Maybe The World Isn’t Ending

by on July 23, 2011 | ETFs Mentioned:

The last week was a busy one for investors; the combination of several major earnings reports and advancements in debt discussions on both sides of the Atlantic gave traders plenty to digest. Apple was once again the highlight; the company blew way past analyst expectations, pushing AAPL higher and giving a boost to many tech ETFs in the process. The past several days featured some welcome news from Washington as well, where lawmakers appeared to be on the path towards an ambitious deficit reduction package that would allow for an increase of the debt ceiling and presumably spare the AAA credit rating.

Against this backdrop, most of the model ETF portfolios performed quite well, and the actionable ETF ideas for this week delivered some nice returns as well.

Actionable ETF Trade Ideas

Our picks from Monday’s Insider were fairly rewarding this week, with all three recommendations finishing in positive territory. Although two of the three picks got off to a rocky start on Monday, broad-based strength across equity markets in the days following helped our positions get back on track and inch higher. We highlight the performance of our three trade ideas below [sign up for a free ETFdb Pro trial to get more actionable ETF ideas every week]:

Trade #1 Long XLF: Up 3.7%

We were correct directionally on this pick, although we were a bit disappointed since XLF ran out of steam just below our price target of $15.70 a share for the week. Our technical analysis outweighted the fundamentals this week and XLF charged higher even though financial-sector giants Goldman Sachs and Bank of America both came short of analyst expectations. We recommend locking in profits at current levels given the modest gain in just a week’s time. Traders with a longer time horizon and a bigger appetite for risk ought to consider holding this position until it nears $16 a share, assuming that equity markets hold up strong during the remainder of earnings season.

Last Week’s Actionable ETF Ideas
Ticker Position Performance







Trade #2 Long EZA: Up 2.8%

This recommendation shaped out fairly well for the week despite the much lower than anticipated open on Monday. EZA trekked upward during the week as we had predicted, however the fund did fall short of our near term price target of $72.50 a share. EEM, which tracks the MSCI Emerging Markets Index, outpaced EZA by just over 2% this week. While this difference in performance is a bit unfavorable at the moment, we believe that over the coming months EZA has more upside potential than EEM, while from a technical perspective the risk levels are not drastically different.

Trade #3 Long IGOV: Up 2.6%

When technical analysis works it’s a beautiful thing. IGOV bounced higher off its 200-day moving average making our directional prediction spot on. However, like the rest of the picks this week IGOV was unable to hit our suggested price target of $108 a share. This was our defensive pick for the week and it’s quite interesting to see that it managed to post a modest gain alongside our domestic and emerging market equity positions. This ETF can certainly continue charging higher next week, however investors should take note that profit taking near the next level of resistance (around $108 a share) may lead to significant volatility. In terms of downside, support remains near $104 a share.

ETFdb Portfolios

Retirement ETFdb Portfolios

The generally strong week for U.S. and international equity markets gave a nice boost to our long-term portfolios over the last week, and the entire collection remains on pace for a relatively strong 2011:

ETFdb Portfolio Weekly Return YTD Return
30 Years To Retirement 1.80% 7.04%
20 Years To Retirement 1.78% 6.94%
Cheapskate 1.67% n/a
10 Years To Retirement 1.51% 6.36%
Moderate 1.39% 6.35%
5 Years To Retirement 1.18% 5.78%
Ready To Retire 0.92% 6.08%

Themed Portfolios

The themed ETFdb Portfolios with the greatest equity exposure led the way over the last week. Stellar weeks were enough to push both the Emerging & Frontier Markets and Asia Centric ETFdb Portfolios into positive territory for 2011; those portfolios in particular have struggles as emerging markets have lagged behind their developed counterparts on the year. 

ETFdb Portfolio Weekly Return YTD Return
RAFI 2.40% 4.63%
Asia Centric 1.99% 1.42%
Ex-U.S. 1.96% 3.93%
Alpha-Seeker 2.0 1.74% 8.4%
High Tax Bracket 1.60% 6.71%
Black Swan Hyperinflation 1.51% 8.16%
Actively Managed 1.51% 7.26%
Ex-Europe 1.38% 4.78%
High Yield 1.28% 6.41%
Emerging & Frontier Markets 1.17% 0.76%
Small Cap 1.14% n/a
Equal Weight 1.01% n/a
Ben Graham 50/50 0.76% 6.66%
Sky Is Falling -0.48% 1.45%

New ETF Highlights

This was a very quiet week on the product development front, and the only activity abound was the launch of two new ETNs on Thursday by UBS targeting Internet IPOs, a corner of the market previously uninhabited by exchange traded products [see the ETF Launch Center for updates on all new ETFs]:

ETF Launches


This new product offers exposure to Internet-related companies that have recently completed an initial public offering (IPO). The underlying portfolio includes many of the companies that have recently completed high profile IPOs, such as Pandora Media, OpenTable, and LinkedIn. EIPO rebalances monthly and while most holdings are U.S.-based, the portfolio does offer some international exposure, including Yandex, the operator of Russia’s largest search engine, and Renren, a popular social networking site often referred to as the “Facebook of  China”.

UBS Monthly 2x Leveraged ETRACS Internet IPO ETN (EIPL)

EIPL is linked to the same index as EIPO, but will deliver monthly results that correspond to 200% of the monthly change in the underlying index. As such, this ETN offers an opportunity for investors to amplify exposure to young Internet-based companies, resulting in both greater risk and greater potential return.

Disclosure: No positions at time of writing.