Highlighting New ETF Launches and A Portfolio Freefall

by on June 11, 2011 | ETFs Mentioned:

With another disappointing week in the books, anxiety is beginning to spike among investors. The past several days saw most major benchmarks decline sharply, as dismal economic indicators hammering equity markets and many commodities struggled to hold their ground as well. The sell-offs hammered some of our actionable ETF ideas for the week, though one of our calls showed significant strength over the last few days. Below, we take a look back at out ideas from the beginning of the last week, and recap some of the new additions to the ETF lineup as well.

Recapping Our Actionable ETF Trade Ideas

Last Week’s Actionable ETF Ideas
Ticker Position Performance







Our recommendations weren’t able to outpace the markets in the right direction and two of our three picks ended the week in red territory alongside most equity funds. Going long in the agricultural commodities space turned out to be our most profitable call for the week, while our positions in the equity space were closed out as the funds dipped below the outlined support levels.

Trade #1 Long JJS: Up 1.5%

This turned out to be our most resilient recommendation for the week,  as JJS managed to creep higher amidst persistent volatility in the equity markets. The fund started the week much lower than anticipated, and we were able to establish a long position on Wednesday near the market close, as we made sure the fund was capable of closing above outlined support at $80 a share. On Thursday, JJS gapped higher at the open, while on Friday it managed to hold its ground and even gain some even though the bulls once again ran away from equities.

Trade #2 Long EMFN: Down 1.2%

A rebound in the financial sector did not manifest itself, let alone in the emerging market equities space. EMFN opened at attractive levels on Monday morning, and the fund managed to surge past $28.50 a share on Tuesday just as anticipated. However, in the following trading days the sellers took charge and shares of EMFN tumbled lower. Our long position was closed on Friday as the fund dipped below $28 a share, which we outlined as a significant support level in our Monday recommendation.

Trade #3 Long CHIB: Down 0.6%

We were a little disappointed with CHIB to say the least, since the fund almost immediately fell below our outlined support levels of $17.50 a share, closing our position mid-day Monday. Liquidity is a traders best friend and in the case of CHIB, light trading volumes clearly contribute to quick and rapid sell-offs. We remain bullish on the technology sector going forward and we especially favor Chinese equities given their attractive upside potential. We recommend stepping to the sidelines for those who don’t have a stomach for volatility, simply because equity markets can remain irrational for weeks or even months.

ETFdb Portfolios

Retirement ETFdb Portfolios

The past week was once again drenched in red for the long-term retirement-themed ETFdb portfolio, as another losing week for equities weighed heavily on these all-ETF packages. More conservative portfolios fared better thanks to the bigger weightings to bonds, though none of these portfolios had a big enough weighting to offset the performance by equities.

ETFdb Portfolio Weekly Return YTD Return
Ready To Retire -0.98% 3.02%
5 Years To Retirement -1.39% 2.07%
Moderate -1.69% 2.38%
Cheapskate -1.73% n/a
10 Years To Retirement -1.74% 2.27%
30 Years To Retirement -2.18% 2.13%
20 Years To Retirement -2.24% 2.04%

Themed Portfolios

Not surprisingly, the Sky Is Falling ETFdb Portfolio led the way this week, though even this portfolio suffered losses over the last several days (gold didn’t flex its safe haven muscles, and even low-beta stocks were pummeled over the past few sessions). The weekly gaps between these portfolios were significant, though in year-to-date terms these remain clustered around zero. The Emerging & Frontier Markets portfolio also continued to close the gap on its counterparts, as the lack of U.S. equities in this portfolio has powered strong relative performance in recent weeks. The Asia Centric Portfolio wasn’t quite so lucky, as Asian stocks continue their disappointing 2011 run:

ETFdb Portfolio Weekly Return YTD Return
Sky Is Falling -0.35% -0.26%
Emerging & Frontier Markets -1.18% -0.99%
Ben Graham 50/50 -1.25% 3.93%
Black Swan Hyperinflation -1.57% 2.70%
High Yield -1.64% 2.93%
High Tax Bracket -1.75% 2.97%
Actively-Managed -1.80% 2.82%
Asia Centric -1.91% -2.55%
Alpha Seeker 2.0 -2.10% 3.78%
Ex-U.S. -2.44% 1.28%
RAFI -3.03% 0.06%

New ETF Highlights

The last week saw several new ETF launches, keeping up with the furious pace that has been established in the first several months of 2011. In total, three issuers launched seven new products during the last week, including a suite of hedged equity products and two ETFs focusing on dividends [see the ETF Launch Center for updates on all new ETFs]:

ETF Launches

Guggenheim ABC Dividend ETF (ABCS)

  • Launch: June 8
  • ETFdb Category: Global Equities
  • Structure: ETF
  • Expense Ratio: 0.65%

There are a number of ETFs on the market targeting various regions of the globe, and several that focus on blocs of countries that aren’t necessarily located in close proximity to one another (the BRIC ETFs would be a good example). This ETF offers exposure to the ABC countries, which include Australia, Brazil, and Canada. While these three countries have little in common in terms of culture, geography, or demographics, they all maintain significant natural resources and are among the most important commodity producing economies in the world. ABCS offers exposure to the ten companies from each of these three countries that offers the highest dividend yield, giving investors looking to maximize current returns another option with an international focus¬† [see detailed review of ABCS].

Global X SuperDividend ETF (SDIV)

  • Launch: June 9
  • ETFdb Category: Global Equities
  • Structure: ETF
  • Expense Ratio: 0.58%

This ETF offers exposure to 100 high dividend yielding stocks, including components from the U.S. and emerging and developed international markets. SDIV is unique in part because of the weighting methodology used; the index to which this fund is linked gives an equivalent allocation to each component, rebalancing on a semi-annual basis. That strategy may make SDIV appealing to investors who are looking to generate dividend yields while steering clear of cap-weighting methodologies. SDIV includes allocations to REITs, utilities, telecom stocks, and financial services firms [see complete review of SDIV].

MSCI Japan Currency-Hedged Equity Fund (DBJP)

  • Launch: June 9
  • ETFdb Category: Japan Equities
  • Structure: ETF
  • Expense Ratio: 0.50%

This ETF offers exposure to large cap Japanese equities, but is unique from most products in the Japan Equities ETFdb Category in that it strips out associated currency exposure (exposure to Japanese stocks essentially includes going long yen and short dollars). DBJP contains the same stocks that are included in the popular EWJ, but uses short-term forward contracts to remove yen exposure. For those with a bullish outlook on the dollar (or those simply looking to avoid currency exposure), this ETF might be worth a closer look [see complete analysis of new Deutsche Bank Hedged Equity ETFs].

MSCI Brazil Currency-Hedged Equity Fund (DBBR)

This ETF offers exposure to large cap Brazilian stocks, and hedges out the effective long real / short U.S. dollar position that an investment in this asset class generally includes. DBBR is a currency hedged alternative to EWZ; these two funds include exposure to the same equities, but DBBR isn’t impacted by exchange rate fluctuations. As such, DBBR might be useful for those who want exposure to Brazil but have a bullish take on the U.S. dollar.

MSCI Canada Currency-Hedged Equity Fund (DBCN)

This ETF offers exposure to Canadian equities with a hedge against CAD / USD fluctuations. DBCN is the hedged alternative to the unhedged EWC; both offer exposure to large cap Canadian equities, with DBCN using one month forwards to strip out the currency risk.

MSCI EAFE Currency-Hedged Equity Fund (DBEF)

This ETF offers exposure to EAFE stocks, including equities from Japan, Western Europe, and Australia. Like the rest of the Deutsche Bank products debuting this week, DBEF hedges out exposure to the basket of underlying exposure; think of this ETF as an alternative to EFA or VEA for those looking to avoid a position in exchange rate movements.

MSCI Emerging Markets Currency-Hedged Equity Fund (DBEM)

This ETF maintains exposure to the same companies that make up the ultra-popular EEM and VWO, but offsets the currency exposure those ETFs maintain by using forward contracts. As such, this fund might be popular as a means of establishing exposure to developing economies without taking on a short dollar position.

Disclosure: No positions at time of writing.