ETF Edge: September 2011
Welcome to the September edition of ETF Edge! This month began with a harsh reality-check for investors as the S&P downgraded U.S. credit quality, putting a monstrous strain on equity markets and sparking waves of furious panic-selling. August saw some of the most volatile trading in history as investors scrambled to reallocate assets to safer corners amidst the chaos which overtook Wall Street. Economic data releases have been largely worse-than-expected on the home front, with manufacturing in a decline and a gloomy labor market putting the strain on U.S. output and discouraging equity market inflows.
After several months of robust expansion, the ETF industry cooled off a bit in August. The number of new product launches declined considerably, and several issuers are revamping their lineup, while some products are coming to a close and leaving the market entirely. Inside this issue, we highlight some of the developments in the industry besides new launches, including a big overhaul of the HOLDRS products, several international bond proposals, as well as a look at how recent volatility has impacted forward-looking valuations for domestic sectors and global economic regions.
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 takes a closer look at how the industry has been developing over the past year and especially in the recent summer months. We take a peek at how new products are holding up, in addition to taking a closer look down the product development pipeline.
- Heard On The Street: In this section of Edge, we highlight noteworthy launches as well as other interesting developments that took place in August. Most importantly, the HOLDRS products are getting a much needed overhaul, while another issuer is closing the doors on some of its less popular offerings.
- Actionable ETF Investment Ideas: We review our recommendations from last month, with most in red territory given the dismal equity market performance. Looking forward, our ideas this month include a tactical play in the energy sector, as well as commodity fund and two fixed income products.
- ETFdb Portfolios: Our team of ETF experts comment on the performance of their all-ETF model portfolios, noting the winners and laggards over the last month.
- Coming and Going: August was an uneventful month for new product launches although several interesting offerings did 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 August. For investors and advisors facing “age restrictions” or uncomfortable investing in products without a track record, August 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 a “pure” gold miners ETF that gives investors unparalleled exposure to firms involved in mining the precious metal.
- 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 August, taking a closer look at some of the drivers for each.
- Now Is The Season To: This section takes a look at the available products on the market offering exposure to the Scandinavian region, a corner of Europe that offers a much different risk/return profile than the rest of the Euro zone.
- 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.