ETF Edge: April 2011
Welcome to the April issue of ETF Edge. March was an extremely busy time for the ETF industry, with more than two dozen new products debuting, two new issuers throwing their hat into the ring, and a potential gamechanger in the active ETF space. The biggest story was the return of FocusShares, the former issuer of esoteric products such as the Wal-Mart Suppliers Fund and the SINDEX who has emerged as a provider of plain vanilla equity ETFs and a unit of Scottrade. FocusShares is throwing it shat into the ring as a low cost ETF provider, undercutting Schwab and Vanguard and offering commission-free trading in an effort to match initiatives from Fidelity, TD Ameritrade, and others.
Inside this issue we highlight all of the new products, including a review of the suitability for various types of investors and accounts. We also highlight the biggest winners and losers from the first quarter of the year, a list that includes commodity products and some surprising equities.
As the calendar turns to April, much of the uncertainty that was present at the start of the year remains. The investment landscape remains challenging and somewhat confusing, with weakness popping up in new corners of the global market and the emerging economies that have powered growth for the last several years showing signs of cooling off quite a bit. Still, we see several opportunities in the current environment, thanks in part to innovation in the ETF industry that has resulted in more options for targeted international exposure.
Here’s a look at what’s inside this month’s ETF Edge:
- Heard On The Street: March saw tremendous activity on the product development front, including a number of new funds and some major developments related to SEC approval. We discuss the odds that FocusShares becomes a relevant player in the U.S. ETF industry and break down what the escalation of price wars may mean for investors.
- Actionable ETF Investment Ideas: After many of our picks from last month struggled initially, we return to highlight four ETFs we think are poised to perform well during the next three to six months. Picks for April include a new international bond fund and a short opportunity related to ongoing uncertainty in Japan.
- ETFdb Portfolios: Our team of ETF experts comment on the performance of their all-ETF model portfolios, reflecting on a growing gap between the performances.
- Coming and Going: March was the busiest month of 2011 so far, with more than two dozen new ETFs hitting the market. These new additions covered the full spectrum, ranging from plain vanilla equity ETFs to inverse and leveraged options and exchange-traded notes. In this section, we highlight the investment thesis behind each new ETP and discuss which type of investors may be interested.
- ETF Milestones: In this section ETF Edge, we highlight all of the ETFs that reached three-year and five-year milestones in March. For investors and advisors facing “age restrictions” or uncomfortable investing in products without a track record, March saw a number of ETFs hit important milestones.
- ETF Spotlight: In this segment we highlight an ETF that is flying under the radars of most investors, but that may present an intriguing investment option in the current environment. This month’s spotlight focuses on an alternative option for accessing Japanese equities–an asset class that is drawing attention in the wake of the devastating earthquake.
- ETF Scorecard: This section includes a performance matrix that highlights how the combination of market cap exposure and weighting methodology can lead to very different bottom line results. Also, we take a look as how U.S., developed, and emerging markets have performed over the last month. New this month is a matrix of these three regions by style, joining a breakdown by size.
- Sector & Region Outlook: In this section, we take a look at pricing multiples across the U.S. economy and around the world, pointing out some apparent opportunities.
- Inside The ETFdb 60 Index: We take a look at the biggest gainers and losers in our all-ETF index for the month of March, taking a closer look at some of the drivers for each.
- Now Is The Season To: In light of the recent turmoil in the Middle East and Japan, we look at a few ETFs that could offer stability in the equity space thanks to their hefty dividend payouts.
- ETF Performance Database: Year-to-date performance and expense data for all 1,000+ U.S.-listed ETFs, organized by ETFdb Category.