The beginning of December brought more good news for the ETF industry, as cash continued to flow in and innovative new products continued to gain traction with investors. It was an active week on Wall Street as well, with a pleasant surprise from the jobs front wrapping up a week that saw continued rises in gold prices and easing anxiety over Dubai’s “crisis.” Here are the ETF Database staff picks of the week’s most important and interesting stories from around the Web:
Kevin Rich’s Second Act at Index Universe:
“Kevin Rich, as much as anyone, is responsible for the existence of commodity-based exchange-traded funds,” writes Matt Hougan. Last week, a new filing hit detailing an ETF that will be subadvised by Rich Investment Solutions, a new venture from the commodity ETF pioneer. The new fund to which Rich has been tied is the U.S. Equity Reserve Convertible Index Fund, which will use reverse convertibles to implement a somewhat complex investment strategy. The success of the new venture is far from certain, but Hougan says he looks forward to seeing how it all plays out.
ETFs Caught In The Dubai Storm at Morningstar:
As investors around the globe try to interpret the latest developments out of Dubai, Scott Burns takes a look at the impact a potential crisis could have on UAE-heavy ETFs. “Although it is rare that the average U.S. investor will have any direct investments in companies listed in Dubai’s home country of the United Arab Emirates, there are a handful of ETFs that have exposure to those names,” writes Scott Burns. Among the ETFs that have big allocations to the UAE are the Market Vectors Gulf States (MES), PowerShares MENA Frontier Countries (PMNA), and WisdomTree Middle East Dividend Fund (GULF). Burns also takes a look at some of the issues surrounding investments in frontier markets.
What’s Wrong With UNG? at ETF Database:
One of the biggest disappointments in 2009 has been the United States Natural Gas Fund (UNG), which has plummeted despite countless calls from analysts for a rise in natural gas prices. For those looking for an explanation for the poor performance (the fund has lost more than 60% of its value this year), we provide a two-part answer. While hype over the “fuel of the future” has spurred billions in cash inflows, weak fundamentals have sent prices plummeting. But that’s only one half of the explanation.
Exodus From U.S. Stock ETFs May Be Telling at ETF Expert:
“The exchange-traded fund industry certainly has reason to cheer,” writes Gary Gordon. But he notes that while $90 billion new dollars have flowed into ETFs in 2009, U.S. stock ETFs have seen massive outflows. The author thinks these statistics are telling of a larger trend: investors aren’t yet sold on a path of sustainable growth in the developed world.
That’s it for This Week in ETFs: happy reading. Have a great weekend!