This week gave investors quite a scare, as markets seemed to be heading for a great demise, only to successfully pull out of their tailspin on the final trading day of the week. The week began with markets nervously reacting to the death of world’s most wanted man, Osama Bin Laden, and the volatility only increased from there. Late in the week, a hefty jump in jobless claims led to oil falling by over 9%, closing out Thursday below the $100 per barrel mark for the first time since the Middle East crises began. Luckily, an unexpected jump in jobs brought markets back into the green on Friday, silencing those who were urging investors to run for the hills. The ETF world saw a steady week with several new funds launching, as we approach a total of 1,300 ETPs for investors to sort through [see Global X Launches Fishing ETF (FISN)].
Below, we profile three interesting ETF articles from around the Web from the past week:
Are HOLDRS Still Worth Holding? at IndexUniverse:
HOLDRS (holding company depositary receipts) were first introduced in the dot com era as new products that investors had never had the chance to trade with before. But now that the ETF industry has taken off, the 17 remaining HOLDRS seem to be going the way of the dodo. One of the major issues with these funds, is that they have no underlying index or management; their holdings were set at a date and never rebalanced or tweaked afterwards. This article, by Dennis Hudachek, outlines the various quirks of these funds, and touches on the debate of whether or not these products are still relevant.
Equal Opportunity ETF Investing at Forbes:
SPY has long been the go-to image of an ETF, as it is the biggest and one of the cheapest in the entire space. But some see flaws in how the fund invests in its underlying index. SPY utilizes a market capitalization methodology, meaning that the bigger companies in the index receive a higher weighting. Though SPY has generated strong returns for its investors since inception, there is another weighting methodology that has performed better. This article, by Jim Lowell, outlines Rydex’s equal weighting strategy and how it compares to the ultra-popular SPY.
Lessons From The Leveraged Silver ETF (AGQ) at ETF Database:
Silver has been enjoying its share of the spotlight recently, as its price skyrocketed, and then saw a nasty correction in recent trading. Through out this meteoric rise, the leveraged silver ETF has gained an astonishing amount (well over 400% in the past year alone). But investors may be confused when they dig deeper to find that this 2X leveraged product is up far more than two times the unleveraged silver fund. In this article, Michael Johnston explains the complexities and behaviors that cause leverage products to ‘stray’ from their unleveraged counterparts.
Disclosure: No positions at time of writing.