It’s been an interesting week in the world of ETFs: major indexes finished the week on a down note after trending upwards earlier in the week while gold finished around $1140/oz. Here are the ETF Database staff picks of the week’s most important and interesting stories from around the Web:
Rethinking Gold Miner ETFs at Hard Asset Investor:
This article focuses on two Gold Mining ETFs, the Market Vectors Gold Miners (GDX) and Market Vectors Junior Gold Miners (GDXJ), and highlights the similarities and differences between the two funds. Although the funds have 8% of their assets in identical stocks, a large disparity remains between the two funds. The biggest difference is the geographical dispersion: GDX focuses only on companies that are listed in the U.S., and thus is dominated by large Canadian miners. GDXJ has a much larger weighting in American firms as well as Australian firms, which the author believes will play a huge role in the future of the fund.
We discuss the bright prospects of the ever-changing ETF industry and what we see in its future. In the first installment, we focus the “back to basics” movement in which issuers such as ETF Securities have seen great success launching physical gold (SGOL) and silver (SIVR) funds, as well as the need for more emerging market and developed market ETF options for American investors. In part II we highlight possible issues that ETFs might face in the corporate bond field, since there are relatively few funds that target this very important corner of the market. We believe that this will be the next wave of ETFs, and that sector and maturity specific bonds are one of the greatest untapped markets in the industry.
3 Reasons for the Relative Weakness of Transportation ETFs at ETF Expert:
While most ETFs and the market in general have rebounded in 2009, many transportation ETFs have not followed suit. This article gives investors three possible reasons why, including weakness in producer prices, poor consumer sentiment, and contrarian concerns. All of these reasons have kept the iShares DJ Transportation Fund (IYT) from rebounding and have been even more damaging to the Claymore Arca Airline Fund (FAA). However, despite these downsides, things are looking much better for shipping as represented by the Claymore Global Shipping Fund (SEA), which has registered new highs recently.
4 Strategies For Getting More Income at ETF Guide:
Discussed in this article are four ways investors can protect their investments and ensure that they obtain the most income possible in this low interest rate environment. First, it is recommended that investors use stop-loss orders whenever possible in order to ensure minimal losses of principal. Another idea that protects principal is to focus on low cost funds to once again save as much of your initial investment as possible. As far as ETFs go, the author suggests looking at industries that have a history of paying high yields and investing in funds such as XLF and XLU, which follow the financial and utilities sectors, respectively. Lastly the author recommends that investors use puts and calls when appropriate in order to generate the maximum level of return.
Trading Tactics Matter With International ETFs at Morningstar:
This article focuses on several items that investors should be on the lookout for when investing in international ETFs. First, the author suggests that investors should always use limit orders when dealing with illiquid funds in order to make sure that they get the best price for these often volatile countries. Investors should also try to trade the ETFs when their underlying holdings are trading in order to avoid missing out on important news. Lastly, investors should know whether the fund is trading at a premium or a discount to its NAV (and watch out for funds that are trading well above NAV).
That’s it for This Week in ETFs: happy reading. Have a great weekend!
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