Power Shift Seems to Agree With Russia ETF

On May 7, Vladimir Putin stepped down and Russia's new president became Dmitry Medvedev - is it any coincidence that in one day, the Russia exchange traded fund (ETF) rose 4.4%?

Market Vectors Russia (RSX) seems to be a beneficiary of the surge in energy prices in particular, as 43.1% of the fund is allocated in the sector. It's up 6.4% year-to-date.

Foreign investors, attracted by the record-high oil prices, are turning a blind eye to the country's expulsion of U.S. diplomats and threats of a war with Georgia, reports Peter Apps for Reuters. The expulsions were ordered on April 28 after the United States expelled three diplomats earlier in April. The back-and-forth is bringing back Cold War memories.

Some investors might be deterred by Russia's issues, especially when compared with other emerging markets such as Brazil, which has the growth without the political risks. And those investors who are concerned with the oil and energy sector in Russia are focusing on other sectors such as construction and retail.

An ETF is a good way to get exposure to several sectors - the diversification means you could potentially benefit from any growth, while avoiding too much risk if it doesn't pan out.

Exposure to Russia can also be had through the SPDR S&P Emerging Europe (GUR), which also contains exposure to Poland, Turkey, the Czech Republic and Hungary. Year-to-date, it's down 5.2%.

A closed-end fund (CEF) contains Russia exposure, too: the Central Europe and Russia Fund (CEE), which is down 5.1% year-to-date. It holds 27.7% of the country.

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

BRIC ETFs Were Anything But In April

BRIC exchange traded funds (ETFs) showed themselves to be solid in April. Investor interest and enthusiasm for the funds has peaked over the past several years, with outstanding sector-leading performances in 2007.

Richard Widows for The Street researched the BRIC ETFs for the month of April, some of which posted impressive performance numbers.

SPDR S&P China (GXC) was up 17.97% in April, and was the top performer for the month. iShares FTSE/Xinhua China 25 Index (FXI) advanced 17.5% with a net $6 billion in assets.

Brazil fared well with a pair of ETFs: iShares MSCI Brazil Index (EWZ)  up 17.3% and HOLDRs TeleBras (TBH) up 14.2% in April.

First Trust ISE Chindia (FNI) was up 16.6%, as a blend of China and India, and Claymore/BNY BRIC (EEB) was up 11.1%. An honorable mention was given to iPath MSCI India Index (INP), as the ETN gives a hard-to-access passage to India. The fund rose 7.1% in April.

There's still more BRIC exposure to be had, though, both in single-country and broad-based form.

• Market Vectors Russia (RSX), up 3% in April
• SPDR S&P BRIC 40 (BIK), up 9.7% in April
• iShares MSCI BRIC Index (BKF), up 9.8% in April

For full disclosure, Tom Lydon's clients own shares of INP.

Control of Russia Changes Hands, But Will the Growth In Russian Related ETFs Be Sustained?

The Russian economy is shifting leadership while the economy is booming under Vladimir Putin's hand, with the focused exchange traded fund (ETF) on a run. But can it sustain momentum under the next President?

Gleb Bryanski for Reuters says Russian officials are ecstatic over the economic achievements of Putin's office over the past 8 years, with high economic growth and investment rates.

But one of his last acts before stepping down, Putin signed a law placing limits on foreign investment within key sectors of the Russian economy. The law terms state that any private foreign company wanting to buy more than 50% of a company in any of the 42 strategic sectors will need authorization from a commission made up of economic and security officials, reports Thompson Financial News.

The challenge for Dmitry Medvedev is going to be sustaining the economic growth, which could turn out to be a headache. Growth rates are showing signs of faltering and inflation is ticking up. Medvedev's commitment to reform is still a question mark among many Russians, and he hasn't disclosed much in the way of economic policy.

Market Vectors Russia (RSX) would be in a position to benefit if Medvedev manages to keep Russia on a growth course. Year-to-date, the fund is down 0.7%. The Central Europe and Russia Fund (CEE), a closed-end fund, could also benefit. Year-to-date, it's down 12.2%, and it's 27.7% allocated in Russia.

BRIC ETFs Have Many Access Points for Investors

A reader wrote in recently wanting to know more about BRIC and the related exchange traded funds (ETFs). We're here to help!

BRIC stands for four of the fastest-growing emerging markets out here: Brazil, Russia, India and China. In 2007, these countries delivered some of the biggest returns of any ETFs or exchange traded notes (ETNs) around. So far for 2008, BRIC ETFs and some of the single country funds have been fairly quiet.

But make no mistake: these countries are still growing, and could have plenty to offer down the line.

Oil Prices May Get Worse; Steel and Natural Gas ETFs Are Keeping Pace

The price of oil has slipped some over the last few days, but it's projected to soar even higher - what will it mean for its exchange traded funds (ETFs)?

The reports on fuel got more dismal this morning, as many wonder just how much worse it's going to get. According to an energy report from the Canadian Imperial Bank of Commerce today, oil could hit $225 a barrel by 2012.

Cars are blamed for the continually rising prices: 90% of the demand growth in the last few years has gone to transportation. Car sales globally soared last year, growing 60% in Russia, 30% in Brazil, 20% in China. Sales were flat in Europe and dropped in the United States.

Meanwhile, the oil ETF isn't the only one performing. Steel and natural gas are nothing to turn up one's nose at, either. Gary Gordon for ETF Expert reports that funds for both of the commodities have at least kept pace with United States Oil (USO), if not leaving it in the dust.

In the last month, USO is up 18.6%. Year-to-date, it's up 25.6%. Not too shabby.

United States Natural Gas (UNG) is blowing right past oil, though: it's up 20% in the last month, and 45.2% year-to-date. Market Vectors Steel (SLX) is keeping up: it's up 17.9% in the last month and 17.6% year-to-date.

The question on everyone's minds is whether the U.S. slowdown will eventually catch up to the global markets and put the brakes on demand for these commodities. Gordon says it's possible for some commodities, but he doesn't see steel demand slowing. In China, the number of steel factories has doubled in the last five years.

Global demand for natural gas is also high, but the supplies are plentiful. That begs the question: why has the price been rising? It all traces back to the price of crude oil; it's so expensive that natural gas is one of the alternatives under consideration. It's the cleanest burning carbon-based fuel (unlike coal), and cars powered by natural gas are getting attention from major car makers such as Honda.

Do you find it daunting to focus on a single commodity? Another option is picking a fund diversified over several commodities, such as the Dow Jones Total Commodity Index ETN (DJP) or the iShares S&P GSCI Commodity-Indexed Trust (GSG), which is allocated about 67% in energy, 16% in agriculture, 7% in industrial metals, 7% in livestock, and 3% in precious metals.

Russia Debates the Merits of Tax Cuts; What Will It Mean for ETF?

The Russian government can't seem to agree about the economy there, which means it's anyone's guess which way the exchange traded fund (ETF) will go.

Some policymakers say the economy is overheating, citing the 8.1% growth rate, report Darya Korunskaya and Yelena Fabrichnaya for the Guardian. The economy minister said Russia needed still more growth, saying the price of a slowdown was too high.

The debate mostly centers around whether a tax cut is needed to boost growth. Opponents see it as a move that would cost the state budget the equivalent of one year's defense spending. Both President Vladimir Putin and president-elect Dmitry Medvedev are in favor of the cuts.

Those in favor of the cuts say Russia needs growth of 7%-8% over the next few years if it wants to realize Putin's goal of doubling the country's gross domestic product.

Wherever Russia lands on the tax cut issue, the move could affect Market Vectors Russia (RSX). The fund is down 5.3% year-to-date, but is up less than 1% in trading today.   

Meanwhile, Putin and Bush have sat down negotiating a strategic framework for relations for both nations, even once both presidents have left office. The missile defense deal assures the Russians the European military threat is not aimed at them, reports Robert Burns for Associated Press. Apparently suspicions and old fears regarding missile defense are still a factor, so both presidents must work together to resolve this.

A key pledge is that the United States won't activate new sites in Poland and the Czech Republic unless Iran proves to be an imminent threat to Europe.

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

Emerging Market ETFs Could Be Worth a Look In Rough Times

Is it time for exchange traded fund (ETF) investors to take a trip to emerging markets - or anywhere other than the United States for now?

While some stocks are beginning to stir and the markets have been up so far today, thanks to optimism about the Federal Reserve's most recent rate cut, economists are still ready for a slowdown within the U.S. economy for the latter part of 2008.

The problems within the financial markets, in particular, are spreading into the broad stock market and are causing problems that will not go away overnight. One Moody's economist says the United States is 100% in a recession.

If that's the case, it could be time to seriously look elsewhere until this mess plays out.

Economists are favoring the long-term prospects of Brazil, China and India, reports Murray Coleman for Index Universe. China, in particular, has taken a real hit lately, but the prevailing sentiment is that it's not going to be this way forever. Mexico is showing signs that it's emerged from the U.S.' shadow. Russia's influence in Europe's emerging markets should also be watched.

If you're thinking emerging markets might be right for you, you've got many options once the funds move above their trend lines (200-day moving average):

• iShares MSCI Brazil Index (EWZ), down 4.6% year-to-date
• iShares MSCI Mexico Fund (EWW), down 3.1% year-to-date
• Market Vectors Russia (RSX), down 9.1% year-to-date

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.

Will "Medvedev" Spell Success for Russia's ETF?

Dmitri Medvedev is set to win around two-thirds of the vote in Russia's presidential election on Sunday, and some wonder what his appointment will mean for the economy and exchange traded funds (ETFs).

The insiders are actually calling the victory for the system of "managed democracy", which is causing many to believe the voter turnout will be large, reports Fred Weir for The Christian Science Monitor.

Will Market Vectors Russia (RSX) be set on the right course? People in Russia are said to be voting for stability because they've been told that's how to keep the country on its current course, reports Daniel Varnet for Herald Tribune. But is it the right one? Time will tell.

Russia needs to start making nice with other countries if it wants to continue to benefit its own economy. Is Medvedev the man to usher in a new era of change in the country?

Russia's ETF Is On the Right Track; the Right Moves Could Keep It There

On Dec. 24, Russia's exchange traded fund (ETF) hit an all-time high. By Jan. 23, its value dropped 26% as panic over the U.S. economy spread.

Since then, things have begun to look up once again and Market Vectors Russia (RSX) has climbed 8.9%. The turnaround owes much to the climbing price and growing demand for oil and gas, as 50% of the fund is allocated in those companies, reports Joanne Von Alroth for Investor's Business Daily.

Investors are also anticipating the transfer of power from President Vladimir Putin to his expected successor, First Deputy Prime Minister Dmitry Medvedev, who is seen more liberal and open. It's been said before that Russia needs to start buddying up to other countries in order to benefit its own economy, and Medvedev might just the man for that.

A fund so heavily weighted in oil and gas, however, needs to be watched closely for volatility. But the shifting winds in Russia could blow these ETF in the right direction.

What's Behind the Activity in the Steel, Metals and Mining ETFs?

Two exchange traded funds (ETFs) posted stellar numbers this week. What's behind all the movement?

Market Vectors Steel (SLX) is up 7.2% this week and up 18.4% since Jan. 22. One possible factor in the upswing is that the world's largest steel maker, ArcelorMittal MT, said it was set to raise steel prices in the United States and Europe. ArcelorMittal MT is the fund's top holding, at 14.9%, and it produces 10% of the world's global steel output.

Steel demand is booming worldwide, reports Newstex, and nearly all steel makers are expanding their operations to accommodate the demand. Matthew Hill for Mining Weekly says that China's growth, in particular, is a strong factor in the metal's demand. In fact, Chinese steel production could double by 2012.

Other fast-growing economies throughout Latin America, Eastern Europe and Russia will place extra demand on steel, too, as they call for more cars, buildings and machines. Brazil, in particular, is a major source of demand right now.

Then there's the overall feeling in the steel industry that it will be able to weather any kind of global economic downturn, report Aoife White and Matt Moore for the Associated Press.

Another ETF with similar returns of late is the SPDR S&P Metals & Mining (XME). In the last week, it's up 5.7%, and since Jan. 22 it's up 20.1%.

On top of some holdings in steel, the fund also has several companies that deal in coal mining - a major component in the production of steel.

Put the two together, and an interesting story is revealed.

BRIC ETFs Caught In Gap Between Perception and Reality

The consistency of economic strength is still being determined among investors of BRIC (Brazil, Russia, India, China) exchange traded funds (ETFs).

Pierre Daillie for Seeking Alpha says that at best, the general sentiment surrounding emerging markets has remained skeptical, and this is why the market has been absorbing the BRIC investment story with a grain of salt. Is their credit worthiness being overlooked?

Right now, emerging markets have a current account surplus of $700 billion, and longer term surpluses of $3 trillion are found on balance sheets of BRIC countries in the form of Foreign Exchange and trade surpluses.

BRIC countries have been financing the debt and driving the growth of the G7 countries for the last 5-7 years. This makes their relationship a symbiotic one.

Furthermore, the idea of emerging markets being highly correlated to U.S. markets has been overplayed, Daillie says. The correlation is there, but it is low, at .30-.40. Emerging markets will sustain, and some of their current growth and inflationary pressures may benefit from a U.S. slowdown.

The four of these are "total" emerging markets funds that give broad-based exposure to any portfolio:

• iShares MSCI Emerging Markets (EEM)
• PowerShares FTSE/RAFI  Emerging Markets Portfolio (PXH)
• SPDR S&P Emerging Markets (GMM)
• Vanguard Emerging Markets (VWO)

If Russia Makes Friends, ETF Could Benefit

Could Russia's diplomacy be hurting its opportunities for foreign investors and its exchange traded funds (ETFs)?

The Kremlin admitted that it is, reports Ambrose Evans-Pritchard for the Telegraph. It said that the country's hard-nose diplomacy and manipulation of the energy sector for political goals deters investors and has left the country friendless.

Finance Minister Alexei Kudrin said that tiffs with Europe and the United States have gone too far. Kudrin acknowledges that Russia is dependent on global economic ties and that the time to safeguard stable investment is now. A former Kremlin official said that Russia needs to think about what its foreign policy is actually costing its economy.

Although the country has the world's third-largest reserves at $470 billion, officials are still concerned about lurking risks. Companies have had to borrow heavily overseas to raise capital because the internal bond market can't keep pace with growth. The credit crisis is spreading to the country.

Market Vectors Russia (RSX) is down 8.2% year-to-date. If Russia begins to make nice with other economies, maybe a turnaround is in the offing.

Russia is also a small component of several BRIC (Brazil, Russia, India, China) funds, if you're seeking more diversified exposure.

• iShares MSCI BRIC Index (BKF)
• Claymore/BNY BRIC (EEB)
• SPDR S&P BRIC 40 (BIK)

BRIC ETF Sees Challenges, But It Still Offers Diversification

In 2007, BRIC-centric exchange traded funds (ETFs) were powerhouses. So far, 2008 is telling a different story.

The Claymore/BNY BRIC Fund (EEB) has seen challenges in some of its four countries - Brazil, Russia, India and China. From its all-time high, it's down 19%, reports Gary Gordon for ETF Expert, and the gains upward of 65% in 2007 feel like a memory. Year-to-date, the fund is down 10.7%.

Take heart, though: it's still above its long-term trend line (200-day moving average).

  Gordon feels that the fund is still attractive, though: it has a low price and allows investors access to all four emerging markets without being overweight in any single country or having to purchase four separate ETFs. It takes the guesswork out of trying to pinpoint which emerging economy is going to perform.

Eastern Europe ETF a Dark Horse in Emerging Markets Sector

When talk turns to the "emerging markets" exchange traded funds (ETFs), it often centers around a few economies in particular: Latin America, India and China. In the fourth quarter of 2007, however, there was one region that flourished: Eastern Europe.

Gary Gordon of ETF Expert says that the SPDR S&P Emerging Europe (GUR) ended the year just a few points off its 52-week high. Compare that with the performance of the iShares S&P Latin America 40 Index (ILF) and the iShares MSCI Pacific ex-Japan (EPP), both of which didn't perform as nicely as they had in the previous three quarters.

So far this year, GUR is showing strong demand, thanks in part to a heavy weighting in energy. The fund is 50% allocated in that sector, and of that, 60% allocated in Russia (one of the BRICs, you'll recall).

Is GUR truly an emerging market fund, though? The fund, overall, is 36.3% allocated in Russia, 13.1% in Poland, 12.1% in Turkey and 6.2% in Hungary. But before you nod your head "yes," consider that 27.1% of the fund is in the United Kingdom -- decidedly not an emerging market. One can't help but wonder if the fund is getting a little bit of its boost from the UK's comparatively strong economy.

Another way to access Eastern Europe is through the iShares MSCI Austria Index (EWO). The fund is heavily weighted in the struggling financial sector, though, so keep that in mind as you consider the credit crisis that is not only affecting things on U.S. soil, but also abroad.

December and Year-End ETF Performance Report

It was an eventful year for the markets and exchange traded funds (ETFs) as we saw the Dow break new records, closing above 14,000, only to have the sub-prime mortgage debacle take a toll on the markets.

The domestic challenges kept returns low for the major market indexes, but global markets continued to benefit from growth and expansion.  While the Dow was up 6.4%, the S&P 500 gained 3.5% and the Nasdaq 9.8%, the BRIC (Brazil, Russia, India, China) country ETFs soared 60-86%.  Steel also benefited from global expansion and was up over 80%.

Click here to view the December, year-end ETF Performance Report.

BRIC ETFs Are No Lightweights

Matt Krantz at USA Today touts the value of a BRIC-related exchange traded fund (ETF). As the U.S. economy puts on the brakes, the BRIC countries (Brazil, Russia, India, China for those just joining us) are looking good. Their economic growth is predicted to continue into the near future, thanks to growing populations, bustling city centers and a wealth of natural resources.

Sure, you could just track the individual stock markets of those countries. But investing in an ETF that kills four birds with one stone is probably a less cumbersome use of your time.

• SPDR S&P BRIC 40 (BIK), up 28.8% since its inception on June 22
• iShares MSCI BRIC Index (BKF), down 0.2% since its inception on November 20
• Claymore/BNY BRIC (EEB), up 51.3% year to date

Russia and BRIC ETFs Looking to Russian Election

Chairman of oil giant Gazprom, Dmitry Medvedev, is the candidate who will likely boost Russian equity markets, and exchange traded funds (ETFs). Recent political uncertainty in Russia has had investors on watch to see who will be the next president. Polya Lesova for MarketWatch reports that Vladimir Putin has backed the nomination of Medvedev to succeed him next March as Russia's president.

Medvedev is seen as a positive signal for economic policy. He is the more liberal, technocratic, and business-friendly of the front runners to succeed Putin. In Moscow the markets rose on news of his nomination.

ETFs that may be affected by the elections include:

• SPDR S&P BRIC 40 ETF (BIK) up 34.1% since June launch
• iShares MSCI BRIC Index ETF (BKF) up 6.8% since November launch
• Claymore's Bank of New York BRIC ETF (EEB) up 67.5% year-to-date
• Market Vectors Russia (RSX) up 31.1% since May launch

Russia ETF May Be At Mercy Of Presidential Elections

Presidential campaigning in Russia may put pressure on on the Russian related exchange traded funds (ETFs). After parliamentary elections on December 2, Putin's party had a landslide victory, showing a sign of trust and affirmation for his rule, reports Henry Meyer and Sebastian Alison for Bloomberg. Now that Putin must step down in May, he is searching for a viable successor who may be willing to let him continue to lead.

After eight years as president, Putin is trying to find a way around the constitutional limit of two terms in a row.  Perhaps this could be done by running things form a "lower perch". Putin's inability to clarify his plans is raising concern over a destabilizing struggle in trying to manipulate or push aside a successor who doesn't co-operate.

The political situation in Russia will be worth keeping an eye on and how it may affect Market Vectors Russia (RSX). RSX is up 27.3% since its May launch.

BRIC ETF Comparisons

There are several BRIC (Brazil Russia India China) exchange traded funds (ETFs) to choose from, so which is the best choice?  Matthew D. McCall for Seeking Alpha reports that what's inside is just as important, if not more so, than fees.

SPDR S&P BRIC 40 ETF (BIK) has an expense ratio of 0.5%.  BIK is made up of 40 stocks and the top 10 make up 55% of the portfolio.  The country breakdown is as follows: China 44%, Brazil 26%, Russia 25% and India 6%.

iShares MSCI BRIC Index ETF (BKF) has an expense ratio of 0.75%. BKF has 124 stocks, with the top 10 making up 36% of the ETF. Country weightings are: China 36%, Brazil 28%, Russia 20% and India 16%.

Claymore's Bank of New York BRIC ETF (EEB) has an expense ratio of 0.6%.  EEB has 75 stocks in its portfolio, and the breakdown is: Brazil 46%, China 39%, India 11% and Russia 4%.

Knowing your financial goal is important in selecting an ETF.  If you want exposure to Russia, then EEB may not be the right choice for your portfolio.  Make sure your objectives are in line with the ETF's holdings.

Russia Oil Market Pumps Up the ETF RSX

The point of view on Russian blue-chip oil companies is changing, due to earnings surprises in strong oil prices and this is can affect the Russian-focused exchange traded fund (ETF). J.P. Morgan Chase began coverage of Russia's oil companies and believes it is misunderstood and undervalued. "Positive fundamental sector dynamics" may deliver valuations and earnings performance over 12-18 months, reports Polya Lesova for MarketWatch.

Oil and natural gas products make up over 65% of Russia's total exports, and the Russian stock market is dominated by oil and gas stocks, accounting for at least 50% of the RTS index. Oil and gas make up 37.1% of Market Vectors Russia ETF (RSX), which is up 22.5% since its May inception.

The BRIC ETF Theme

The BRIC (Brazil, Russia, India, China) countries are growing at a substantial pace, helping exchange traded funds (ETFs) and Canada attractive to investors. Why Canada? No matter what happens with the U.S. economy, the BRIC countries will most likely buy their resources from Canada. Shirley Won for ReportonBusiness reports that strong growth in the BRIC countries and their growing middle class should also drive demand for metals used in infrastructure projects and gold for jewelry. Agricultural and industrial companies also play on the BRIC theme. Canada is filled with natural resources to help these countries grow.

BRIC focused ETFs include:

• SPDR S&P BRIC 40 (BIK)
• Claymore/BNY BRIC ETF (EEB)
• iShares MSCI Brazil Index (EWZ)
• Market Vectors Russia ETF (RSX)
• First Trust ISE Chindia (FNI)
• iShares FTSE/Xinhua China 25 Index (FXI)
• iPath MSCI India ETN (INP)
• iShares MSCI Canada Index (EWC)
  

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!

Investors and ETFs Seek Shelter From the Storm

The sub-prime and credit mess has led to money being pulled out of exchange traded funds (ETFs) and instead taking shelter in money market funds, reports Carl Delfeld of ETF XRAY.

EPFR Global, which tracks net investment flows by the world's biggest equity managers, says all of the major equity funds and ETFs posted net outflows for the week ending November 14. Equity funds in emerging markets had $5.58 billion pulled out, while $5.07 billion was pulled out of developed markets.

If investors were leaving their money in emerging markets, they tended to favor the larger economies. Net inflows to Brazil, Korea, China and Russia totaled $878 million. The BRIC funds took in an additional $480.6 million.

On the flip side, money market funds took in $10.1 billion. That brings the net inflows since the beginning of August past $100 billion.

The Russians And ETF Are More Than Just Energy

Russia is an oil-rich country and earlier this year exchange traded fund (ETF) investors were given the opportunity to invest in the country and its energy through Market Vectors Russia ETF (RSX).  But there is more to Russia than oil, according to John Boudreau of the San Jose Mercury News. There are lots of scientists, technologists and a well-educated workforce. Their problem lies in the conversion of tech know-how into products and business plans.

Russia is looking to Silicon Valley for help creating a business model of success. They want to partner with tech companies and venture capitalists (VCs). However, current investment laws in Russia are turning off VCs. Russia requires VCs to back their commitments with cash up front, as opposed to the common practice of sending the money at the time of investment.  Russia is working to change its laws to better align itself and help make their businesses more attractive. They also must overcome the leeriness Americans feel about the erosion of democratic institutions. To Russia's advantage, there is a new generation graduating from universities who are smart, speak English, study abroad and will be better equipped to work in the global world. Will this mean we see more growth in the country outside of energy?

Energy Exposure With Russian ETF

Van Eck Global seems to have timed the launch of their Russian exchange traded fund (ETF) perfectly. An "emerging markets" party if you will, Market Vectors Russia ETF (RSX) hit the market in May, just as equity markets began their great upswing in Russia, reports Trading Markets. RSX is up 23.7% since inception.

Russian equities usually equals oil and gas. As of August 31, two giants of the energy sector made up roughly 15% of the 30 listed companies on the DAXglobal Russia+Index. This is RSX's benchmark and that means nearly one-fifth of your investment will be tied up in two companies: Rosneft and Gazprom. The remaining holdings are utilities, and there are more within the energy sector. Aside from this risk, there are also political considerations and economic risks that come with any emerging market or investment. Another way to gain exposure to Russia with a little more diversification is through the BRIC (Brazil, Russia, India, China) ETFs.

Economic Worries Could Wear on Russia's ETF

Although Russia's exchange traded fund (ETF) has been climbing upward for the last couple of months, political and economic jitters could be the influence behind it's recent drop. Currently, the Market Vectors Russia ETF (RSX) is up 9.1% for the last three months, having launched in April.

On Thursday, President Vladimir Putin said that fighting poverty had been the most challenging mission of his eight years in office and offered assurances that the country would not see an economic meltdown when he leaves office next year. However, Putin acknowledged that inflation was a problem and warned that consumer prices could continue to climb, reports Anna Smolchenko for The Moscow Times.

During Putin's presidency, the country's oil-driven economic boom has reached the poor. Many Russians are worried that the stability he brought will evaporate once he steps down. Russians also are concerned about inflation and steadily increasing consumer prices. Putin said that the government would not meet its target of 8% inflation for the year and said prices could rise further.

Oil, natural gas, metals and timber account for more than 80% of exports and 32% of government revenues, which leaves the country vulnerable to swings in world commodity prices. However, Russia ended 2006 with its eighth straight year of growth, averaging 6.7% annually since the financial crisis of 1998. Although high oil prices and a relatively cheap ruble initially drove this growth, since 2003, consumer demand and investment have played a big role, according to the CIA World Factbook.

It's a BRIC House in the ETF Industry

As we finish out a strong week for the markets, we see that BRIC exchange traded funds (ETFs) are still among the top performers. China and India have made headlines with their tremendous economic growth and rapidly rising gross domestic products (GDPs). In fact, in the first half of 2007, the increase in consumer spending (in actual terms) in China and India together contributed more to global GDP growth than America's increase did.

Brazil has been greatly benefiting from our weak dollar. Its currency, the real, recently gained 0.21% to 1.867 per U.S. dollar, and its stock market has hit record closes. Meanwhile, Russia's economy also has had good news. Some experts predict that Russia's GDP could grow 7.5% in 2007. For investors interested in BRIC ETFs, consider EEB and BIK with their year-to-date performance:
 

• Claymore/BNY BRIC (Brazil, Russia, India, China) ETF (EEB) - up 50.1%
• SPDR S&P BRIC (Brazil, Russia, India, China) 40 ETF (BIK) - up 23.2% for the last three months, having launched in June.

For full disclosure, some of Tom Lydon's clients own EEB.

Good News for Russia's Economy and ETF

The Market Vectors Russia ETF (RSX) exchange traded fund (ETF) that launched in April is up 11% since the market low in August. What could account for its rise?

One factor influencing RSX's performance is the prediction that the country's GDP could grow 7.5% in 2007, according to Russia's Finance Minister Alexei Kudrin. He also said he thought capital inflow to Russia would be somewhere between $60 to $70 billion for this year, according to Interfax. Another factor that could help RSX is the International Monetary Fund's (IMF) overall positive outlook on Russia's economy. All members agreed that the country has had rapid economic growth; an increase in the volumes of investments, including direct foreign investments; and financial sector strengthening and development, ITAR-TASS reports.

BRIC Country ETFs Come out Ahead

Emerging markets and the exchange traded funds (ETFs) that follow them appear to benefit from the global credit crunch as long as there isn't a recession. According to an investment strategy report by Merrill Lynch, analysts do not detect one on the horizon. The report says, "Nominal GDP growth of 12% in emerging markets should be more than sufficient to deliver the consensus EPS growth target of 15% next year." Fundamentals are strong, yet emerging markets are still undervalued, underowned, undercapitalized and underleveraged, reports Trang Ho for Investor's Business Daily.

Next year, it appears the consumer and infrastructure sectors of the BRIC countries (Brazil, Russia, India and China) will take center stage thanks to higher global inflation and strong domestic demand. One way to play the emerging-market countries is through:

• SPDR S&P BRIC 40 (BIK)
• Claymore/BNY BRIC (EEB)

Energy, financials and telecommunications dominate in both ETFs, while EEB has higher weightings in materials and technology. EEB caps energy at 25% of assets, and BIK caps at 39%.

Russian Optimism Could Spread to Its ETF

Russians seem to be more optimistic about the country's economic future, which could affect its exchange traded fund (ETF). According to the Consumer Confidence Index (CCI), economic growth, rising incomes and declining poverty are components to Russia's fresh optimism, reports Russia Today. The survey reflected the opinions of almost 14,000 respondents across Russia, and it revealed that the index is now at 132 points, which is 11 points higher than 2006 and 17 points higher than 2005's 115 points.

The Market Vectors Russia ETF (RSX) that launched in late April has had a rocky start, but it's up 7.2% for the last three months. RSX tracks the DAX Global Russia+ Index of 30 Russian-based companies. Components of the index include 30 of the most heavily-traded Russian companies that have listings on global exchanges, either through an American Depository Receipt (ADR), a Global Depository Receipt (GDR) or local Russian shares.

India ETFs and Funds: What's the Latest?

The Claymore/BNY BRIC (EEB) that invests in Brazil, India, China and Russia has been a strong performer so far this year, up 21%. Many investors consider India to be the most secure of the BRIC countries, says Fred Fuld for Stockerblog. There are a few theories on why this is. 

For one, India has a more stable government than Russia, according to Jennifer Openshaw for TheStreet.com. Also, most Indian citizens are bilingual (if not trilingual or more) when it comes to English, which is another advantage over other BRIC countries. This might be a reason why it has such strong service economy in areas such as product design, engineering and accounting. Other factors boosting India's economy include credit growth, wage increases for skilled workers, record industrial capital utilization rates and more imports. 

If you're looking to invest in India, you have a couple of other options besides EEB. There's the iPath MSCI India ETN (INP), which is up 18% year-to-date and the closed-end fund India Fund (IFN), up 0.2%. Before investing in India funds, ensure they fit with your investment strategy and know the risks.

Blended ETFs Offer Cure for Indecisive Investors

The exchange traded fund (ETF) world offers something for every investor. For those who have trouble deciding what they want in their ETFs, there are blended ETFs with a dash of "this" and a pinch of "that."

For example, the First Trust Advisors LSE ChIndia Fund (FNI) is an ETF that offers exposure to China and India through one fund. The fund holds the 25 most liquid stocks in each country and has a low expense ratio at 0.6%.

Selena Maranjian for The Motley Fool suggests other diversified ETFs like the SPDR Trust (SPY) that has a broad mix of U.S. companies and the iShares MSCI EAFE Index ETF (EFA) that has a wide array of international exposure. Another blended ETF option is the Claymore BNY/BRIC Fund (EEB). It represents 40% of the global population and gives simplified exposure to Brazil, Russia, India and China.

Russia ETF: Gateway to Russia and Commodities

The Russian economy has come to life, and U.S. investors can now tap into this market with exchange traded funds (ETFs). As we've mentioned before, the BRIC countries (Brazil, Russia, India and China) are having a growth spurt, with expectations of outgrowing other economies during the next several decades. Russia's market has been watched by American investors for a long time, however, of the four BRIC countries, it is the most volatile. Because Russian companies aren't listed on the American exchanges, ETFs make a safe and easy route to gain exposure. The Russia-specific Market Vectors Russia ETF (RSX), which has been on the market since May, has returned 13% so far.

After the collapse of the Russian economy, investors have been shy to put their money there. As of late, Russia has been seen as a commodities giant, with reserves of oil, coal, natural gas and minerals, reports Jonas Emerraji for TheStreet.com. RSX's primary holdings are in oil, gas, iron and steel companies. It is also noteworthy to remember that energy prices are rising globally.

Thinking Global, Acting Local with ETFs

Investing in global exchange traded funds (ETFs) has been a hot topic, as the global markets continue to outperform domestic markets. U.S. markets are reaching record highs, the DIAMONDs Trust (DIA) is up 12% year-to-date, but it still lags behind the top international ETF, iShares MSCI Brazil (EWZ), which is up 46%. SPDRs (SPY) is up 9%.

Recent reports show more money flowing into international ETFs, yet the number of Americans investing internationally is low. Aaron Siegel of InvestmentNews reports 62% of consumers in the U.S. do not believe the U.S. will be a world leader in ten years. Yet only 13% of Americans invest internationally. Will Americans continue to focus on "Made in the USA" or will they look globally to add performance to their portfolio?

Other top performing international ETFs include:

• iShares MSCI South Korea (EWY) - up 35% year-to-date
• iShares S&P Latin America (ILF) - up 35% year-to-date
• iShares MSCI Malaysia (EWM) - up 30% year-to-date
• Claymore/BNY BRIC (EEB) - up 30% year-to-date