Fool.com: China ETF Choices [Motley Fool Take]
China is clearly an area of investor interest since it offers much higher growth rates than the U.S. or European markets. In this article Roger Nusbaum compare the two most popular ETF options iShares FTSE/Xinhua China 25 Index Fund ( FXI ) and the PowerShares Golden Dragon Halter USX China Portfolio ( PGJ ).
Friday, December 31
Thursday, December 30
CNBC: Fine-Tuning a Winning ETF Portfolio
CNBC: Fine Tuning a Winning ETF Portfolio
Tim Middleton (MSN Money) tweaks his ETF portfolio for 2005.
He Sold a 10% position in ICF (a REIT ETF) because he feels REIT's are over priced. He is putting 5% into IGE which is the Goldman Sacks Natural Resources Fund and 5% into EEM an Emerging Markets fund.
Tim Middleton (MSN Money) tweaks his ETF portfolio for 2005.
He Sold a 10% position in ICF (a REIT ETF) because he feels REIT's are over priced. He is putting 5% into IGE which is the Goldman Sacks Natural Resources Fund and 5% into EEM an Emerging Markets fund.
Tuesday, December 28
Year End ETF Bargain Hunting
The Year End Bargain Hunter Strategy
Since I first started watching the stock market, I've always noticed that the best performing investments of one year often turn out to be the worst performing the next year and vice versa. Many strategies have been devised to take advantage of this phenomena such as the "Dogs of the Dow" but it seems to be much more predictable using sectors rather than individual companies. Now with so many ETF categories available, you can truly take advantage of the herd mentality.
Since we are in a bull market phase, I am only looking to invest in underperforming sectors and sell any positions that have performed extremely well. In 2004 the best performing ETF was EWO ( Austria iShare ), with a 1 year return of 75.13%. EWO has been benefiting from the birth of capitalism across Eastern Europe. The best performing sector fund was XLE ( Energy Sector SPDR ) which has a one year return of 55.87%. Housing and other real estate sectors have also outperformed in the past year.
Now for finding the bargains! Doing a quick screen we find that there is a clear winner for the biggest loser.... SMH ( Semiconductor HOLDR ) -20.90% and IGW ( GS Semiconductor iShare ) with a -19.96% 1 yr return! Technology in general (IYW) is also down slightly over the past year.
Health Care ( IYH +3.35%) and Biotech ( IBB +1.66%) are two areas that have under-performed in the past 12 months but are slightly positive on the year.
Out of these areas the two that intrigue me are Semiconductors and Biotech. I tend to go with the highest volume ETF's so I'm using IBB and SMH. IBB recently crossed above it's 200 day moving average so that indicates to me the biotech sector is strengthening.
Right now SMH is trapped within a tight range between $32 and $35. The 200 day moving average also comes in at $34 so there is plenty of overhead resistance that needs to be cleared.
Some people prefer not to look at charts and simply move money at year-end into the underperforming sectors. Each investor needs to access their risk tolerance and determine which method is right for them.
Note: This is not intended to be investment advise and is only offered as an illustration of how to use ETF's to find value in the stock market. Please consult your investment advisor prior to making investment decisions.
Since I first started watching the stock market, I've always noticed that the best performing investments of one year often turn out to be the worst performing the next year and vice versa. Many strategies have been devised to take advantage of this phenomena such as the "Dogs of the Dow" but it seems to be much more predictable using sectors rather than individual companies. Now with so many ETF categories available, you can truly take advantage of the herd mentality.
Since we are in a bull market phase, I am only looking to invest in underperforming sectors and sell any positions that have performed extremely well. In 2004 the best performing ETF was EWO ( Austria iShare ), with a 1 year return of 75.13%. EWO has been benefiting from the birth of capitalism across Eastern Europe. The best performing sector fund was XLE ( Energy Sector SPDR ) which has a one year return of 55.87%. Housing and other real estate sectors have also outperformed in the past year.
Now for finding the bargains! Doing a quick screen we find that there is a clear winner for the biggest loser.... SMH ( Semiconductor HOLDR ) -20.90% and IGW ( GS Semiconductor iShare ) with a -19.96% 1 yr return! Technology in general (IYW) is also down slightly over the past year.
Health Care ( IYH +3.35%) and Biotech ( IBB +1.66%) are two areas that have under-performed in the past 12 months but are slightly positive on the year.
Out of these areas the two that intrigue me are Semiconductors and Biotech. I tend to go with the highest volume ETF's so I'm using IBB and SMH. IBB recently crossed above it's 200 day moving average so that indicates to me the biotech sector is strengthening.
Right now SMH is trapped within a tight range between $32 and $35. The 200 day moving average also comes in at $34 so there is plenty of overhead resistance that needs to be cleared.
Some people prefer not to look at charts and simply move money at year-end into the underperforming sectors. Each investor needs to access their risk tolerance and determine which method is right for them.
Note: This is not intended to be investment advise and is only offered as an illustration of how to use ETF's to find value in the stock market. Please consult your investment advisor prior to making investment decisions.
Friday, December 17
Gold ETF - Some Perspective by Comparison
Gold ETFs - Some Perspective by Comparison
For those who would like a summary of the above, the primary criticisms of GLD are: 1. The key custodian, HSBC, can use sub-custodians 2. HSBC is not liable for the acts or omissions of its sub-custodians 3. The locations of the vaults of the sub-custodians are not disclosed 4. Neither the Trustee or HSBC monitors the activities of sub-custodians 5. Recent analysis of the allocated bar listing reveals duplicated bar numbers 6. Long-term capital gains tax rate on GLD is 28% instead of usual 15%
For those who would like a summary of the above, the primary criticisms of GLD are: 1. The key custodian, HSBC, can use sub-custodians 2. HSBC is not liable for the acts or omissions of its sub-custodians 3. The locations of the vaults of the sub-custodians are not disclosed 4. Neither the Trustee or HSBC monitors the activities of sub-custodians 5. Recent analysis of the allocated bar listing reveals duplicated bar numbers 6. Long-term capital gains tax rate on GLD is 28% instead of usual 15%
Monday, December 13
Tackle ETF prospectus at benchmark, expense ratio
When I first began investing in ETF's I just assumed that all of them operated the same way. I later found out that there are differences between them that can affect their performance. The biggest differences come in how they managed (actively or passively ) how they are "weighted" (based on capitalization or percentage) and also how dividend reinvestments are handled ( Unit Investment Trusts differ from Management Investment Companies).
For those of us who have grown to love etf investing there is nothing in this USA Today article that will scare us off, but it contains many good points that you should take the time to read.
Tackle ETF prospectus at benchmark, expense ratio
For those of us who have grown to love etf investing there is nothing in this USA Today article that will scare us off, but it contains many good points that you should take the time to read.
Tackle ETF prospectus at benchmark, expense ratio
Friday, December 10
PowerShares Capital Management LLC Introduces Two New Exchange Traded Funds
PowerShares Capital Management LLC Introduces Two New Exchange Traded Funds
PowerShares High Yield Equity Dividend Achievers(TM) Portfolio (AMEX:PEY - News) is designed for investors who seek a relative low-cost, tax-efficient investment in high yielding companies committed to consistently increasing their dividend. The PowerShares High Yield Equity Dividend Achievers(TM) Portfolio is based on the Mergent Dividend Achievers(TM) 50 Index which is comprised of the fifty highest dividend yielding companies with at least ten years of consecutive dividend increases. The index has a current dividend yield of 4.1% and average annual returns of 21.12%, 11.63% and 17.93% over the last 1 year, 3 year and 5 year periods compared with the S&P 500 returns of 13.87%, 4.04% and -1.31(1).
PowerShares Golden Dragon Halter USX China Portfolio (AMEX:PGJ - News) is designed for investors who seek relative low-cost, tax-efficient investment in mainland China with the added comfort of owning companies listed on U.S. stock exchanges. The PowerShares Golden Dragon Halter USX Portfolio is based on the Halter USX China Index(sm) which is designed to provide insight and access to the unique economic opportunities taking place in China while using domestic listed securities. The Halter USX China Index(sm) is comprised of U.S. listed companies which derive all or a majority of their revenue from the Peoples Republic of China.
PowerShares High Yield Equity Dividend Achievers(TM) Portfolio (AMEX:PEY - News) is designed for investors who seek a relative low-cost, tax-efficient investment in high yielding companies committed to consistently increasing their dividend. The PowerShares High Yield Equity Dividend Achievers(TM) Portfolio is based on the Mergent Dividend Achievers(TM) 50 Index which is comprised of the fifty highest dividend yielding companies with at least ten years of consecutive dividend increases. The index has a current dividend yield of 4.1% and average annual returns of 21.12%, 11.63% and 17.93% over the last 1 year, 3 year and 5 year periods compared with the S&P 500 returns of 13.87%, 4.04% and -1.31(1).
PowerShares Golden Dragon Halter USX China Portfolio (AMEX:PGJ - News) is designed for investors who seek relative low-cost, tax-efficient investment in mainland China with the added comfort of owning companies listed on U.S. stock exchanges. The PowerShares Golden Dragon Halter USX Portfolio is based on the Halter USX China Index(sm) which is designed to provide insight and access to the unique economic opportunities taking place in China while using domestic listed securities. The Halter USX China Index(sm) is comprised of U.S. listed companies which derive all or a majority of their revenue from the Peoples Republic of China.
Wednesday, December 8
Gold ETF (GLD) Is Hot, But Does It Mean The End For Gold's Bull Run?
In my opinion, the launch of a new sector based ETF is probably one of the best contrarian indicators out there. Now, I'm not talking about the sector making a short term top, but rather an extreme high that stands for years to come.
This is not the fault of ETF's but simply the fact that those who launch a new ETF are doing so in response to investor demand. The same is true with the launch of sector mutual funds, futures or option products. They want to make sure they launch new products that create lots of volume and excitement. The most exciting ETF launch of this year has been in gold. Is it a coincidence that GLD debuted at the same time gold was hitting 16 year highs? I don't think so.
Just look at the trading volume of the Gold ( GLD ) ETF in the first 14 days of trading, volume has been between 4,000,000 and 10,000,000 shares every day which is extraordinary for any new investment vehicle. Granted, the new Gold ETF is probably the most efficient way to own the commodity so that accounts for part of it's instant appeal. But it also indicates that the interest in gold investing is also very high. This type of wildly bullish sentiment is often present at major market tops.
When other sectors ETF's have launched such as the BHH ( Business to Business Holders ), IYW ( Dow Jones Tech Index ), IYV ( DJ Internet Sector ) and IYZ ( DJ US Telecom ) all launched within weeks of major tops in each sector. Ironically, IYV launched at the top of the internet bubble and was closed right near the lows of all the major internet companies such as AMZN, EBAY, YHOO and others. All IYV holders (including me) were forced to cash in our shares at the bottom of a grueling sector bear market. The reason I had bought the ETF was to avoid having to pick which individual stocks were going to survive.
The only example I know of where an ETF was launched at the bottom of a sector cycle (I'm sure there are others) was in the energy services ( XLE ). If you would've bought it the day it opened, you would've entered near a major cycle low for oil stocks. Needless to say, XLE didn't have an average trading volume of 7.5 million per day when it launched. There is always much more enthusiasm at a major top!
Who knows how this will all play out, but it's definitely just another indicator to keep on the long term radar. If a sector is red hot and a new ETF comes to market based on that sector, you may want to think twice about plunking down that hard earned cash!
This is not the fault of ETF's but simply the fact that those who launch a new ETF are doing so in response to investor demand. The same is true with the launch of sector mutual funds, futures or option products. They want to make sure they launch new products that create lots of volume and excitement. The most exciting ETF launch of this year has been in gold. Is it a coincidence that GLD debuted at the same time gold was hitting 16 year highs? I don't think so.
Just look at the trading volume of the Gold ( GLD ) ETF in the first 14 days of trading, volume has been between 4,000,000 and 10,000,000 shares every day which is extraordinary for any new investment vehicle. Granted, the new Gold ETF is probably the most efficient way to own the commodity so that accounts for part of it's instant appeal. But it also indicates that the interest in gold investing is also very high. This type of wildly bullish sentiment is often present at major market tops.
When other sectors ETF's have launched such as the BHH ( Business to Business Holders ), IYW ( Dow Jones Tech Index ), IYV ( DJ Internet Sector ) and IYZ ( DJ US Telecom ) all launched within weeks of major tops in each sector. Ironically, IYV launched at the top of the internet bubble and was closed right near the lows of all the major internet companies such as AMZN, EBAY, YHOO and others. All IYV holders (including me) were forced to cash in our shares at the bottom of a grueling sector bear market. The reason I had bought the ETF was to avoid having to pick which individual stocks were going to survive.
The only example I know of where an ETF was launched at the bottom of a sector cycle (I'm sure there are others) was in the energy services ( XLE ). If you would've bought it the day it opened, you would've entered near a major cycle low for oil stocks. Needless to say, XLE didn't have an average trading volume of 7.5 million per day when it launched. There is always much more enthusiasm at a major top!
Who knows how this will all play out, but it's definitely just another indicator to keep on the long term radar. If a sector is red hot and a new ETF comes to market based on that sector, you may want to think twice about plunking down that hard earned cash!
ETF Focus: ETF inventor Nate Most dies at 90 - Financial - Financial Services - Mutual Funds
ETF Focus: ETF inventor Nate Most dies at 90 - Financial - Financial Services - Mutual Funds: ( Link to Full Story )
BOSTON (CBS.MW) -- Nathan "Nate" Most, who invented the first U.S. exchange-traded fund and spawned a growing $190 billion industry, died Friday at the age of 90.
"'Financial services has lost a real innovator and a true gentleman,' said Tom Taggart, a managing director at BGI who worked with Most for several years. 'Besides serving as the first chairman of the iShares board, he was a positive influence on so many people. He will be missed.'"
BOSTON (CBS.MW) -- Nathan "Nate" Most, who invented the first U.S. exchange-traded fund and spawned a growing $190 billion industry, died Friday at the age of 90.
"'Financial services has lost a real innovator and a true gentleman,' said Tom Taggart, a managing director at BGI who worked with Most for several years. 'Besides serving as the first chairman of the iShares board, he was a positive influence on so many people. He will be missed.'"
Halter USX China Index ETF to Begin Trading on the Amex December 9, 2004
Halter USX China Index ETF to Begin Trading on the Amex December 9, 2004: (Link to full story)
"Effective December 9, 2004, PowerShares Capital Management LLC will introduce a new exchange traded fund (ETF) based on the Halter USX China Index, the only index in the world devoted exclusively to U.S.-listed securities of companies that derive a majority of their revenues from the People's Republic of China. The PowerShares Golden Dragon Halter USX China Portfolio (AMEX: PGJ) will begin trading on the American Stock Exchange December 9, 2004 and will mirror the Halter USX China Index. Currently, 38 public companies are represented in the Halter USX China Index. "
"Effective December 9, 2004, PowerShares Capital Management LLC will introduce a new exchange traded fund (ETF) based on the Halter USX China Index, the only index in the world devoted exclusively to U.S.-listed securities of companies that derive a majority of their revenues from the People's Republic of China. The PowerShares Golden Dragon Halter USX China Portfolio (AMEX: PGJ) will begin trading on the American Stock Exchange December 9, 2004 and will mirror the Halter USX China Index. Currently, 38 public companies are represented in the Halter USX China Index. "
Saturday, December 4
The Growing ETF Craze
With the recent advent of the Gold ETF, better know as the StreetTracks Gold Trust (GLD), interest continues to build exponentially on Exchange-Traded Funds (ETF). For those that don't know, the GLD tracks the price of gold and trades just as a stock would. It is by far the easiest way for an investor to actually buy gold without having to worry about where to store or how to quickly sell the gold. This is exactly why ETFs are quickly becoming extremely popular, they make it very easy to buy and sell an entire industry (or sector) without having to worry about picking the right stock in the sector you like.
Allow me to provide a quick explanation on what ETFs are and that they do. ETFs are investments that track a particular index, a broad sector, or a group of international stocks through a basket of securities. Although they are constructed like mutual funds, ETFs trade like individual securities on stock exchanges. This gives investors the best of both worlds, as ETFs combine the conservative diversity of a mutual fund with the flexibility of a stock. Almost anything that can be done with a stock can be done with an ETF.
Although GLD has stolen most of the headlines recently in the world of ETFs, another significant development surfaced this week without much fanfare. The Investment Company Institute announced that total ETF assets rose to $190.5 billion in October, versus an increase to $181.4 billion in September. For the year, investors have poured nearly $40 billion into ETFs.
When one sees numbers like this it is clear that the future is indeed bright for ETFs, as the crowd is just beginning to take notice of all that ETFs offer.
Delving into the numbers a little more, we see that ETFs tied to bonds accounted for only $7.8 billion, or only four percent of the total assets in the U.S. From this point of view, we see that there is a substantial amount of room for investors to pile into bonds, which could be bullish in the longer-term.
However, with over 149 ETFs to choose from, as of the end of October, how do you know which one might be right for you? To help our subscribers ride this wave of interest in ETFs, we recently opened a new page on our website devoted specifically to following ETFs called the ETF Center. Follow this link to the ETF center, where you will also find a detailed explanation of ETFs, should you have any further questions.
Here at Schaeffer's, subscribers to our new ETF Master Portfolio have benefited mightily from Bernie's expertise in which sectors to play and which ones to avoid. Since its inception in May 2004, the ETF Master Portfolio has gained slightly less than 14 percent, doubling the S&P 500's (SPX) gain of seven percent. A few examples of the sectors that Bernie has been bullish on this year includes metals, energy, Internet, steel, and oil services. Just as importantly, he has avoided the lagging Big Cap stocks and Pharmaceutical companies that so many analysts recommend.
With ETFs providing the flexibility and diversity that investors demand, it might be worth a few minutes to take a closer look at this new investment vehicle to see if it is right for you.Ryan Detrick (rdetrick@sir-inc.com)
Schaeffer's Investment Research's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. We call this Expectational Analysis®. Click here for details.
Allow me to provide a quick explanation on what ETFs are and that they do. ETFs are investments that track a particular index, a broad sector, or a group of international stocks through a basket of securities. Although they are constructed like mutual funds, ETFs trade like individual securities on stock exchanges. This gives investors the best of both worlds, as ETFs combine the conservative diversity of a mutual fund with the flexibility of a stock. Almost anything that can be done with a stock can be done with an ETF.
Although GLD has stolen most of the headlines recently in the world of ETFs, another significant development surfaced this week without much fanfare. The Investment Company Institute announced that total ETF assets rose to $190.5 billion in October, versus an increase to $181.4 billion in September. For the year, investors have poured nearly $40 billion into ETFs.
When one sees numbers like this it is clear that the future is indeed bright for ETFs, as the crowd is just beginning to take notice of all that ETFs offer.
Delving into the numbers a little more, we see that ETFs tied to bonds accounted for only $7.8 billion, or only four percent of the total assets in the U.S. From this point of view, we see that there is a substantial amount of room for investors to pile into bonds, which could be bullish in the longer-term.
However, with over 149 ETFs to choose from, as of the end of October, how do you know which one might be right for you? To help our subscribers ride this wave of interest in ETFs, we recently opened a new page on our website devoted specifically to following ETFs called the ETF Center. Follow this link to the ETF center, where you will also find a detailed explanation of ETFs, should you have any further questions.
Here at Schaeffer's, subscribers to our new ETF Master Portfolio have benefited mightily from Bernie's expertise in which sectors to play and which ones to avoid. Since its inception in May 2004, the ETF Master Portfolio has gained slightly less than 14 percent, doubling the S&P 500's (SPX) gain of seven percent. A few examples of the sectors that Bernie has been bullish on this year includes metals, energy, Internet, steel, and oil services. Just as importantly, he has avoided the lagging Big Cap stocks and Pharmaceutical companies that so many analysts recommend.
With ETFs providing the flexibility and diversity that investors demand, it might be worth a few minutes to take a closer look at this new investment vehicle to see if it is right for you.Ryan Detrick (rdetrick@sir-inc.com)
Schaeffer's Investment Research's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. We call this Expectational Analysis®. Click here for details.
Friday, December 3
Welcome To ETF Answers!
In this little blog, I will post various information regarding one of my favorite investment vehicles, ETF's
Roughly three years ago I started investing in EFT's. At the time, the Nasdaq was retracing it's 1999 gains and was trading at about 3000. I thought it was a good time to start bargain hunting so I bought tech ishares such as IYW. Needless to say I was quite a bit early and I won't see daylight in those first purchases for quite awhile. But what was nice is that I felt comfortable buying more as the prices continued to drop, because I knew the sector as a whole would one day recover. I wasn't quite so sure about many of the individual stocks in my portfolio.
As we neared the end of a grueling bear market I found that many of my individual stocks ( especially tech stocks ) had been beaten down 80-90%. I knew I should put more money into them to get my cost basis down, but which ones were going to survive? I tried to buy those that were trading near their cash value and had "cash burn rates" that would allow them to stay in business for at least 2-3 more years even if things didn't turn around. Needless to say, I wasn't very comfortable with any of my tech holdings. When the market bounced back in 2003 I was relieved to see several of them come back to levels that I thought were more reasonable. By January of 2004 I was actually starting to feel pretty good again. But since then, many of the tech stocks have slowly erroded for much of the year. Which leads me to my point. It's much easier to invest in Sector Based ETF's than it is to pick individual stocks within that sector. Since January of this year the sectors that have been the biggest losers are the drug, biotechs and semiconductors. Instead of going out and picking individual stocks I'm much more interested in building positions in the biotech and semiconductor iShares ( IBB and IGW ) as opposed to picking which will be the next big winner.
Granted the reward might not be as great as it would be if you correctly picked the next Dell or Oracle, but as I've learned the odds of that happening are very, very slim. Through this blog I will be sharing my EFT thought with you as well as different things I use to determine when I should buy or sell a particular EFT. I'm not an investment advisor or broker so I won't be giving you any recommendations, but I do have 16 years of experience in the markets and I think you will enjoy some of my insights ( I was a commodity broker for 8 years and a born trader ). So come back and visit again!
Roughly three years ago I started investing in EFT's. At the time, the Nasdaq was retracing it's 1999 gains and was trading at about 3000. I thought it was a good time to start bargain hunting so I bought tech ishares such as IYW. Needless to say I was quite a bit early and I won't see daylight in those first purchases for quite awhile. But what was nice is that I felt comfortable buying more as the prices continued to drop, because I knew the sector as a whole would one day recover. I wasn't quite so sure about many of the individual stocks in my portfolio.
As we neared the end of a grueling bear market I found that many of my individual stocks ( especially tech stocks ) had been beaten down 80-90%. I knew I should put more money into them to get my cost basis down, but which ones were going to survive? I tried to buy those that were trading near their cash value and had "cash burn rates" that would allow them to stay in business for at least 2-3 more years even if things didn't turn around. Needless to say, I wasn't very comfortable with any of my tech holdings. When the market bounced back in 2003 I was relieved to see several of them come back to levels that I thought were more reasonable. By January of 2004 I was actually starting to feel pretty good again. But since then, many of the tech stocks have slowly erroded for much of the year. Which leads me to my point. It's much easier to invest in Sector Based ETF's than it is to pick individual stocks within that sector. Since January of this year the sectors that have been the biggest losers are the drug, biotechs and semiconductors. Instead of going out and picking individual stocks I'm much more interested in building positions in the biotech and semiconductor iShares ( IBB and IGW ) as opposed to picking which will be the next big winner.
Granted the reward might not be as great as it would be if you correctly picked the next Dell or Oracle, but as I've learned the odds of that happening are very, very slim. Through this blog I will be sharing my EFT thought with you as well as different things I use to determine when I should buy or sell a particular EFT. I'm not an investment advisor or broker so I won't be giving you any recommendations, but I do have 16 years of experience in the markets and I think you will enjoy some of my insights ( I was a commodity broker for 8 years and a born trader ). So come back and visit again!
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