ETF Trends
ETF Trends

It is just about that time of year where we reflect upon the year and resolve to improve upon our quality of life in a fresh new year. Let’s just hope that exchange traded funds (ETFs) have not forgotten this tradition and will resolve to undertake some new years resolutions for a better year.

Emerging Markets Bounce Back.

  • Hopefully the statement will hold true for iShares MSCI Emerging Markets Index (EEM) in the new year with emerging-market countries rich in growing populations, intellectual capital, a growing middle class and growing urban centers. These factors will serve them well when the global economic recovery begins.

Specific emerging-markets that have more potential for prosperity than others include:

  • Latin American countries and their ETFs, such as the SPDR S&P Emerging Latin America (GML). Latin American economies are now pondering whether they should inject capital into their economies like the United States and Australia have done, and if so, can they afford it? Also the fact that these countries are making an investment in the future and building up workers’ skills which could pay dividends in the future.
  • This brings us to Brazil, iShares MSCI Brazil Index Fund (EWZ), which has taken steps to further educate their workforce. Companies such as Vale, Embraer and Amanco have decided to ameliorate the situation by providing educational tools themselves and even open up universities themselves.
  • China and India, First Trust ISE Chindia (FNI) or individually SPDR S&P China (GXC) and PowerShares India Portfolio (PIN), have stagnated this year. But the main points to watch are China’s political reform against economic change as well as India’s economic price for its democracy, presented by terrorist attacks and Pakistan political differences.
  • Other countries such as Thailand’s, iShares MSCI Thailand Invest Mkt Index (THD), economy and ETF have been wrought with internal strife but the appointment of a new prime minister may break the trend.

Certain Sectors Have Eyes for Obama.

  • President-elect Barack Obama has set plans in motion for large public works projects, and infrastructure is poised to reap the benefits, iShares S&P Global Infrastructure Index (IGF). The soon-to-be President of the United States is gearing up with a more expanded economic recovery plan which will create a projected 3 million more jobs within two years.
  • Biotechnology could benefit, too, as Obama is in support of research and development and tax credits for research, the bread-and-butter of the biotech industry. Many believe Obama could approve legislation for federal funding of the research, which has been vetoed by Bush. The iShares Nasdaq Biotechnology (IBB) could win if Obama’s support of the industry goes as planned.
  • Another area feeling optimistic about Obama is the clean energy sector, particularly solar. He has promised to support climate change and has pledged $150 billion in clean power investment. Claymore/MAC Global Solar Energy (TAN) could have a chance to shine if this comes to light.

Commodities Could Be on the Rebound

  • After a year of frenzied commodity selling, commodity and its related ETF, iShares S&P GSCI Commodity-Indexed Trust (GSG), are looking at a treasuretrove. Jim Rogers, chairman of Rogers Holdings, feels that commodities will be the place to have your money when the United States comes out of the downturn. Eventually, a lack of new supply will lead to shortages again, and since the fundamentals of commodities are still in place, prices will rebound nicely.
  • Rogers has specifically noted likely shortages in agriculture and crude oil commodities, United States Oil (USO). For investors who can handle the volatility and sudden price movements, oil can be a long-term play. OPEC announced cuts and many other production cuts around the world are being announced.
  • Another commodity, gold and its related gold mining ETF Market Vectors Gold Miners ETF (GDX), is poised for a lucrative gain. In a Fox Business interview, Tom Lydon stated that as more people go to gold, miners will be the first to see profits. The mine owners will hire people cheaper and extraction of gold is now easier which both have helped cut costs.
  • Common sense suggests that the increased liquidity and projected consumer spending will cause inflation, which would then lead investors to the relative safety of precious metals. Specifially, investors should take a gander at gold and its related ETF SPDR Gold Shares (GLD).

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.