This Week In ETFs: July 17th Edition

by on July 17, 2011 | ETFs Mentioned:

Earnings season kicked off last week , but even corporate performance wasn’t enough to distract investors from the financial woes at home and overseas. Moody’s downgrade of Ireland to junk status sent waves of panic across the financial markets as investors speculated that Italy would be the next. Ben Bernanke’s testimony to Congress sparked a rally on Wall Street, but a sell-off followed on Wednesday and bled into Thursday. Gold and Google investors had a reason to celebrate this weekend as the precious metal marched to new all-time highs, with August futures prices hitting $1,594 an ounce on Thursday, while the Internet giant surged upwards of 13% on Friday after reporting stellar earnings.

After a couple of slow weeks on the product development front, the ETF industry resumed its impressive growth trajectory this week with the debut of several new products. The most recent additions to the ETF lineup included a new Japan Equities ETF which will be the first to track the Nikkiei 225 Index, as well as an innovative inflation fighting fund and another hedge fund replication ETF [see Nikkei ETF Debuts: Newcomer Precidian Launches NKY].

Below, we outline a few interesting ETF-related reads from around the Web:

U.S. ETF Assets Expected to Double at ETF Daily News:

A new research report by BNY Mellon and Strategic Insight predicts that assets in exchange-traded funds in the United States will double to $2 trillion before the end of 2015. The report also forecasts that traditional index-based ETFs will likely account for a falling overall share of total ETF assets, as funds with nontraditional investment strategies and alternative weighting-methodologies are quickly gaining popularity. In fact, research from Strategic Insight shows that since the end of 2008, non-traditional ETFs have grown from 18% of the market to an estimated 30% of U.S. ETF assets by March 31, 2011.

What Investors Should Know About Bond Index Construction at iShares Blog:

Matt Tucker explains how bond indexes are put together and gives a simple interpretation of various indexing rules and construction nuances that go unnoticed by many investors. The vast majority of bond indexes are rules-driven, meaning that the index provider publishes a set of rules, and all of the bonds that meet those rules are included in the index. The four biggest factors that apply to most sets of rules are: maturity requirement, size requirement, credit rating requirement, and rebalancing frequency. The author goes on to explain how index rules are basically a roadmap for how events in the market will impact the underlying bond index.

Inside The 8x Leveraged ETN at ETF Database:

With over 200 leveraged ETPs available on the market, it is hard deny that investors have  embraced the exchange-traded structure as an efficient means of amplifying exposure and gaining leverage across a multitude of asset-classes. While most investors are aware of the differences between ETFs and ETNs, fewer realize that the reset frequency can also vary from product to product. The majority of leveraged ETFs feature daily resets of exposure, however, PowerShares and UBS among others offer ETFs and ETNs that reset exposure monthly, and this difference in timing of  resets can have a major impact on the volatility and potential returns of a product. This article takes a look at some of the leveraged products that never reset exposure, and reveals how this feature can lead to some huge effective return multiples.

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Disclosure: No positions at time of writing.