This Week In ETFs: March 18th Edition

by on March 18, 2012

Stocks fell flat at the end of this week after both the Nasdaq and Dow had logged in their seventh-straight winning streaks. The earlier rally edged both indexes into post-crisis, record breaking territory, an encouraging sign that perhaps the equity markets are well on their way to a full recovery. Friday’s lackluster session was in part due to mixed economic data: consumer sentiment came in weaker-than-expected, while consumer prices rose and U.S. industrial production remained unchanged in the month of February. On the international front, Europe equities saw a slight uptick as optimism over the global economic recovery grew and concerns over the Euro debt crisis seemed to have abated. Investors this week also saw a rather interesting leader emerge in the commodities market: oats, which gained more than 16% this week (see also ETFs To Bet Against Natural Gas). 

A new player entered the ETF industry this week with the debut of the Yorkville High Income MLP ETF (YMLP). This fund is the first ETF to be launched by Exchange-Traded Concepts, an entity comprised of a group of executives who previously worked under the issuer FaithShares. Other launches this week included a large cap and small cap dividend ETF (see also Three Years Later: Best Performing ETFs Since Markets Bottomed Out).

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

Feb. Short Report: EWZ Shorts Jump 27% at IndexUniverse:

February was an interesting and active month for the ETF industry as investors embraced various trends that have recently been dominating markets. For the most part, investors have been slowly increasing their risk appetites, shifting from safer fixed income products into the more lucrative equities space. In this article, authors Alex Ulam and Oliver Ludwig discuss the latest short-selling trends developing in the markets, including the jump in short interest on the Brazil ETFs and the drop in shorts on the emerging market and euro funds.

Limit Volatility Or Use It For Profit – ETFs Help You Do Both! at Money and Markets:

The word “volatility” has, over the years, developed a seemingly negative connotation. When some investors hear this word, they automatically think of significant downward swings when in actuality, volatility is nothing more than another word for variability. Professional traders have been able to successfully profit from transforming historic volatility data into indexes, and thanks to the development of the ETF industry, average investors can now utilize this strategy through exchange-traded volatility products. In this article, author Ron Rowland outlines several ETFs that can help investors limit volatility or use it for profit.

Three ETFs Trading At A Huge Premium To NAV (And Three Alternatives) at ETF Database: 

Although one of the most appealing features of ETFs is their inherent transparency, many investors do not fully understand the rather complex infrastructure that lies beneath the surface. A unique “creation/redemption” mechanism lies at the core of every exchange-traded product and with it, ETFs are for the most part able to maintain a price that is consistent with the value of its underlying securities. This article, by Michael Johnston, explains why some products do not trade at their NAV and lists three ETFs that are currently priced at a huge premium relative to the value of their underlying portfolios.

Disclosure: No positions at time of writing.