This Week In ETFs: December 11th Edition

by on December 11, 2010

This week saw markets struggle to make gains, as the majority of trading days ended relatively flat thanks to a lack of market moving events. Gold made another historic run earlier in the week, hitting a fresh all-time high, only to fall back down to a more sustainable level around the $1,400/oz. mark. Likewise, silver prices spiked to the highest level in nearly three decades, spurring heavy interest in the precious metals sector. News of an extension of the Bush-era tax cuts has been toying with markets all week as investors anxiously await to see if the deal between President Obama and the Congressional Republicans will be able to push through the Democrats’ roadblock. If the bill is passed, it will likely boost consumer spending and growth, but at the same time will add to our already-large deficit, as the government will not be funding the tax break with spending cuts but with debt instead.

The ETF world saw a number of new additions this week, with Direxion launching their first ever non-leveraged product, the Direxion Airline Shares ETF (FLYX), which will track the same index as the existing Guggenheim Airline ETF (FAA) but will be 10 basis points cheaper [see also Direxion Launches Three New ETFs]. Meanwhile, ProShares, RBS, and Rydex also debuted new funds of their own, further adding to the already-robust ETF lineup. With this backdrop of new funds and choppy markets, we profile three interesting ETF articles from around the Web:

Follow the Trend with Small-Cap Growth ETFs at Money And Markets:

Small-cap ETFs allow investors to gain exposure to global markets by country, geographic region, industry sector, and a number of other concentrations. Investors can also choose between growth and value funds to generate returns for their portfolio. Ron Rowland outlines why he believes small-cap growth is the place to be, as he discusses how a number of these funds have outperformed large cap value ETFs as of late. Rowland then goes on to give his suggestions for ETFs that will give exposure to this surging asset class which may offer investors outsized returns in the near future.

China ETF ‘PEK’ Trading At A Big Premium at Index Universe:

The Market Vectors China ETF (PEK) launched several weeks ago, giving investors access to a new asset class that most could not reach on their own; the A-shares market listed on both the Shanghai and Shenzhen Stock Exchanges in China. Since launching, the fund has garnered over $20 million in assets, but is currently trading at a very high premium. Richard Keary, principal at Global ETF Advisors LLC, stated that the premium would only come down if the demand for the ETF slowed, or other A-shares investment vehicles decreased. Oliver Ludwig goes on to outline the issues PEK is dealing with, and how Van Eck plans to resolve them going forward.

ETFs For The Forgotten Asset Classes at ETF Database:

As ETFs have become more popular among investors, a number of investors have come to rely on the funds to make up the cornerstones of their portfolio. While using these popular components gives investors a wide swath of exposure, many are still missing key investment opportunities. Michael Johnston outlines a typical sample ETF portfolio that seems strong on the outside, but goes on to point out key components that are missing and how investors can easily round out their exposure with a few more funds.

Disclosure: No positions at time of writing.