This Week in ETFs: October 16th Edition

by on October 16, 2011

This week saw an uptick in broad equities, giving investors a more promising outlook after the storm that was last week’s market volatility. This came despite a drop in October’s consumer sentiment index, as many investors instead focused in on solid earnings and retail sales to give the market strength. Many also cheered the reports out of Europe which suggested that France and Germany were going to team up in order to tackle the debt crisis once and for all, sending fear levels plunging across the board. Commodities, on the other hand, were more mixed, experiencing great levels of volatility and failing to find definitive direction heading into the second half of October. Coming off a busy September in the ETF world, the pace of ETF expansion has slowed a little in recent weeks but investors did see one new fund hit the market; Van Eck’s answer in the Dim Sum market with their Market Vectors Renminbi Bond ETF (CHLC). Below, we outline the best ETF stories from around the web this past week:

Contrarian ETF Ideas: Investing In The ETF Dogs of 2011 at ETF Database:

The first three quarters of 2011 have been a great disappointment to investors who were hoping the markets would make a comeback. Investors saw new lows being tested in most equity indexes on renewed concerns over the European debt crisis and inadequate U.S. job creation. Equity ETFs have been hit particularly hard, with several losing almost half of their value from the beginning of the year. For those who are looking for new ways to invest their capital, however, there may be some intriguing opportunities in the ETF dogs of 2011. In this article, author Michael Johnston reviews seven of these ETF dogs that may have the potential to make a turnaround to end the year.

Is BDCL’s 23% Payout That Good? at IndexUniverse:

This week, UBS announced that its quarterly payout for BDLC was 22.94%, making this ETN the highest-yielding in the ETP world. Considering the fact that the price of this ETN has tumbled nearly 35% since its issue, many are questioning whether or not the higher payout is really a positive sign. BDLC works like any common or preferred stock, or bond; as its share price lowers, the more attractive its yield starts to looks. There is a catch, however, to this attractive yield. Falling prices do not always signify an alluring dividend yield; instead, they may signal that the investment is losing value and that it may be time to exit the market. This article, by Alex Ulam and Olivier Ludwig, makes a case for business development companies value and for the utilization of ETNs to gain exposure to this high-risk/high-reward industry.

Can You Do Better Thank GDX In The Gold Mining Space? at Commodity HQ:

The growth of the ETF industry has given commodity investors more opportunities to gain exposure to a wide range of new products in the space. This proliferation now allows investors to target specific sectors in the commodity world that best reflect their investment objectives, be that in rare earth metals, platinum, or copper. When it comes to gold, however, Market Vectors Gold Miners ETF (GDX) has become a behemoth in the commodity ETF space and is considered to provide the most popular way to gain exposure to gold mining firms. Yet, some are beginning to question if this is the best way to play the space and are now looking toward other competing ETFs that target junior gold miners, gold explorers, and more diversified precious metal firms. In this article, author Eric Dutram outlines how investing in alternative gold ETFs, particularly in GGGG, can allow investors to gain more diversified, and possibly better, exposure in the gold space.

Disclosure: No positions at time of writing.