure isn't a pain for employers, but is still meaning for workers.
The bill, sponsored by Rep. George Miller, D-Calif., would require firms to disclose fees, conflicts of interest and information on risk, return and objectives. Firms would also be required to offer workers an index fund as an investment choice.
Some say that the worst-case scenario is that such a law would lead to such high costs that firms would dump 401(k) plans altogether, says Robert Powell for Market Watch. Or the law could lead workers to choose the funds that are the least expensive, to their own detriment.
If plan sponsors were taking their jobs seriously, there would be more of a push to include ETFs in 401(k) plans.
Plan sponsors are required to understand and analyze all expenses including both administrative expenses and fund expenses. W. Scott Simon for Morningstar suggests that most plan sponsors don’t even understand what their fiduciary responsibilities are, so how can we expect them to act properly?
One section of the Employee Retirement Income Security Act (ERISA) puts it simply: a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and for the exclusive purpose of: (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan.
Likewise, the U.S. Department of Labor suggests that plan sponsors must "ensure that fees paid to service providers and other expenses of the plan are reasonable in light of the level and quality of services provided." This would require a degree of knowledge and specialty in matching fees paid with service providers. There appears to be a great gap, a disconnect going on here.
How can this happen if plan sponsors aren't even aware of what they are selling?
As an employee, you should ask your Human Resource department why ETFs aren't available to you! This might help get the ball rolling.
The ETF industry is going to be watching these developments closely. And as more people become educated about what fees are costing them, plan participants are going to being to get more discerning. Right now, there is no proper analysis of fees, and plan sponsors clearly don't know what their responsibilities are.
Asset allocation is an important factor within a portfolio, and now Invesco PowerShares offers this strategy all wrapped up in an exchange traded fund (ETF). Their latest ETFs are designed to give investors access to long-term, core asset allocation strategies.
The newest portfolios are based on three distinct risk profiles, targeting a specific percentage of an investment in equity and fixed-income securities. Balanced, balanced growth and growth are set for a May 15 debut on the NYSE Amex, according to PowerShares.
Asset allocation is an important consideration for any investor - it helps one maintain their desired risk/reward profile. Depending on your desired level of risk and long-term goals, investments are spread over several types of asset classes, including equities, fixed-income and non-equity correlated assets.
The anticipated fund names and ticker symbols are:
Rising interest rates within the bond market are signaling a change within investor sentiment that could possibly boost stocks and exchange traded funds (ETFs) in the coming months. It appears that the financial sector may be ready to rebound, and equities may start to head in the right direction.
This change in sentiment comes just in time for the Federal Reserve's meeting today and tomorrow. The public had been awaiting another rate cut of around one-half a point. Now, the feeling that one-fourth a point cut may do, and be the last in a two-year series, explains Carl Gutierrez for Forbes.
The market may not feel that the economy is dropping so much as before, and money is beginning to flow more steadily. Friday's global bond selloff was triggered by inflation in Japan reaching a 10-year high, in tandem with better-than-anticipated first quarter earnings reports in the United States.
As yields around the world stabilize, one analyst says that it removes the incentive for investors to take money out of the United States, leading to stabilization.
SPDR Lehman International Treasury Bond (BWX) is up 5.2% year-to-date and has a 3.83% yield. iShares Lehman 7-10 Year Treasury Bond (IEF) is up 3% year-to-date and has a 4.05% yield.
Fundamental indexes tracked by exchange traded funds (ETFs) are nothing new under the sun. Now the father of fundamental weighting is looking to do the same thing for bonds.
Robb Arnott, chairman of Research Affiliates, says cap-weighting magnifies the overvalued stocks' affect on portfolios. Bonds ETFs are currently weighted similarly - by the amount issued - and Arnott wants to move away from that.
Arnott says fundamental indexing works best when there are a wide ranges between the fair value of a company and the stock or bond. Weighting according to this criteria cuts down on the heft of "fad" stocks, Jesse Emspak for Investor's Business Daily says.
When applying the fundamental indexing principles to bonds, the risk that a bond can't be paid back is taken into account. Among the data Arnott's firm is looking at for weighting country bonds is population, gross domestic product, oil consumption and existing government debt. Taking all of this into account gives a truer picture of fair value.
The firm has not filed with the Securities and Exchange Commission (SEC) yet, and preliminary work is still being done.
Bond exchange traded funds (ETFs) can be a solid way to take the hassle out of buying individual bonds, which can be costly and time-consuming for individual investors.
Heather Bell for Index Universe sat down with Ron Ryan, CEO and found of Ryan ALM Inc., an asset management firm. Ryan has been developing fixed-income indexes for years.
Ryan says bond ETFs are like having an instant portfolio in a single fund.
Short duration funds have a relationship with short-term rates, and with the Federal Reserve guiding those rates, short-term rates are at very low levels. Today's yields are around .50 % from the lowest yields in modern history.
In an attempt to measure interest rate risk, there is the Treasury yield curve. This is the best expression of the risk with maturity and duration leading the outcome of risk. If you have a product that is not clear about the risk, then there is a problem. With ETFs, the transparency is great because you can see the risk involved and you know exactly what you are purchasing. Then it is a fair game, as Ryan says.
Ryan also says the average investor overlooks the importance of fixed income. Is it time to think about your retirement? It could be - even if it's 20 years from now, is your portfolio going to be where you want it to be by then?
One way to do the math is with Yahoo's retirement calculator. Then see if bonds have a home in your portfolio. They just might.
Treasury Inflation Protected Securities, or TIPS, have made their way into exchange traded funds (ETFs).
These U.S.-government issued bonds are issued by the Treasury and they are sellable in the "after" market. Designed in terms of 5, 10 and 20 years, their interest rate is determined at auction, and they are sold in increments of $1,000.
The principal is adjusted along with the Consumer Price Index (CPI). If the CPI falls, so does the principal, and vice versa, reports Steven Halpern for Blogging Stocks.
TIPS are a decent investment, with the lowest risk that you can find anywhere. iShares Lehman TIPS (TIP) and SPDR Barclays Capital TIPS (IPE) are two ways an investor can minimize inflation risk.
For full disclosure, some of Tom Lydon's clients own shares of TIP.
Bond exchange traded funds (ETFs) have sparked investor interest across the board. It's largely a by-product of the world we're living in these days, since people turn to bonds during volatile times.
Just look at the numbers: as of February 2008, there were 53 bond index ETFs. In February 2007, there were a measly 14.
As their ranks have grown, so have the assets in them. In the first quarter of this year, assets rose 16% to $40.4 billion, reports Jesse Emspak for Investor's Business Daily. According to iShares, the area isn't going to be slowing down anytime soon, either. Over the next three years, they say, the bond ETF industry could grow by 200%.
In addition to providing a place to go when the markets begin acting up, there are some bond ETFs that give access to areas they previously were unable to get into, such as international bond ETFs.
Don't forget: municipal bonds are currently in the rare circumstance of yielding more than treasuries.
Some of the many types of bond ETFs available are:
For full disclosure, some of Tom Lydon's clients own shares of TIP.
It's an event like Halley's Comet, although with a little more frequency: municipal bond yields are higher than those of treasury bonds. For that reason, it makes more sense than ever to grab exchange traded funds (ETFs) that hold them.
"It's something that doesn't happen very often," says Glenn Smith, associate of ETF sales at Van Eck. "Maybe once every 7-10 years or so."
Continue reading "It's Bond ETF Time - Munis Are Yielding More Than Treasuries" »
The choices and types of dividend stocks available are numerous, and there's an exchange traded fund (ETF) for many of them.
A dividend is a payment that a company makes to you as a shareholder. Judy Alstar for Rightside Advisors explains that most payments are made at predictable rates, at regular intervals. Generally, firms make special dividend payments at year's end, offer additional stock as payment, or spin-off ownership of another company. That might not be what you want, though, if you would prefer to take the payout.
Among the most commonly used dividend-generating equities are real estate investment trusts (REITs), closed-end funds and royalty trusts.
Dividend ETFs can be an excellent source of retirement income, says Dobromir Stoyanov for Seeking Alpha. At the beginning of this decade, 12% of the U.S. population was 65 or older, and the baby boomer generation is booming into retirement age. Social Security isn't a sure thing anymore, and this could lead to a major demand shift in favor of dividend stocks and ETFs.
Among the many dividend 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:
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.
Once the Federal Reserve decides it's done making interest rate cuts, junk bond exchange traded funds (ETFs) could be a beneficiary. The appetite for risk goes up with economic recovery.
Gary Gordon for ETF Expert says that last year, he suggested a solution to the widening "credit spreads": invest in the iShares Lehman 7-10 Year Treasury Bond Fund (IEF) and short sell the iShares iBoxx High Yield Corporate Bond Fund (HYG).
Since he made his recommendation, IEF returned 15.5% and the short-selling hedge of HYG resulted in 0%. In effect, it neutralized the risk associated with a growing spread between junk bond funds (also called "high yields") and intermediate term U.S. treasury funds.
Meanwhile, the credit spread has grown: the difference between IEF's annual yield and HYG's in July 2007 was about 3%. Now, it's above 4.5%. A widening spread can hint that investors aren't exactly feeling bullish.
When the economic recovery begins, high yield bond funds could reap the rewards as the spreads tighten once again. HYG has a distribution yield of 8.3%. The SPDR Lehman High Yield Bond Fund (JNK) comes with an 8% distribution yield.
State Street Global Advisors unveiled their first International Inflation-Protected Bond exchange traded fund (ETF). The SPDR DB International Government Inflation-Protected Bond (WIP) began trading on the American stock exchange March 19. The index, DB Global Government ex-US inflation-Link Bond Capped Index, uses 120 inflation-indexed bonds from 18 developed and emerging counties outside the U.S.
BusinessWire reports the expense ratio at 0.50%. The ETF joins the iShares Lehman TIPs ETF (TIP) in this area of the market.
Bonds, in general, can be a safer place for investors to stash their money when the markets are haywire.
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:
While you are egg-hunting today, your mind may not be on your exchange traded funds (ETFs). However, you may want to consider how your nest eggs are doing at his point in time. ETFs have yet to break into the 401(k) area of the market completely, so by investing in a broad-based ETF, you could have your bases covered for the long term until something within the retirement industry gives.
ETFs are baskets of stocks that represent a certain sector of the market. For the widest variety of stocks there are plenty of choices, one example being Diamonds Trust Series 1 (DIA). The stocks range from Johnson & Johnson (JNJ) to Boeing Co. (BA), giving your basket the most variety.
And as you enjoy all of those chocolate eggs and bunnies, are you really thinking about exchange traded funds (ETFs)? While every household is likely to consume at least one chocolate bunny, the PowerShares Dynamic Food and Beverage (PBJ) may get a sugar rush, too.
Holdings range from Yum Brands (YUM) to Anheuser Busch (BUD) giving Easter dinner with Auntie and Uncle a chance to kick in, too.
Happy Easter and may you find lots of eggs!
Investors, feeling more skittish than ever in these "what's going to happen next?" times, are showing signs that they're moving money away from commodities and metals exchange traded funds (ETFs) and stocks, and into bonds.
The prices of gold and oil retreated this week - gold dipped to $900 an ounce and oil finally fell below the $100 a barrel mark, reports Rob Wherry for Smart Money. It's quite a turnaround for the belles of the investment ball, which for weeks didn't seem that they could make a false move.
Gold, silver and agriculture commodities ETFs are continuing to show signs of cooling off in early trading today.
On the other hand, bond funds are among those rare flashes of green when it comes to performance and investors are taking that color where they can get it these days. The markets seem to have a split personality these days, and bonds are about as safe as you can get.
Among the top performers for bond funds so far this year:
Fixed-income exchange traded funds (ETFs) are fast becoming the investment of choice for those concerned with the market's recent direction.
TIPS (Treasury Inflation Protected Securities) are a special type of note or bond that offers protection from inflation, something investors want in a big way right now. An inflation-indexed security pays interest every six months and pays the principal when the security matures. With TIPS, the coupon payments and underlying principle are increased to compensate for inflation as measured by the Consumer Price Index (CPI).
Joanne Von Alroth for Investor's Business Daily reports that one of the hottest strategies as of late has been to invest in TIPS for some "fear insurance." iShares Lehman TIPs Bond (TIP) is up 5.4% year-to-date. The ETF tracks the Lehman Brothers Treasury Inflation Notes Index.
These types of funds are great for those investors who not only fear inflation, but fear losing their principal to boot. With these you get a government guarantee that you're protected from the ravages of inflation.
The fixed-income exchange traded fund (ETF) market still has plenty of room to grow.
In fact, iShares predicts that the area is primed to grow by 200% over the next three years. Globally, fixed-income ETFs have $60 billion in assets, about 7.5% of the total ETF market, according to Anil Dawar for FT Adviser.
Growth in these types of funds will owe much to the fact that they're increasingly traded by capital market banks.
ETF assets of all classes are expected to grow from $800 billion, currently, to $2 trillion by 2011.
Bear Stearns is going to launch the first actively managed exchange traded fund (ETF).
The Bear Stearns Current Yield Fund (YYY), or the Triple Y, will be made up of a variety of short-term fixed income instruments. This includes government bonds, municipal securities, bank obligations, corporate and securitized debt. The holdings will be disclosed each day on the fund's website.
The fund begins trading on the American Stock Exchange on March 18.
Actively managed ETFs have been anticipated for years now, and whether they will take off is a matter of debate. The first funds are going to be scrutinized closely by both investors and the industry, and if they can withstand being under the microscope, they just might be embraced.
Exchange traded funds (ETFs) have different ways of generating returns for investors, and one way is through bond funds. They buy a relatively static pool of securities based on an index, and they're attractive for the same reason other ETFs are: lower cost, because they lack an active manager.
Jack Colombo for Forbes shares his preferences in the world of ETF bond funds. Check out these bond ETFs:
In addition to Colombo's picks, a few other bond funds we track are currently residing above their trend lines (200-day moving average):
Now that actively managed exchange traded funds (ETFs) are just around the bend, investors can expect a slew of filings.
State Street Global Advisors on Wednesday filed an application with the Securities and Exchange Commission (SEC) for a series of actively managed target-date ETFs, reports BusinessWire.
The funds will invest in a diversified sampling of equity and fixed-income ETFs.
If this line of funds gets the go-ahead from the SEC, it will join PowerShares' newly-approved set of active funds, which are aiming for an April launch.
Let's get this straight: No target-date exchange traded funds (ETFs) are closing.
However, portfolio provider XTF Advisors is shutting down its lineup of target-date ETF portfolios.
Since Claymore's announcement that it's booting 11 of its weakest-performing ETFs, you'll forgive the alarm these days when investors see "closing" and "ETFs" in the same sentence.
We repeat: No other ETFs are actually closing this time.
"No animals have been injured in this movie," says Jeffrey Feldman, chairman of XShares. XShares has nothing to do with XTF, but somehow in the spreading of the news, their similar-sounding names were linked. XShares currently offers the only target-date ETFs in the marketplace through its line of TDAX products.
Feldman set the record straight: "They went out of business for reasons totally unrelated to ETFs. There was an inability to raise capital. They had a very good business model, but they never built or managed ETFs."
Meanwhile, State Street Global Advisors filed with the Securities and Exchange Commission (SEC) to launch a series of actively managed target-date ETFs, reports Stacy Schultz for On Wall Street. They're going to be a "fund of funds" and hold other ETFs, according to Matthew Hougan for Index Universe.
The XShares line consists of ETFs of stocks and bonds - analogous but different products, Feldman says.
The list of choices within the municipal bond exchange traded funds (ETFs) continues to grow.
On Tuesday, Van Eck Global launched a new ETF on the American stock exchange, the Market Vectors-Lehman Brothers AMT-Free Short Municipal Index ETF (SMB), reports 24/7 Wall Street.
The fund is designed to offer investors exposure to investment-grade municipal bonds with a nominal maturity of 1-6 years. The expense ratio is 0.16%, and it will track the price and yield performance of the Lehman Brothers AMT-Free Short Continuous Municipal Index.
The growing family of options in municipal bond ETFs include:
Some positive news in the financial sector gave a lift to the KBW Capital Markets (KCE) exchange traded fund (ETF).
Two of the biggest bond insurers, MBIA Inc. (MBI) and Ambac Financial Group (ABK), avoided rating downgrades, report Abigail Moses and Shannon D. Harrington for Bloomberg. Since that bullet has been dodged, investor sentiment toward the financial sector has gotten a small boost. The woes aren't over yet, but investors will take the good news where they can get it, especially in this beleaguered sector.
These days, the investment world is all about diversification to minimize risk, and exchange traded funds (ETFs) can help you get the necessary exposure. ETFs are a great diversification tool that can help buy-and-hold types and active traders alike.
Matt Kranz for USA Today questions why someone would own two stocks when they could own two ETFs instead. We have to agree with that one. Owning more stocks, rather than fewer, is a benefit because you can reduce your portfolio's overall risk and your exposure to possible problems with just one or two companies.
If you're more domestic-minded, you can start with the S&P 500, and the S&P 500 (SPY). It has relatively low risk and a broad base. For bonds, there are large baskets put together by iShares with the Lehman Aggregate Fund (AGG) or the Vanguard Total Bond Market (BND). For broad global exposure, there's the Vanguard FTSE All-World ex-US ETF(VEU) gives broad global exposure.
By keeping your mix more diversified, you lower your risk and increase your expected returns. Getting and staying diversified with ETFs is easy.
Some trouble in a Fidelity fund can be ill-afforded as the exchange traded fund (ETF) industry gains on mutual funds.
Fidelity is facing subprime losses in a central fund, an internal fund that only other Fidelity funds can invest in. This has taken away from returns in at least 10 mutual funds. Fidelity Ultra Short Central Fund fell 2-3% in the third quarter because of bad investments in subprime linked securities.
Joe Morris of Ignites reports that the funds left holding the bag include:
By investing in these funds so widely, the risk of widespread loss is greater, and expenses paid to such funds are hard to understand. Central funds do provide other funds with exposure to investment expertise in individual sectors.
Investors are too often left in the dark about what they own - a great arguments for ETFs and the transparency and ease-of-use that they offer.
The signs are all there that we're in a recession: many exchange traded fund (ETF) sectors have taken a hit, Congress is calling hearings, the Federal Reserve is talking about more rate cuts, housing, retail and unemployment numbers are unimpressive at best.
When will the government finally admit what we've all suspected for some time now - that the recession has already started? We can't answer that, but what we can tell you is that now is the time to start thinking about how you can protect your portfolio. The last thing you want to do is wait until it's too late.
Here are a few sectors that have been bucking the trend:
Continue reading "Five ETF Sectors To Recession-Proof Your Portfolio" »
Municipal bonds and related exchange traded funds (ETFs) are in a bit of a pickle, but billionaire Warren Buffett has stepped in to help.
As we wrote yesterday, while municipal bonds are currently offering attractive yields, there's some imminent downgrading risk. That's because the insurers that back them have also branched out into insuring other more profitable and risky investments such as subprime mortgages, and we all know by now how that's been going.
To keep the troubled industry afloat, Buffett came forward and offered to add a second level of insurance - up to $800 billion, reports Josh Funk at the Associated Press. Buffett said the move has nothing to do with altruism, and everything to do with making money.
Hey, the guy is honest.
Buffett's offer extends only to municipal bonds, and not the complicated, risky investments.
Investors looking to capitalize on the yields municipal bonds are currently offering have a range of options:
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.
The bond market isn't too happy as exchange traded funds (ETFs) fell in response to bond auctions held by the U.S. Treasury. The auctions have foreign and domestic banks submitting offers for bonds.
The "indirect" bid was 11% of the auction, after averaging 27.2% in the last six auctions. The decline shows hesitancy among foreign banks, reports Arthur B. Hill for ETF Investment Outlook.
The bond market responded with a dip. The iShares 20+ Year Bond (TLT) declined 2%, making yesterday the biggest loss since April 2007. TLT still remains on an upward trend, though. Surveyors are pondering if this is a one-time random chance, or a sign of what's to come.
The indexing and exchange traded fund (ETF) industry recently was privy to the observations of an outside observer.
Adam Sussman, a senior analyst for the TABB Group, wrote an exhaustive report titled "Performance Anxiety: A Buy-Side Study on Benchmarks and the Investment Process." You can buy it for $8,000 - or just read summary here for the bargain price of free.
Heather Bell for Index Universe sorted out the report's 38 pages so you don't have to and highlighted some of its most illuminating findings:
The overall conclusion of the report? Benchmarks once were an afterthought, and now they are front and center. Indexing has opened, and will continue to open, new doors.
In troubled times, investors are on the hunt for safe havens, and one of those is bond exchange traded funds (ETFs). There is always the concern about interest rate risk, but with the possibility of further rate cuts by the Federal Reserve, short-term threats should be small.
Continue reading "High Yield Bond ETFs Inviting During Dicey Market" »
PowerShares has launched the newest exchange traded fund (ETF) of preferred stocks today.
The PowerShares Preferred Portfolio (PGX) is based on the Merrill Lynch Fixed Rate Preferred Securities Index and gives investors exposure to fixed-income securities.
Preferred stock ETFs have been performing nicely so far this year. Owners of preferred stocks have a higher claim on assets and earnings than common stock. They often have dividends that are paid out to their holders before dividends are paid out to the holders of common stock.
Other ETFs made up of preferred stocks are:
Exchange traded fund (ETF) provider WisdomTree announced that it's teaming up with the Dreyfus Corporation on international cash and fixed income ETFs. The goal of the partnership is to provide investors with access to cash products around the world.
Dreyfus is a subsidiary of BNY Mellon Asset Management.
Quick: will your exchange traded fund (ETF) portfolio take you into your golden years?
Not sure? Yahoo! has a nifty calculator you can use to see if you're on track.
Be aware, though, that saving for retirement isn't just about making money - it's about keeping what you've earned, too. The best way to do that is to have a discipline that you can stick to.
iShares Lehman Bond ETF (TIP) has been a popular exchange traded fund (ETF) choice for investors all around the world.
Carl Delfeld at ETF XRAY explains that these Treasury-inflation protected securities (TIPS) are a simple way to eliminate one of the most threatening risks to fixed-income investments-inflation.
As inflation expectations build for the U.S. economy, ETF options are becoming even more interesting to investors. What's more, TIPs deliver a real rate of return guaranteed by the U.S. government and they also keep their pace with inflation as defined buy the Consumer Price Index.
The Treasury yesterday auctioned $8 billion in 10-year inflation-adjusted TIPs T-notes. These are also popular among foreign central banks as witnessed by 42.9% of indirect bidders. Foreign investors appear to be buying up these bonds.
Hennion Walsh Asset Management has come out with a mutual fund of
exchange traded funds (ETFs). This presents a diversified, low-cost
alternative for investors and is set up as a target-date fund.
Thanks to the varying levels of risk each fund contains, the SmartGrowth mutual funds can be an option for investors considering retirement, whether it's a long way off or just around the corner.
There are three risk/reward options ranging from conservative to growth portfolios. The funds are:
Each tracks the Optimal Target Risk Index, launched in January 2007 by Lipper.
Investors have been pleading for exchange traded funds (ETFs) to be available in 401(k) retirement plans for quite some time now. Some feel like they are getting burned with hidden fees found in many traditional mutual fund-based plans.
Laura Rowley for Yahoo Finance adds fuel to the fire by reporting that members of Congress, the Department of Labor and financial experts have officially found that some companies managing 401(k) plans are siphoning off billions in excessive fees. These fees are "bundled services" that are taken before returns are reported, and are either overlooked or not disclosed at all.
The average fee charged to a plan is 1% of assets managed, and they can range as high as 2.25%. Those fees can really put a dent in a retiree's budget and hurt a population of people who need food and medicine.
The Fortune 500 companies are under scrutiny right now, but the smaller businesses with fewer than 100 employees are actually hit the hardest. They lack economies of scale and are paying higher fees because the plan is smaller. By incorporating ETFs into these 401(k) plans, many of these fees wouldn't be an issue.
Some people hate making resolutions (especially because some of you have been writing variations on the "get in shape" theme since college, but this year, you're serious. We know you are.), but now is as good a time as any to evaluate where you stand with your exchange traded funds (ETFs) and make your resolutions for next year.
May we suggest a few?
Actor Sam Waterston of "Law and Order", the television show on which he plays a district attorney, is making a case for exchange traded funds (ETFs) on ads for online broker TD Ameritrade. This is a sign of the times, where ETFs are becoming a mainstream investment tool, and could possibly become a household word, such as cell phone, computer and mutual fund.
The ETF revolution has allowed individual investors to use strategies that were before only available to large institutions, such as shorting or buying on margin, reports CNN Money. The industry has also broadened exposure past stocks and reached out to bonds, currencies and commodities. In 2008, we're likely to see some of these ETF advances:
These are just the beginning of the possibilities. The benchmarks tracked by ETFs are becoming more sophisticated and technology is allowing much more to happen faster.
