Exchange Traded Funds (ETF)

[winston]

Short Oil & Metal while Long Internet, Retail & Consumer Discretionary ?


5 PowerRatings ETFs for the Next 5 Days (as of Friday, November 4, 2011)

ETF / Symbol / PowerRating ProShares
1. UltraShortt DJ-UBS Crude Oil SCO 8
2. B2B Internet HOLDRS ETF BHH 7
3. S&P Retail SPDRS ETF XRT 7
4. Consumer Discretionary SPDRS ETF XLY 7
5. ProShares UltraShort Materials ETF SMN 7

Source: Trading Markets

[winston]

Looks like they are expecting a correction ....


5 PowerRatings ETFs for the Next 5 Days (as of Friday, November 11, 2011)

ETF / Symbol / PowerRating
1. iShares Dow Jones U.S. Technology Sector Index Fund ETF IYW 7
2. Direxion Financial Bear 3x Shares FAZ 7
3. Direxion Energy Bear 3x Shares ERY 7
4. ProShares UltraShort MSCI Emerging Markets ETF EEV 7
5. Market Vectors Junior Gold Miners ETF GDXJ 6

Source: Trading Markets

[winston]

ETF ‘street brawl’

Laurence D. Fink, chief executive officer of BlackRock Inc. (BLK), stepped up his criticism of some exchange-traded funds such as those provided by Societe Generale SA, saying he didn’t want them to damage the industry.

So-called synthetic ETFs, offered by firms including Societe Generale’s Lyxor Asset Management and Deutsche Bank AG, introduce a layer of complexity and counterparty risk that investors may not be aware of, Fink said yesterday.

Synthetic funds generate returns through derivatives contracts rather than owning underlying securities as traditional ETFs do.

“If you buy a Lyxor product, you’re an unsecured creditor of SocGen,” Fink, who heads the world’s largest asset manager, said at a conference held in New York by Bank of America Corp.’s Merrill Lynch unit.

Providers of synthetic ETFs should “tell the investor what they actually are. You’re getting a swap. You’re counterparty to the issuer.”

Lyxor Chairman Alain Dubois said in an interview last month that BlackRock’s warnings ignored risks associated with securities lending by physical ETFs.

Physical ETFs “expose their holders to undisclosed levels of counterparty risk to typically undisclosed counterparties,” Nizam Hamid, deputy head of Lyxor ETFs, said in an e-mailed response to Fink’s comments.

BlackRock’s iShares unit is the world’s largest ETF provider with $612 billion in assets as of Oct. 31, according to BlackRock data.

In Europe, Lyxor is the third-biggest with $40.1 billion, behind Deutsche Bank’s $48.5 billion and iShares’ $111.1 billion.

Synthetic ETFs have lost popularity among investors in Europe his year, reporting $1.86 billion in withdrawals in October, compared with $3.11 billion deposits for physically backed funds.

The U.K. Financial Services Authority in a June report raised concerns about counterparty risk and the quality and liquidity of synthetic ETFs’ collateral.

The International Monetary Fund and the Bank for International Settlements have also raised concerns about the funds’ risks.

Fink reiterated his criticism of leveraged and inverse ETFs, saying he was surprised that some were approved by U.S. regulators.

He compared leveraged ETFs to the financial engineering that ultimately lead to the collapse of the U.S. mortgage market in the subprime crisis.

Fink’s comments about Lyxor refer to the fact that its funds contract with its Paris-based parent company for the total return swaps that generate their return. If Societe Generale (GLE) were to fail, the funds would generate no return.

http://www.yolohub.com/trading/etf-street-brawl

[winston]

5 PowerRatings ETFs for the Next 5 Days (as of Friday, November 18, 2011)

ETF / Symbol / PowerRating
1. Retail HOLDRS ETF RTH 9
2. Direxion Energy Bull 3x Shares ERX 9
3. Market Vectors Gold Miners ETF GDX 8
4. S&P Retail SPDRS ETF XRT 8
5. First Trust Morningstar Dividend Leaders ETF FDL 8


Source: Trading Markets

[winston]

5 PowerRatings ETFs for the Next 5 Days (as of Friday, November 25, 2011)

ETF / Symbol / PowerRating
1. S&P Retail SPDRS ETF XRT 10
2. Direxion Energy Bull 3x Shares ERX 10
3. Utilities Select Sector SPDRS ETF XLU 9
4. Pharmaceuticals HOLDRS ETF PPH 9
5. ProShares Ultra Gold ETF UGL 9

Source: Trading Markets

[winston]

Looks like they are very bearish on the markets ...

5 PowerRatings ETFs for the Next 5 Days (as of Friday, December 2, 2011)

ETF / Symbol / PowerRating
1. ProShares UltraShort S&P 500 ETF SDS 9
2. ProShares UltraShort MidCap 400 ETF MZZ 9
3. Direxion Daily Latin America Bear 3x Shares LHB 9
4. Direxion Large Cap Bear 3x Shares BGZ 9
5. Rydex Inverse 2x S&P 500 ETF RSW 9

Source: Trading Markets

[winston]

5 PowerRatings ETFs for the Next 5 Days (as of Friday, December 9, 2011)

ETF / Symbol / PowerRating
1. iShares Nasdaq Biotechnology Index Fund ETF IBB 8
2. ProShares Ultra DJ Crude ETF UCO 7
3. Direxion Daily China Bull 3x Shares YINN 7
4. ProShares UltraShort MSCI Europe ETF EPV 7
5. ProShares UltraShort Financials ETF SKF 7

Source: Investment House

[winston]

5 PowerRatings ETFs for the Next 5 Days (as of Friday, December 16, 2011)

ETF / Symbol / PowerRating
1. SPDR S&P Retail ETF XRT 8
2. Retail HOLDRS ETF RTH 8
3. DB Gold Double Long ETN DGP 8
4. ProShares Ultra Gold ETF UGL 8
5. ProShares UltraShort Real Estate ETF SRS 8

Source: Trading Markets

[winston]

not vested

US pension funds sue BlackRock, allege 'looting' at iShares

NEW YORK - Two US pension funds filed a lawsuit against BlackRock, alleging that the world's biggest asset manager had "looted" securities-lending revenues from iShares exchange-traded funds investors, and breached its fiduciary duties.

In the suit, the Laborers' Local 265 Pension Fund of Cincinnati and the Plumbers and Pipefitters Local No. 572 Pension Fund of Nashville allege that several iShares ETFs spent funds on "grossly excessive compensation" to agents affiliated with the ETFs, as well as on other agents, and they want to recover the funds for investors.

Source: Reuters

[winston]

BUYER BEWARE!

Today's note is a reminder that not all ETFs do what they say...

Exchange-traded funds, or ETFs, were created in the early 1990s to provide investors with "instant diversification." Most ETFs track indexes (like the S&P 500) or commodities (like gold)... And because many are not actively managed, they do this with low fees. A good ETF can be a big help to individual investors.

But not all ETFs work as advertised. Take the popular U.S. Natural Gas Fund (UNG), for instance. It's supposed to track the price performance of natural gas, but its flawed structure makes it "bleed" value from shareholder accounts. It's one of our candidates for "the world's worst ETF."

You can see this dynamic at work below. Our chart plots the performance of natural gas (black line) and UNG (blue line) over the past five years. Natural gas is up nearly 20%. But UNG is down more than 75%. Just because an ETF says it tracks an index or commodity, doesn't mean it will.

Source: www.dailywealth.com