Five ETFs George Washington Probably Would Have Liked

by on February 20, 2012 | ETFs Mentioned:

After a strong close to last week–the Dow jumped by more than 150 points in the last two sessions–U.S. stock markets will have to wait until Tuesday to try to continue the positive momentum. Major exchanges are closed on Monday in observance of President’s Day, which this year falls two days before the anniversary of George Washington’s birthday. In a tribute to our first president, below we examine five ETFs that may have been appealing to the founding father [for more ETF ideas, sign up for the free ETFdb newsletter]: 

PowerShares DB USD Index Bullish (UUP)

This ETF offers exposure to the U.S. dollar, allowing investors to bet on an increase in the greenback relative to a basket of developed market currencies. UUP is linked to an index comprised of USDX futures contracts, meaning that UUP essentially is a bet against the euro, yen, British pound, Canadian dollar, Swedish krona, and Swiss franc. Given the dollar’s safe haven appeal, this ETF generally performs well in turbulent environments.

Though UUP offers exposure to a basket of securities, the underlying index is dominated by the euro. PowerShares also offers the DB 3x Long U.S. Dollar Futures ETN (UUPT), which delivers amplified exposure to the same basket of currencies.

PowerShares Build America Bond ETF (BAB)

BAB is one of three Build America Bond ETFs, offering exposure to a type of fixed income security that was introduced as part of the effort to accelerate the recovery in the wake of the recent recession. Interest on Build America Bonds is essentially subsidized by the Treasury, allowing municipalities to borrow at reasonable rates to pursue various initiatives. Though the Build America Bond program was not renewed, the securities issued under this program continue to trade; there is nearly $1 billion in assets in the various Build America Bond ETFs. With a 12-month yield of more than 5%, BAB offers a pretty intriguing return opportunity–especially in the current low rate environment.

Guggenheim Timber ETF (CUT)

Most Americans probably can’t give many details of Washington’s time in office, but almost all are aware of his cherry tree-related exploits as a young boy. After chopping down his father’s tree, Washington reportedly confessed to the deed upon questioning, uttering that he could not tell a lit. Given Washington’s propensity to bring down fruit-bearing trees, it seems likely that he would be intrigued by the investment thesis behind CUT.

This Guggenheim ETF offers exposure to the global timber industry, investing in stocks of companies that own and lease forested land and harvest timber for commercial use. The timber industry is cyclical, meaning that CUT will tend to perform well when demand for construction products and other raw materials is strong.

Another legend surrounding our first president relates to the state of his teeth. Washington suffered from teeth problems throughout his life, and eventually started wearing false teeth. Though the urban legend was that Washington’s false teeth were made out of wood, that probably wasn’t the case.

SPDR Nuveen Barclays Capital New York Municipal Bond ETF (INY)

Our nation’s capital is now named for Washington, but during his presidency Washington D.C.  was not yet home to the White House. Instead, the capital was in New York City, and Washington lived there for several years during his two terms. This ETF offers targeted exposure to the muni bond market, focusing exclusively on securities from New York issuers. Given the state’s ongoing budget problems, some see INY and the other New York muni ETFs as risky plays. But that also means a potentially appealing yield profile; INY has a tax equivalent yield of about 4% (assuming a top tax rate of 35%).

iShares MSCI United Kingdom Index Fund (EWU)

Though the concept of short-selling wasn’t around in Washington’s day, it seems like a fairly safe assumption that he would short EWU in a heartbeat if given the chance. Before he was president, Washington was one of the leaders of the American Revolution, scoring several key victories against the British that ultimately led to independence.

Though the United Kingdom is now one of the strongest allies of the U.S., we suspect that Washington would have continued to hold a grudge against the country that tried to put an end to his rebellion (and his life). EWU focuses primarily on large British companies; the top holdings in this ETF include HSBC, Vodafone, and BP. iShares also recently launched a small cap complement to EWU; EWUS focuses on smaller British companies.

Disclosure: The above is meant for entertainment purposes only – Happy Presidents’ Day From All Of Us At ETFdb!

No positions at time of writing.