ETF Edge: November 2011

Published on by on November 2, 2011 | Updated November 7, 2011

Welcome to the November edition of ETF Edge! Investors prepared for the worst over the last few months after a string of disappointing economic reports and discouraging developments, including the downgrade of U.S. credit quality back in August, sparked fears that we were undoubtedly headed for another economic downturn. The grass wasn’t much greener on the other side as the Euro zone faced a host of problems of their own stemming from debt burdened member nations like Greece.

Much to investors’ surprise, equity markets around the globe staged a considerable comeback in October, with the S&P 500 Index rebounding upwards of 10% for the month. Economic indicators at home seem to be improving, with third quarter U.S. GDP coming in at an impressive 2.5%, while overseas EU leaders are taking serious steps to bring forth a comprehensive plan for restoring stability in the financially fragile region.

The ETF Industry continues to grow by leaps and bounds as the product development front buzzes with activity. More than two dozen new products hit the market over the past month, including more than a handful of exciting first-to-market offerings. Inside this issue, we highlight some of the developments in the industry besides new launches, including our actionable ideas from last month as well as looking at how different corners of the market have been performing during a surprisingly prosperous month.

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:

  • Feature Article: This new section of Edge cover some fundamental as well as more advanced considerations that investors and financial advisors alike can use to enhance overall understanding of how to better utilize ETFs to suit their needs.
  • Actionable ETF Investment Ideas: We review our recommendations from last month, with most in green territory given the surprisingly strong equity market performance. Looking forward, our ideas this month include a tactical dividend play, a long position in a new international bond fund as well as several other intriguing ideas.
  • Coming and Going: October was a busy month for new product launches as a wave of over two dozen new funds hit the market. 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 October. For investors and advisors facing “age restrictions” or uncomfortable investing in products without a track record, October 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 intriguing low-volatility emerging market equity fund that provides investors with a relatively high dividend yield.
  • 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 October, taking a closer look at some of the drivers for each.
  • Now Is The Season To: This section takes a look at several overlooked currency basket ETPs that may serve as uncorrelated sources of return, potentially helping to improve your portfolio’s risk-adjusted returns.
  • ETF Performance Database: In the final section, we highlight year-to-date performance and expense data for all 1,000+ U.S.-listed ETFs, organized by ETFdb Category.

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