This Week In ETFs: April 1st

by on April 1, 2012 | ETFs Mentioned:

With the first quarter of 2012 on the books, stocks managed to make one more final push this week, posting its best quarterly gains in more than a decade. Better-than-expected U.S. economic data coupled with positive news from the Euro zone sent equities rallying: the Dow Jones gained 0.5%, Nasdaq was up 4 points, and the S&P rose 0.4% during Friday’s trading session.  This latest surge was in part due to positive U.S. consumer spending data, which was announced to have increased in the month of February. Despite experiencing significant volatility, gold futures also managed to stay out of the red, posting a 6% gain for the first quarter. Another developing market trend seen this quarter is the surge in a highly risky, but lucrative segment of the market: junk bonds. As investors continue satisfy their riskier appetites, junk bonds have experienced enormous inflows and in turn have handsomely compensated investors with juicy high yields [see also 3 ETFs For The End Of Operation Twist]. 

March has proved to be a relatively slow month for the industry, with only two new ETFs launched this week. Teucrium debuted its new agriculture ETF, while ProShares rolled out yet another leveraged, inverse Treasury fund.

Below we outline three of the best ETF stories from around the web this past week:

Thoughts On Dividend ETFs at IndexUniverse:

With interest rates at rock bottom, many investors have embraced a dividend focused strategy to enhance returns on their portfolios. The ETF industry has provided more than 40 funds that strive to achieve this investment objective in an easy and cost-effective way. As with many products, investors have numerous misconceptions about dividend ETFs and what their objectives actually are. In this article, author Carolyn Hill explains her thoughts on this intriguing and popular class of ETFs.

ETFs: Do You Really Know What You’re Buying? at Casey Research:

The ETF industry has seen tremendous growth and interest in recent years thanks  in part to its cost-effectiveness, relative ease, and most importantly, its transparency. With over 1,400 products to choose from, investors can easily get overwhelmed in picking the fund that best fits their investment objectives. This article, by Vedran Vuk, outlines the top ten misleading ETFs and takes a look under the hood of some utterly deceptive products.

How The VIX ETN Lost 50% In 48 Hours at ETF Database:

Volatility funds have been getting a lot of heat from the media in recent weeks as one of the most popular VIX ETNs suffered traumatic losses, shedding light on some of the potential dangers of complex exchange-traded products. The VelocityShares Daily 2x VIX Short-Term ETN (TVIX), which offers leveraged exposure to VIX contracts, lost an astonishing 50% in just 48 hours. In this article, author Jared Cummans offers an explanation of the fund’s 2-day free fall and outlines crucial steps investors need to take when investing in these types of products.

Disclosure: No positions at time of writing.