This Week In ETFs: August 12th Edition

by on August 12, 2012

Markets struggled to find a definitive direction this week as investors waited for any news concerning central bankers’ futures actions. With no significant headlines and the corporate earnings season winding to a close, U.S. equities continued to drift aimlessly, as will likely remain the trend in the coming weeks. Stocks managed to eke out a gain by Friday’s close, but only by a slim margin. Economic powerhouse China reported an unexpected drop in its trade surplus on Friday, leading more people to believe that growth is cooling off in what has otherwise been a hot spot for economic activity. This report along with several other blaring red flags shows just how dire the global situation actually is. Without additional action from central bankers, many investors fear the slowdown could get much worse [see also 7 Simple & Cheap ETF Model Portfolio].

The ETF industry had a slow week on the product development front, with only one new fund hitting the market. AdvisorShares launched its new long/short hedge fund ETF (QEH), while a pair of filings came in from iShares and State Street. 

Below we outline the three best stories from around the ETF space this past week:

1. Knight Pulling Big Volume Again in ETF Market at The Wall Street Journal:

Last week’s technical glitch by Knight Capital sent markets into a frenzy, as botched trades forced trading at the NYSE to halt for several minutes. Since the company responsible for the panic is one of the largest market movers in the ETF industry, investors’ fears quickly heightened as they saw liquidity vanish in several thinly-traded ETFs. Despite the setback, author Alexandra Scaggs explains how Knight Capital managed to pull big volume again in the ETF market, regaining their status as the industry’s top ETF market maker.

 2. 2012′s Best Performing Commodity ETF at Commodity HQ:

This year has proven to be a rather volatile one for commodities as markets continue struggle to find definitive directions. Some of this inconsistency can be attributed to the nation’s most severe drought in 70 years and the hottest ever recorded temperatures for every month this year. Many of the most popular commodities rely on weather conditions and will continue to perform erratically until temperatures start to cool off. In this article, author Jared Cummans outlines which commodity ETF has profited the most from this summer’s soaring heat wave.

 3. 3 ETFs For Roubini’s “Perfect Storm” at ETF Database:

The infamous Dr. Doom has spoken once again: prepare your bunker and portfolio for the global economic showdown of 2013. Nouriel Roubini, better known as “Dr Doom,” predicted the 2008 financial meltdown when no one else was concerned. So when he tells us to look out this time, we might want to listen. This article by Stoyan Bojinov highlights which ETFs could not only survive, but thrive during the “Perfect Storm.”

Disclosure: No positions at time of writing.