This week saw a flurry of activity early, as a number of key data releases in both the U.S. and abroad made for active Monday and Tuesday sessions. Activity trailed off as the week went on, as traders were hesitant ahead of a long holiday weekend. It was a relatively quiet weekend in the ETF industry, with no new products launching. State Street followed through with a planned overhaul indexes on seven of its equity funds, while a number of firms prepared to make capital gains distributions [see ETF Tax Efficiency Report Card].
Here are the ETF Database staff picks of the week’s most important and interesting stories from around the Web:
ETFs With Little Volume, But Big Returns by Paul Weisbruch
Paul Weisbruch, VP of ETF/Options Sales and Trading at Street One Financial, takes a long hard look at some of the ETFs and ETNs with relatively low trading volumes that have turned in big returns so far in 2010, covering a number of different asset classes. Along the way, he provides different insights into why low volume ETPs aren’t necessarily illiquid, and sheds some light on strategies that can be used for establishing or liquidating big positions in funds that don’t meet rules of thumb for sufficient liquidity. “In essence, these ‘rules’ address ETFs and ETNs as if they were individual small cap stocks from a feasibility of trading standpoint and largely this practice of installing such screens is akin to investing with ‘blinders’ on,” writes Weisbruch.
Put Buy-And-Hold On Hold With ETFs at Index Universe:
While we here at ETF Database are big fans of buy-and-hold strategies, we aren’t afraid to take a closer look and more active tactics as well. In this article, Oliver Ludwig sits down with John Nyaradi the author of ‘Super Sectors: How to Outsmart The Market Using Sector Rotation and ETFs’ in order to ascertain how investors can use certain products to limit damage from devastating bear markets and cycle into surging sectors when appropriate. In the interview, John discusses the implications of this year’s ‘flash crash’ and why retail investors have taken so long to get back into the investing game. Lastly, John reveals some of his favorite strategies in order to help beat the market both from a technical and fundamental standpoint.
For much of ETFs’ existence, the focus has been on funds tracking various indexes as opposed to active management. However, in recent months the trend towards actively managed ETFs has picked up steam and the exchange-traded world has seen the launch of numerous funds employing active management techniques. In this article, Shishir Nigam looks back at the year that was in active ETFs discussing the four big themes over the past twelve months and what investors have to look forward to heading into 2011 in the active management space.
Precious Metal ETFs: Physical vs. Equity Exposure at ETF Database:
Since the rise of ETFs tracking indexes of mining companies, investors have been wondering which is the best way to play commodities; with mining firms or with ETFs that actually hold the physical metal? Our own Jared Cummans tackles this question in this article, detailing the three main precious metals– silver, gold, and platinum– while comparing the returns and betas for each. Jared identifies a clear trend among 2010 returns and beta suggesting that investors may have an easier time picking how to achieve their commodity exposure than initially thought.
Disclosure: No positions at time of writing.