This Week In ETFs: April 2nd Edition

by on April 2, 2010 | ETFs Mentioned:

Equity markets trended higher in a shortened week, and a generally positive jobs report will likely set the tone for a continued rally when traders return on Monday. “It’s just the beginning of a rise in private hiring that will help sustain the recovery,” said Stuart Hoffman, chief economist at PNC Financial Services Group, noting that private employers added 123,000 jobs, the most since May 2007. “They’re not big numbers, but they’re welcome numbers.” In addition, health care companies and industrials remained in focus as the pros and cons of the health care legislation became better known. Below, we offer our picks for the week’s most important and interesting ETF stories from around the Web:

A Few Gems Shine Through Bond ETF Marketing Mania at Index Universe:

There has been a slew of innovation in the bond ETF space over the last year, ranging from sector specific funds to those that offer short exposure to Treasuries. In this article, Olivier Ludwig discusses products that “may help investors cope more nimbly with the perils of rising interest rates in ways they couldn’t in the past.” Some investors are noting a ‘Treasury bubble’ that is forecasted to pop once the Federal Reserve ends its quantitative easing program. For investors considering this strategy, the ProShares UltraShort 20+ Year Treasury Fund (TBT) could make an interesting choice. For muni focused investors, iShares has recently launched six funds with different target maturity dates ranging from 2012 to 2017. These new products will allow investors to better plan their tax liabilities, and they may reduce some of the risk since the funds will close as the holdings mature, ensuring that investors receive their principal back.

Where Will Nickel Go Next? at Hard Assets Investor:

Nickel prices have been a classic story of supply and demand as of late, with rising prices coming as stocks of the metal have fallen significantly. While the metal has shown a strong inverse correlation to stock levels, some believe that the key to nickel is in stainless steel demand. With rising levels of consumption in many emerging markets, as well as China’s demand for all things commodity related, it could lead to a further bullish run for nickel. For more on nickel see Three Reasons The Nickel ETF (JJN) is Soaring.

How UNG Lost 20% In March at ETF Database:

March was a very rough month for United States Natural Gas Fund (UNG), which saw its value decline by 20% in just 23 trading days. This has happened for two main reasons; an increase in supply and unseasonably warm temperatures in much of the Northeast and Midwest. On the supply side, a massive new platform from Royal Dutch recently opened which is capable of producing 20 million cubic feet of natural gas per day. For demand, temperatures have been higher than usual in much of the country. While late March and early April can usually produce at least one solid snowstorm in parts of the country, temperatures approaching 80 degrees in Chicago and New York City make this seem very unlikely for the rest of the season, further decreasing demand prospects for beaten down energy commodity.

Japanese ETFs: Stagnation at ETF Zone:

One of the weakest markets over the past decade has been Japan. The iShares MSCI Japan Fund (EWJ) is down close to 30% since its debut in the spring of 1996. Despite this incredibly long period of weakness, some believe that the Japanese market may finally be ending its long slump since the fund has performed on par with many other developed market ETFs over the past five years. However, Japan still faces a plethora of issues which could stagnate the economy further. By some estimates, Japan has close to 30% of its factories idle, it has unfavorable demographics and its debt is close to 200% of GDP. These factors should make investors pause before believing that the Japanese economy is poised for a quick and prolonged recovery.

Disclosure: No positions at time of writing.

“It’s just the beginning of a rise in private hiring that will help sustain the recovery,” said Stuart Hoffman, chief economist at PNC Financial Services Group. “They’re not big numbers, but they’re welcome numbers.”