ETF Edge: August 2011

Published on by on August 2, 2011

Welcome to the August edition of ETF Edge! This month begins with perhaps more uncertainty than at any point in 2011, as legislators in Washington head to a critical vote on a debt ceiling plan that doesn’t seem to leave anyone particularly thrilled. And recent economic indicators have been anything but robust; anxiety remains high, job creation remains elusive, and output remains stuck in first gear. The situation isn’t much better overseas, where a host of sovereign debt issues remain and where emerging markets that were recently red hot have cooled off considerably.

After several months of impressive expansion, the ETF industry finally took a bit of a breather in July. The number of product launches declined considerably, and we finally saw some of the fund closures that had been widely expected come to fruition. Inside this issue, we highlight some of the developments in the industry besides the new product launches, including a key personnel change at a major issuer, a new strategy for a down-and-out issuer, and insight into the most recent earnings reports from the only pure play publicly-traded ETF issuer.

Also included is an updated download of ETF performance by ETFdb Category for the year-to-date period, allowing investors to analyze the performance of their portfolio components relative to alternative funds.

Here’s a look at what’s inside this month’s ETF Edge:

  • Heard On The Street: In addition to several new ETF launches, the industry saw a handful of noteworthy developments in July, including another private equity investment in an ETF issuer and plans for more first-to-market products.
  • Actionable ETF Investment Ideas: Our team of experts looks back on how our  July predictions played out and make several new forward-looking picks designed to take advantage of the continuing uncertainty in the current environment.
  • ETFdb Portfolios: Our team of ETF experts comment on the performance of their all-ETF model portfolios, noting some new additions and winners and laggards over the last month.
  • Coming and Going: With dozens more ETPs debuting last month, we offer a recap of the activity on the product development front. Highlights from July include more sector-specific funds, a pair of internet IPO funds, and a new cloud-computing ETF that had got off to a roaring start. In this section, we highlight the investment thesis behind each new ETP and discuss which type of investors may be interested in some of the latest additions to the lineup.
  • ETF Milestones: In this section ETF Edge, we highlight all of the ETFs that reached three-year and five-year milestones in June. For investors and advisors facing “age restrictions” or uncomfortable investing in products without a sufficient track record, a recap of the June “birthdays” should be interesting.
  • 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 a new fund from First Trust that offers exposure to an increasingly popular corner of the technology sector.
  • 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.
  • 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 July, taking a closer look at some of the drivers for each.
  • Now Is The Season To: This section takes a look at several ETFs that offer exposure to international treasury bonds, since the fixed-income corner of the market has been quite popular lately given the mountains of uncertainty pressuring equity markets.
  • ETF Performance Database: Year-to-date performance and expense data for all 1,200+ U.S.-listed ETFs, organized by ETFdb Category.

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