ETF Edge: March 2011
Welcome to the March issue of ETF Edge. February may have been a short month, but the last four weeks have seen plenty of action in both the ETF industry and the investing landscape in general. In addition to a number of new product launches, the last month saw some interesting development in the competitive landscape and laid the groundwork for interesting expansions in the months ahead. February also saw the debut of a new ETF issuer and at least two other companies take additional steps towards wading in to the ETF waters.
From an investing perspective, the wave of democratic movements sweeping through the Middle East have dominated headlines in the past four weeks. Oil ETFs have seen a surge in interest, as investors have looked to both profit from a spike in energy commodity prices and hedge against further volatility that could hammer equities and boost oil even further. The surge in oil prices has presented yet another obstacle to global equity markets–one that some investors worry will hammer corporate profits and erode consumer confidence and spending.
The events of the last four weeks have also shed some light on the inner workings of ETFs, including an examination of the huge premium in the Egypt ETF and focus on differences between various oil ETFs. Once again ETFs have been acting as price discovery mechanisms to access the underlying holdings in periods of illiquidity, filling a need in the market when the underlying securities have “gone dark.”
In this edition of ETF Edge we offer our takes on the short-term outlook, identifying some opportunities in various asset classes. Also included is a closer look at how various weighting methodologies and sectors have performed during the last two months–revealing some surprisingly large gaps between seemingly similar funds. Finally, we take a look at the various options for achieving exposure to oil, highlighting the pros and cons of several different ETFs.
Here’s a look at what’s inside this month’s ETF Edge:
- Heard On The Street: The last month saw the debut of a number of different products, and the stage has been set for two more heavyweights to make their ETF debut in March. We highlight the latest developments in the potential sale of one ETF issuer, and review the musings from a mutual fund powerhouse on the future of active ETFs.
- Actionable ETF Investment Ideas: After a mixed bag of performances last month we look over the current environment to identify opportunities after a choppy few weeks of trading, including a backwardation-supported commodity ETF plan and a long/short currency pair that we think is headed for a nice jump.
- ETFdb Portfolios: Our team of ETF experts comment on the performance of their all-ETF model portfolios, reflecting on some big swings during the month of February.
- Coming and Going: Product development activity spiked in the final week of the month, with another player entering the ETF industry with five new funds and a handful of veterans building out their suites further. We dive deep into each of the new products, highlighting the investment thesis behind each.
- ETF Milestones: In this section ETF Edge, we highlight all of the ETFs that reached three-year and five-year milestones in February. For investors and advisors facing “age restrictions” or uncomfortable investing in products without a track record, February 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 an alternative option for accessing one of the best-performing commodities over the last year–one that doesn’t expose investors to the vagaries of a futures-based strategy.
- 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: Pricing multiples didn’t change much over the last month, meaning that the same opportunities we sensed in February remain heading into March.
- Inside The ETFdb 60 Index: We take a look at the biggest gainers and losers in our all-ETF index for the month of February, taking a closer look at some of the drivers for each.
- Now Is The Season To: In light of the surging price of oil, we take a look at the many ways to play this important commodity via ETPs.
- ETF Performance Database: Year-to-date performance and expense data for all 1,000+ U.S.-listed ETFs, organized by ETFdb Category.