It’s All Greek To Me

by on November 5, 2011 | ETFs Mentioned:

Euro zone debt woes took investors for another roller coaster ride as uncertainty from overseas led to volatile trading across equity markets all over the globe. Investors were spooked early in the week after Greek Prime Minister George Papandreou announced a proposal for a referendum to the three-pronged “bailout plan” proposed by EU leaders earlier in Brussels. Selling pressures hit the street as investors scrambled for the safe havens, fearing that Greece would succumb to default. However, euphoria quickly returned to the markets after Greece decided to solidify its place in the currency bloc and scrapped the referendum. Domestic equity indexes finished the week in red territory as stocks faced headwinds on Friday despite the better-than-expected unemployment report at home. 

Actionable ETF Trade Ideas

Last Week’s Actionable ETF Ideas
Ticker Position Performance
FXA

Short

+3.1%
EWJ

Long

-1.5%
IEF

Long

+1.7%

Our picks from Monday’s Insider performed quite well during another volatile week on Wall Street. Our technical analysis allowed us to  lock in profits on two of our recommendations, while our third one was not as successful. Below, we highlight how our trade ideas fared during the week [sign up for a free trial of ETFdb Pro to get actionable ETF ideas every Monday, as well as access to more than 25 all-ETF model portfolios].

Trade #1 Short FXA: Up 3.1%

This recommendation got off to a strong start as the Aussie dollar faced headwinds in the currency market after the Australian central bank decided to lower the interest rate down to 4.5%. On Tuesday, FXA continued to sink lower and this ETF opened below our price target at $105 a share which allowed us to close our short position in the morning, locking in a very respectable gain of 3.1% in just two days.

Trade #2 Long EWJ: Down 1.5%

Japanese equities took a dive lower after the Bank of Japan intervened in the currency markets on Monday, sending this ETF in the wrong direction right from the start of the week. Unfortunately, EWJ drifted just above our stop-loss at $9.25 a share for the remainder of the week. We were disappointed with the fact that EWJ did not manage to partake in the broad market rally on Thursday, leaving us with a minimal 1.5% loss on the week.

Trade #3 Long IEF: Up 1.7%

This was our fundamentally defensive pick and IEF performed just as anticipated early in the week. This ETF crept up higher on Monday and extended gains into Tuesday as Greek default fears resurfaced, prompting investors to flee from equities and pile into Treasuries. In fact, IEF opened above our outlined price target at $104 a share on Tuesday and we let our profits ride for the day, selling our long position at $104.50 a share and locking in a nice 1.7% gain for the week.

ETFdb Portfolios

Retirement ETFdb Portfolios

Stock markets finished the week in red territory, and so did our retirement portfolios, as Greek drama weighted on investors’ confidence. Our conservative Ready To Retire portfolio managed to hold its ground best, while our equity heavy Aggressive portfolio was at the bottom of the barrel in terms of performance.  From a year-to-date perspective, our Ready To Retire portfolio continues to lead the way higher while the Aggressive, 20 Years, and 30 Years To Retirement portfolios remain in negative territory.

ETFdb Portfolio Weekly Return YTD Return
Ready To Retire -0.16% 5.39%
5 Years To Retirement -0.89% 2.45%
Moderate -1.14% 1.94%
10 Years To Retirement -1.41% 1.22%
30 Years To Retirement -1.88% -0.08%
20 Years To Retirement -1.93% -0.30%
Cheapskate -2.12% n/a
Aggressive -2.25% -3.63%

Themed Portfolio

Our themed portfolios tumbled lower alongside sinking equity markets, with the majority still struggling to climb out of red territory for the year. Our ultra-defensive Sky Is Falling portfolio managed to gain close to two full percentage points amidst the uncertainty, while our Euro Free Europe portfolio turned in the worst performance for the week. In terms of year-to-date performances, our Simple (But Effective) Safe Haven Portfolio continues to lead the way, while our regional themed, Asia-Centric and Emerging & Frontier Markets portfolios, sit at the bottom of the barrel.

ETFdb Portfolio Weekly Return YTD Return
The Sky Is Falling 1.84% 7.11%
Better-Than-AGG Total Bond Market 0.18% n/a
Ben Graham 50/50 -0.57% n/a
Black Swan Hyperinflation -1.03% 2.34%
Actively-Managed -1.33% 0.70%
Small Cap -1.40% n/a
High Yield -1.40% 4.07%
High-Tax Bracket -1.42% -0.22%
Equal Weight -1.43% n/a
Ex-Europe -1.45% -.04%
Alpha Seeker Portfolio 2.0 -1.46% -0.80%
Simple (But Effective) Safe Haven -1.51% 8.76%
Emerging & Frontier Markets -2.01% -9.23%
AlphaDEX -2.08% n/a
Africa-Centric -2.33% n/a
Commodity Guru -2.33% n/a
LatAm Centric -3.10% n/a
Global Titans -3.30% n/a
Ex-U.S -3.38% -7.30%
Asia-Centric -3.41% -8.78%
RAFI -3.55% -8.08%
Euro Free Europe Portfolio -4.85% n/a

New ETF Highlights

The exchange-traded universe continues its expansion into November as PowerShares rolled out several new offering in the financial equities space along with an intriguing Australia bond fund from PIMCO. Check out our ETF Launch Center for complete updates on all new ETFs.

ETF Launches

KBW Bank Portfolio (KBWB)

  • Launch: November 1st
  • ETFdb Category: Financial Equities
  • Structure: ETF
  • Expense Ratio: 0.0%

Invesco PowerShares launched their KBW Bank Portfolio ETF, KBWB, which tracks the float adjusted modified-market capitalization-weighted KBW Bank Index. This index seeks to reflect the performance of publicly traded companies that do business as banks or thrifts. This ETF will not charge an expense fee through February 1, 2012.

KBW Capital Markets Portfolio (KBWC)

  • Launch: November 1st
  • ETFdb Category: Financial Equities
  • Structure: ETF
  • Expense Ratio: 0.0%

Invesco PowerShares rolled out KBWC, which tracks the float adjusted modified-market capitalization-weighted KBW Capital Markets Index. This ETF seeks to capture the performance of U.S. publicly traded companies that are involved in the broker-dealer, asset manager, trust and custody bank, or exchange business. This ETF will not charge an expense fee through February 1, 2012.

KBW Insurance Portfolio (KBWI)

  • Launch: November 1st
  • ETFdb Category: Financial Equities
  • Structure: ETF
  • Expense Ratio: 0.0%

Invesco PowerShares launched KBWI, which tracks the float adjusted modified-market capitalization-weighted KBW Insurance Index. This index is comprised of the leading publicly traded companies in the U.S. insurance industry. This ETF will not charge an expense fee through February 1, 2012.

KBW Regional Banking Portfolio (KBWR)

  • Launch: November 1st
  • ETFdb Category: Financial Equities
  • Structure: ETF
  • Expense Ratio: 0.0%

Invesco PowerShares also introduced KBWR, which tracks the float adjusted modified-market capitalization-weighted KBW Regional Banking Index. This index seeks to reflect the performance of publicly traded companies that do business as regional banks or thrifts. This will not charge an expense fee through February 1, 2012.

Australia Bond Index Fund (AUD)

PIMCO launched its new Australia Bond Index Fund ETF, AUD, which seeks to capture the performance of Australian dollar-denominated investment grade debt instruments. The fund is comprised of Australian sovereign, quasi-sovereign, corporate, securitized and collateralized securities. All of the debt instruments selected are publicly traded in the Australian domestic bond market.

Disclosure: No positions at time of writing.