This Week In ETFs: August 6th Edition

by on August 6, 2010

Another wild week in the financial world brought a slew of earnings reports and government data that kept traders on their toes during the first week of August. The latest batch of earnings were generally positive, with companies like CBS, Electronic Arts, and Andarko Petroleum reporting solid results. Highly anticipated economic data was also released during this past week; the service industry experienced unexpected growth while private companies increased hiring in ADP’s report on Wednesday. Yet these positives were canceled out by Friday’s all-important government unemployment report, which showed a net loss of jobs due to the end of the census and a generally weak job creation environment.

It was a busy week in the ETF world as well; perhaps the biggest story was Schwab’s introduction of  low-cost bond ETFs that could challenge iShares’ grip on the space. Below, we profile three of the best ETF stories from around the Web from the last week:

Comparing ETFs and Index Funds at The Wall Street Journal:

The debate between mutual funds and ETFs has become heated over the past few years as exchange-traded products continue to make inroads on the mutual fund world. A recent batch of commission-free ETFs has spurred some investors to reconsider the merits of mutual funds, sparking fresh debates about the best vehicles for allocating capital. This article hits the high points in this ongoing debate; when deciding between ETFs and index funds, investors should take several important aspects into consideration. Many ETFs are cheaper than traditional mutual funds, they offer important tax advantages, and they have a higher level of flexibility in trading. On the downside, because ETFs trade like stocks, their trading prices can deviate from the actual net asset value, causing a discrepancy in returns when compared to their mutual fund counterparts. The article continues by pointing out some additional flaws as well as upsides to both ETFs and traditional mutual funds.

SPDR S&P 500 ETF May Move Towards The April 2010 Highs (SPY) at ETF Daily News:

ETF Daily News outlines reasons why SPDR S&P 500 (SPY) could be ready to surge back to its April 2010 high. The article describes patterns and trading volume relative to how the fund may move in the coming days, including three possible scenarios. This article is heavy on technical analysis and although the article paints SPY in a bullish light, it does note that the unemployment report will weigh heavily on this fund’s near-term future.

Three ETFs To Invest Like Marc Faber at ETF Database:

Marc Faber, the Swiss fund manager known for his spot-on bear calls, isn’t quite so bullish on the outlook for equity markets. Faber pulled his clients out of U.S. equities one week before the 1987 crash, and also predicted the most recent financial crisis. Faber now believes that more rough seas are ahead for investors and that the markets are likely to go lower in the near-term. The article outlines three ETFs to line up with Faber’s more bearish ideologies for investors who believe that the market is still very weak and likely to fall further.

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Disclosure: No positions at time of writing.