This holiday-shortened trading week saw a healthy bounce in most asset classes after last week’s sharp decline. Not even the sweltering east coast heat wave could burn out the markets; which finished positive the first three days of the week. Financials were especially impacted by a report from investment giant State Street which said that it was likely to beat earnings estimates for the most recent quarter, a prediction which helped to alleviate many investor concerns about the health of the economy and boost markets by over 3% on Wednesday. Although markets gained across the board and have some momentum going into next week, investors are anxiously awaiting the results of earnings season which will undoubtedly impact the direction of the markets going forward. Below, we profile three of the best ETF stories from around the Web:
Fee Fight Brews in Gold ETFs at The Wall Street Journal:
The major interest in gold funds has long been in SPDR Gold Trust (GLD), but BlackRock aims to change that. Last week the company cut down the expense ratio by over a third on iShares COMEX Gold Trust (IAU) to 0.25% (GLD’s is at 0.40%). This may make the much smaller IAU a better choice for investors looking for long term exposure, and has created serious competition for GLD even though GLD is more likely to retain traders due to its much higher volume and liquidity. Gold has gained a vast amount of popularity, surging 9% in 2010 as investors grow increasingly worried about the soundness of fiat currencies, so the expense cut could possibly attract a wave of new investors to IAU. The article goes on to outline the various benefits and pitfalls of each fund including tax breaks, potential gains, and price.
ETF ‘Circuit Breakers’ Needed To Stop Flash Crashes: Pros at Yahoo! Finance:
When regulators try to stop future crises like the May 6 “flash crash” they overlook a crucial factor, ETFs. ETFs made up roughly 70% of the bad trades on that day two months ago. The stock market has circuit breakers that halt trading of securities that make up the funds, but ETFs can continue to trade even if these circuit breakers are operating. The SEC is currently considering a list of 334 ETFs for circuit breaker protection, but that still leaves out two thirds of the ETF industry. One currently proposed solution is to freeze the trading of any ETF that has seen 3% of its assets halted. But with talk of regulations, investors fear that the SEC may go to far, or may be misinterpreting the problems.
ETFs To Play A U.S. Export Boom at ETF Database:
The Obama administration made a slew of promises upon taking office, one of which was to double our nation’s exports in just five years. The plan, which began this year, is to boost the value of our exports, which would theoretically create new jobs on our home-front. According to White House data, exports skyrocketed 17% in just the first four months of 2010 which has contributed to a 1% growth in GDP. The article goes on to outline five ETFs that could reap the benefits of doubling exports in the U.S.
Disclosure: No positions at time of writing.