This Week In ETFs: November 14th Edition

by on November 14, 2010

Another interesting week on Wall Street put a variety of market sectors in focus as traders zeroed in the all important G20 meeting in Seoul to see how the world’s most important economies would react to growing calls for protectionism and escalating worries over the start of a major currency war. Unfortunately, the nations were unable to resolve their differences at the meeting, only deepening the divide between the major exporting countries of the world– such as China, and Germany– and the world’s major importers such as the U.S. and the UK.

Meanwhile, tech giant Cisco disappointed investors with its outlook for the following quarter and year, which helped to sink the DJIA component by 16.8% on the week and kill off a budding recovery in the technology sector. Markets then experienced one more piece of bad news as the world’s current driver of growth, China, announced that inflation was beginning to reach the high end of its tolerable level and that a rate hike might be in store for the world’s second biggest economy in the near future. This news helped to sink commodities across the board and was especially devastating for the soft commodities such as coffee, cotton, and sugar. This rocky market gave analysts plenty to discuss and below we have highlighted three of the best ETF stories from around the Web during the last week:

How To Take Advantage Of A Steep Yield Curve at Morningstar:

In this article, Timothy Strauts discusses the vagaries of the U.S. Treasury market and how the curve has become so steep in the past few years. In fact, according to Tim’s research, the yield spread has only been this high 9.7% of the time in the past 34 years. Luckily for investors, there are two new ETFs on the market to play either a quick reversal or a continuation of this trend. For investors expecting the curve to flatten out the iPath US Treasury Flattener ETN (FLAT) makes for a great option, while a continued steepening of the curve is best accessed with the iPath US Treasury Steepener ETN (STPP). Tim goes on to discuss some of the pros and cons of each fund as well as the methodologies that these securities employ in order to accomplish their objectives.

How To Play The Coming Water Boom at Hard Asset Investor:

Matt McCall discusses the rise of water equities as an investment as well as highlighting the differences between the four main funds that track this sector of the market. While many investors might assume that all of the water ETFs are incredibly similar, that is really not the case. Some focus in on water infrastructure, while others allocate higher percentages to wastewater management firms and other service focused companies. Furthermore, the water ETFs offer different levels of exposure to international markets– both in terms of developed and emerging countries– once again proving that investors need to do their homework before picking out a particular fund.

Emerging Market ETFs: Seven Factors Every Investor Should Consider at ETF Database:

As investor interest in emerging markets has surged over the past few years, the number of funds targeting this space has grown as well. While this explosion of choice has been great news for many investors, it has paralyzed others leaving many to avoid solid funds or pile into products that really don’t accomplish their portfolio objectives. In light of this, we have come up with seven crucial factors that every investor must consider before investing in emerging market ETFs. Among the top factors are: going beyond the BRIC, looking at small cap funds, and looking at all the China options. Make sure to check out the article for the full list!

Disclosure: No positions at time of writing.