It’s been an interesting week in the world of ETFs: Greek government debt was downgraded and world leaders continued their climate conference in Copenhagen. Here are the ETF Database staff picks of the week’s most important and interesting stories from around the Web:
Could the Government Prevent Another Major Collapse? at ETF Guide:
In an interesting take on the recent bailouts, Simon Maierhofer discusses the disastrous impact that these programs have had on the overall market. Maierhofer notes that after the first major bailout equity markets plunged 30% and dropped 15% after the second, only recently rebounding to pre-crash levels. He also points out that although the bailout funds were generally given to banks in order to start lending again, cash assets at banks have grown four-fold over the past year and a half. The author concludes that the problems we currently face are too big even for the government to fix and that eventually the bills will come due and have to be paid by somebody.
Often controversial but never dull, Andy Hagans shares his thoughts in the new column, The Hagans View. This installment features Andy’s thoughts on an ETF issuance bubble and how anything resembling a bubble is many years away. Andy discusses several funds that currently are not available to investors but should be, including more bond funds and several country specific ETFs. He also points out that while there have been some terrible ideas in the past, that should not stop the industry from innovating and bringing to market much needed products in overlooked areas.
Do “Buyback” ETFs Deliver on the Performance Promise? at ETF Expert:
Gary Gordon discusses the PowerShares Buyback Achievers Portfolio Fund (PKW) and the debate over stock buybacks. Many are convinced that share repurchases are not an efficient use of funds and tend to just artificially boost earnings. Gary highlights the pros and cons of each side, and discusses the fundamentals of PKW. To be included in the buyback achievers index, a company must have repurchased at least 5% of its outstanding stock over the past year. The fund has outperformed the S&P 500 over the past 3 years, but is one of the less liquid ETFs, currently trading just a few thousand shares each day.
Corn… In December? at Hard Asset Investor:
Julian Murdoch discusses this year’s corn crop and how recent trends might be bullish for commodity investors. Despite nearing the end of 2009, 12% of the nation’s corn crop is still in the ground due to cold weather in Illinois and heavy snow in Wisconsin, where a whopping 25% of their harvest is under snow. Should the snow melt too quickly or if the snow becomes packed down, it will make harvest impossible and render a large swath of our nation’s corn crop useless. This could lead to a sharp price increase for corn and good news for investors in commodity funds such as PowerShares DB Agriculture Fund (DBA), the Elements MLCX Grains ETN (GRU), or the iPath DJ-UBS Grains Total Return Sub Index ETN (JJG), all of which have a significant allocation to the staple crop.
4 Reasons Chile ETF Could Have A Bright Future at ETF Trends:
This article takes a look a the rise of Chile and why this country’s ETF, the iShares MSCI Chile Investable Market Index Fund (ECH) could produce big gains for your portfolio. Although mired in recession, the Chilean economy has shown signs of rebounding recently with an uptick in external demand and the prices of copper, the main export of this Andean nation. The Chilean economy is also beginning to receive international respect as well: it will soon become the first South American country to join the exclusive club of OECD nations. ECH has performed admirably in 2009, up over 83%.
That’s it for This Week in ETFs: happy reading. Have a great weekend!
Disclosure: No positions at time of writing.