This Week In ETFs: April 2 Edition

by on April 2, 2011

This past week was yet another wild one around the world, as international affairs continued to consume media headlines. The conflict in Libya has worsened, as it now seems likely that NATO will step in to end the problem before it spirals out of control. All the while, oil has enjoyed a strong week, as it clipped $108 intraday in Friday trading, marking another post-recession high for the important commodity. This week also brought more bad news from Japan as the threat of radiation leaking from a local nuclear plant seems to be increasing daily, with engineers working round the clock to try and keep the dangerous chemicals contained. As far are ETFs are concerned, numerous funds made their debut this week, as FocusShares returned to the ETF ring with 15 low cost options for investors.

Below we highlight three intriguing articles from the always interesting world of ETFs from the last week:

Oil ETF buyers, beware at MarketWatch:

Oil is among the most heavily traded and volatile commodities in the world. Its price can hinge on a number of factors, and if just one of them falls out of place, it can mean a major swing for crude. When choosing oil ETFs, investors must carefully research their decision, and be prepared to act when necessary depending on the behavior of oil. Thus far in 2011, oil-futures ETFs have fared quite well, but not quite up to the gains seen by crude futures themselves. This article, by Myra P. Saefong, goes on to outline the various dangers of oil ETFs, including the reasons that these products lag behind the futures they track, in an effort to help investors better understand exactly what they are getting into.

Commodity Exposure and the Question of Structure at Morningstar:

Following the financial crisis of 2008, commodities surged in price as investor interest similarly spiked. From a historical standpoint, a well diversified portfolio can greatly benefit from commodity holdings, which act as an inflation hedge to an individual’s investments. As the ETF world continues to expand, so too do the options for gaining ever-important exposure to numerous global commodities. In this article, Abraham Bailin outlines different exchange traded methodologies for investing in commodities to help individuals chose the funds that are best for them.

FocusShares Debuts 15 Low Cost ETFs at ETF Database:

The introduction of index-based exchange traded products seemed like a necessary evolution in order to avoid the hefty costs associated with traditional mutual funds. Since the ETF world began, numerous issuers have fought back and forth to give investors the cheapest funds possible. Now, a new issuer has set the bar high by setting costs low; FocusShares’ slew of new funds feature the cheapest available ETFs in numerous different market corners, with two funds sporting expense ratios of a mere 0.05%. This continues the price slashing trend that may be bad news for other issuers, but is extremely beneficial for investors looking to keep as much of their gains as possible.

Disclosure: No positions at time of writing.