Between Hurricane Issac testing the New Orleans levies for the first time since Katrina, the Republican National Convention in Florida, and ever present eurozone uncertainty, this week has been a wild ride for investors brave enough to get involved. With Spain earlier this week saying it was skeptical about the proposed Euro relief plans, stock markets took a nose dive Thursday. But it seems that all American investors needed was the promise of Bernanke speaking Friday morning to bolster the markets once again. After the Chairman’s speech reinforced that the central bank is holding off from further stimulus until deemed necessary, disappointed domestic markets took a dip before slowly recovering to end the week just below where they started.
The ETF industry grew just a little more on the last day of August as First Trust added one more ETF to its product line this week, making it First Trust’s third new product this month. This new fund focuses on concurring the downside risk all investors take when following a popular index by adding exposure to the VIX to hedge (VIXH).
Below we outline the three best stories from around the ETF space this past week:
1. The Darker Side of the Dividend ETF Craze at IndexUniverse:
With the recent economic uncertainty and historically low yields on TBills, fixed income funds have been in high demand and ETF fund managers have been providing. But this new trend in investing might be just that, a fad set to end when the economy starts to pick back up. Hannah Tool explains why returns on dividend ETFs might be a good idea now, but not for long.
2. Billionaires Trust GLD, Why Can’t You? at Commodity HQ:
The world’s second-largest ETF has been a safe haven and source of resentment for investors ever since opening. Many mistrust this ETF and feel is misrepresenting its fortune, but that hasn’t stopped the ultra wealthy from investing in the fund whenever the outlook for the global market appears gloomy. With all of these huge investors pouring money into the fund, it seems odd that average investors are hesitant to join in. Jared Cummans explains the nuances associated with GLD and why investors need to take a good look under the hood.
3. Rogers Eyes Russia at ETF Database:
Negotiations with Russia have finally ended and it has been accepted into the World Trade Organization, making the BRIC country even more enticing for investors looking for foreign fund exposure without getting involved the Euro drama. Many have been hesitant to invest in Russia before now, including Wall Street veteran Jim Rogers, but even he is starting to consider it a great opportunity. Stoyan Bojinov discusses how ETF investors can gain exposure to this lucrative emerging market economy.
Disclosure: No positions at time of writing.