It’s been an interesting week in the world of ETFs: The unemployment rate moved up to 9.8% and Rio De Janeiro won the 2016 Summer Olympics over Chicago. Here are the ETF Database staff picks of the week’s most important and interesting stories from around the Web:
Will RevenueShares’ Outperformance Continue? at Index Universe:
RevenueShares’ unique indexing model has lead to some outsized gains this year: its Small Cap Fund (RWJ) has more than twice the gain of the S&P Small Cap 600 Index, and many other RevenueShares funds have are well ahead of their market-cap weighted counterparts. Some argue that this indexing model allows “ETFs to capture alpha before the market-cap-weighted indexes adjust.” But others make the claim that RevenueShares ETFs have only gotten lucky because the revenue weighting skews the fund towards big firms with low profit margins that have weathered the recession better than most.
The Definitive Guide To Platinum ETFs: Platinum ETF Investing 101 at ETF Database:
This article discusses the rising popularity of investing in platinum and why the metal can make a quality investment in certain environments. Platinum is both a hedge against a weak dollar and has variety of industrial uses that are critical to modern life. It is also one of the rarest metals on earth, found in only a handful of countries in much smaller quantities than gold. The main ways to play platinum are through ETNs which includes iPath’s PGM and E-TRACS’ PTM.
Count ETFs in 401(k)s at Treasury and Risk:
Although mutual funds have dominated the 401(k) space for a while, that may soon change with a new program being developed by iShares and financial technology firm SunGard. SunGard will use its software to help address the main issue of ETFs in retirement plans; the transaction costs that come from buying ETFs in small increments. SunGard’s solution makes ETFs look like no-load mutual funds by pricing them once a day and by rolling up all of the trades each day into a single transaction for each ETF. Currently this is only being offered with iShares, but should it be successful look for more plans to start offering this service.
China ETFs: Too Much Optimism Or Too Much Pessimism? at ETF Expert:
Gary Gordon discusses his perceptions regarding Chinese ETFs and why he is still bullish long term, but increasingly bearish in the short term. He also discusses why he believes it is foolish to blindly believe in Chinese growth and that such an investment policy leaves an investor facing excessive risk. He implies that a temporary stock market bubble may be forming in China, but that a higher level of consumer spending may warrant building a long term position in China with Claymore’s China Small Cap ETF (HAO).
The Three C’s of Commodity ETF Returns at Hard Assets Investor:
The author looks at four popular broad commodity ETFs (GCC, GSG, UCD, and DBC) and discusses how he believes that three main issues (composition, contango, and compounding) cause the differences in the returns. He explains that while all the funds might invest in commodities, they do not have the same weighting which allows for differing returns depending on which commodity has the highest weight and how well or how poorly the commodity performed. Another problem is contango which describes the tendency of back-month futures to trade at a premium to nearby deliveries. Lastly is the issue of compounding, which seems to disproportionately impact UCD, is another factor that investors need to consider when investing in commodity ETFs.
That’s it for This Week in ETFs: happy reading. Have a great weekend everyone!