This Week In ETFs: June 5th Edition

by on June 5, 2011

This week started off with a bang as Greece and the EU had reportedly settled on an aid package to keep the highly indebted country afloat a little while longer. But after equities enjoyed a strong session to start the week, poor U.S. data including downgrades and a dismal job report, pushed major indexes spirally lower to close out the week, reigniting fears of a double dip recession. Already, this week saw a confirmed double dip in the housing market, which was the sector that got us into this mess in the first place. The ETF world saw some positive activity though, as a few new funds launched keeping investors focused on events other than the wealth of negative data that seems to have all fallen upon us at once [see Global X Launches Farming ETF (BARN)].

Below, we outline three of the most interesting stories from the ETF world this week:

Schwab’s Bold Bet on ETFs at The Wall Street Journal:

Jim McCool, executive vice president of institutional business at Charles Schwab, made quite a bit of noise in March when he announced that the firm would offer 401(k) plans made up solely of ETFs. “Moving to an ETF-based 401(k) program is something new and certainly could have profound impacts for the asset-management industry,” says Alex Kramm, an analyst with UBS Securities. While critics accuse exchange-traded products of being more volatile than mutual-funds, their low cost and transparent holdings make them an attractive option. This article, by Mary Pilon, explains Schwab’s move to ETP-based 401(k)s, and what the firm is doing to ensure the safety of these new retirement plans.

3 Ways to Squeeze More Dividend Income at ETF Guide:

Dividend investing has long been the mainstay for numerous traders who feel that a hands-off portfolio that offers steady returns is one of the best ways to ensure a strong return even through retirement. In fact, “Since 1926, dividends have accounted for one-third of the total return for stocks, and today, exchange-traded funds that pay high dividends are gaining attention among investors who want secure income”. This article, by Catherine Epperson, details strong dividend ETFs from various sectors, including technology, financials, and dividend-focused funds.

Never Judge An ETF By Its Cover at ETF Database:

As the ETF industry continues to heat up, with hundreds of billions in inflows over the past few years, investors have embraced products with international exposure, shedding their long held “home country bias”. But not all products are as they appear. On some occasions, the name of a particular fund can be misleading when compared to the individual holdings and strategy the ETF employs, especially when it comes to region-based funds. This article, by Michael Johnston, outlines several ETFs that prove that it is always a good idea to look under the hood of a particular fund to get a sense of exactly what you are buying.

Disclosure: No positions at time of writing.