This Week In ETFs: August 19th Edition

by on August 19, 2012

The beginning of this week was as uneventful as it could get, but yesterday some investors took comfort in German Chancellor Angela Merkel’s commitment to hold the euro zone together as a part of the recovery plan. The consumer sector of the global economy has also been recovering quicker than many bond investors anticipated, which has actually led to the biggest monthly global bond market loss in two years. Both the euro and the dollar hit 6 and 5 week highs respectively against the Japanese yen, as investors have been pulling out of the safe haven and reinvesting in slightly riskier options. Technology stocks were the winners this week, excluding Facebook, which has reached a record low after early investor shares became unlocked and were immediately sold off. Even with all these developments, trading volumes were pretty low and the majority of the market was unmoved [see also 101 ETF Lessons Every Financial  Advisor Should Learn].

The ETF industry had four new funds hitting the market, one in technology, one in multi asset income, and two in emerging markets. First Trust launched two ETFs, one which combines two current trends in investing, dividends and technology (TDIV), and the other searching for income anywhere it can find it (MDIV). EGShares launched two products dealing with emerging markets this week, one that is dependent on the domestic economy (EMDD), and another invested in less trendy markets (BBRC).

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

1. Low Junk Bond Yields Not Done Falling at Inside Fixed Income:

Many investors have been questioning how low yields will go. Apparently, junk bond yields can fall even more than the historic rates we saw in 2008. Due to the Fed’s actions to fix our economy, the rules for investing have changed, even in this negative economic climate. Investors that would have invested in Treasury Bills are finding alternatives and are investing in junk bonds and junk bond ETFs, looking for a better outcome. Spencer Bogart gives his prediction for the fate of junk bond yields.

 2. Advisors Gaining Upper Hand in Growing ETF Market at The Wall Street Journal:

ETFs might have gained their momentum with average traders, but they are becoming an ever more popular tool for financial advisors and firms. Institutional use of ETFs has been steadily rising over the past decade and in 2010 took the majority control of industry assets. Many retail traders are feeling overwhelmed by the deep pocketed institutions coming in, and fear they will change the landscape of the ETF market for their needs. Murray Coleman discusses what could be changing in the ETF market’s future.

 3. Visualizing Target Retirement Date ETFs at ETF Database:

Planning for retirement will eventually be on the minds of everyone currently in the workforce. Getting back to the roots of what ETFs were built to do, target retirement date ETFs offer investors the ultimate in passive, buy-and-hold investment strategies. Through a single equity ticker, investors can now gain fine-tuned exposure to a diversified basket of securities with an investment strategy that falls in line with their risk and retirement profile. In this article, Daniela Pylypczak takes a closer look under the hood of these unique target retirement date ETFs.

 Disclosure: No positions at time of writing.