The exchange traded fund (ETF) world is large, vast and still growing. As new launches appear, it becomes increasingly challenging to become educated on all of them. Here are five funds that are different from the rest and may be worth a look.
1. EGS Dow Jones Emerging Markets Titans Composite (NYSEArca: EEG): down 5.7% in the last three months. EEG seeks to track the Dow Jones Emerging Markets Titans Composite Index, which is an index composed of a representative sample of 100 emerging market companies deemed by Dow Jones to be leaders in each of 10 sectors. [ETF Spotlight: EEG.]
Emerging Global Shares prides itself on having funds that are pure plays on emerging markets. Until recently, there haven’t been many sector-based funds focusing on emerging markets. This fund is a broad way to get that exposure if you want it.
Emerging markets productivity is improving, are a part of the next investment frontier, have greater economic freedom and account for a large portion of global GDP. [Reasons to stick with emerging markets.]
- Brazil is the top country, with 24.9% of the weighting. China has 24.3%, Russia has 13.4% and India has 13%. Other countries include Mexico, South Africa, Chile and Indonesia.
- Oil and gas is the top sector, weighted at 30.8%; financial is 22.1%; telecommunications is 11.6%; and basic materials is 9.3%.
2. PowerShares Global Progressive Transport (NYSEArca: PTRP): up 69.9% in the last year. PTRP seeks to reflect the Wilder NASDAQ OMX Global Energy Efficient Transport Index. This ETF focuses on companies that promote the advancement of efficient transportation. More countries are becoming environmentally conscious and many have already set aside billions in infrastructure projects. [How climate change can boost transportation ETFs.]
This is a first-of-its kind ETF, focusing on a sector that could have some legs as the global climate change debate (ahem)…heats up.
- Top countries include: United States 28.5%, Canada 11.04%, United Kingdom 8.03%, Taiwan 7.9%.
- Sector allocations: consumer discretionary 19.4%, energy 6.7%, industrials 59.5%, information technology 5.9%, Materials 8.6%.
3. ELEMENTS S&P CTI ETN (NYSEArca: LSC): How the S&P Commodity Trends Indicator provides returns is a simple matter of its construction, which follows trends. This allows commodities to be either long or short (except the energy sector which is long or flat, but never short). Rather than going down with a sinking ship, the indicator can adjust its positions on a monthly basis, depending on how the individual commodities are trending at month’s end.
This fund is interesting because of the long/short approach it takes to a basket of commodities. Commodities tend to move on their own trends (for example, agriculture may be trending down while gold is hitting record highs), and this fund takes the differences into account. [How this fund works.]
Note that LSC is an exchange traded note (ETN). [The difference between ETFs and ETNs.]
- The indicator goes both long and short in six areas: energy (long or flat only), softs, grain, livestock, industrial metals and precious metals. Using a seven-month weighted moving average, the indicator then determines in what areas it will be long and where it will be short.
4. PowerShares DB G10 Currency Harvest (NYSEArca: DBV): up 22.2% in the last year. The ETF seeks to capitalize on the theory that currencies with high interest rates generally tend to rise in value relative to currencies that have low interest rates. DBV looks at the three-month interest rates of the G10 currencies and goes long on the three with the highest rates and short on the three with the lowest, making it a carry trade play. [ETF Spotlight: DBV.]
The carry-trade involves for selling a currency from a low interest rate country and using the proceeds to purchase a currency from a high interest rate country. The idea is not to capture big moves, but to exploit the spread between the two countries’ interest rates. [Playing carry-trades.]
- DBV can hold positions in any of the following 10 currencies: The U.S. Dollar, the Euro, the Japanese Yen, the Aussie, Canadian and New Zealand Dollars, the Norwegian Krone, the Swedish Krona, the British Pound and the Swiss Franc.
5. Claymore/Clear Global Exchanges, Brokers/Asset Managers (NYSEArca: EXB): up 66.7% in the last year. EXB tries to reflect the performance of the Beacon Global Exchanges, Brokers & Asset Managers Index. The Index is made of around 100 equity securities traded on global exchanges, including MLPs, ADRs and GDRs of companies that operate security exchange or brokerage/asset manage firms. The financial sector has seen a handsome recovery off the market’s March 9 low, with most ETFs up at least 100% since then. However, fourth-quarter earnings have provided mixed sentiments. [Financial ETFs, struggling but improving.]
This is a fund that could give broad, global exposure to the financial sector as the global economy continues to recover. Just watch that trend line. [How to follow trends.]
- Top countries: United States 61.8%, Japan 9.8%, Britain 6.0%, Germany 5.1%, Hong Kong 4.9%.
- 100% Financials
Max Chen contributed to this article.