Christian Magoon recently was on the Fox Business set in New York to discuss the ETF industry and to highlight opportunities within the ETF space. The discussion was wide ranging and covered the pricing of ETFs, leveraged ETFs, Gold ETF, India ETFs and Dividend ETFs.
The markets are ripe for the ETF structure to be exploited. The efficiency, transparency and flexibility ETFs offer make them a premier packaged product choice. Mutual fund investors require more transparency of holdings, lower fees and more liquidity options than end of the day pricing and ETFs are delivering. For individual stock investors, ETFs offer the liquidity of stocks AND the diversification of funds — the best of both worlds.For doomsday “investors” buying gold coins and melting down the family jewelry, there are attractive physically backed gold ETFs — solutions that just don’t exist in the mutual fund world — priced at .25 bps a year!
As the fiscal drama unfolds the future will only be brighter for ETFs. Higher taxes coming? ETFs are a tax advantaged structure, just read the prospectus. Lower return environment looming? ETFs are at the cutting edge of fee compression and fees matter more in a lower return environment. Searching for alternative strategies? ETFs are delivering access and ETPs (exchange traded portfolios) are expanding the set even further. Need to hedge? Geared ETFs are liquid and trade millions of shares a day in all types of asset classes.
Perhaps that’s why ETFs, with an asset base about 12% the size of mutual funds and minimal access to the defined contribution market, took in more than 30% of all inflows into funds in the first half of 2011.
ETFs are the future and the future is now.
The first quarter has come to a close and what a quarter it has been! With the Fed continuing QE2, MENA turmoil, a Japan earthquake/tsunami/nuclear crisis and European debt issues (right on cue), the first quarter of 2011 has been one of the more eventful Q1’s in recent memory. Investors in the right areas of the market were handsomely rewarded with double digit gains during the roller coaster start of 2011. Let’s examine the top 11 best performing non leveraged equity ETFs/ETNs in Q1 to determine several winning trends. Continue Reading
According to Bloomberg, fears over oil supply disruptions have led to the price of oil likely rising higher this week than in any other week over the last two years. In fact, this week Nomura Holdings put out a research note pointing to a possible $220 a barrel scenario should supply disruption grow in Libya and move into Algeria. All this drama seemed to have peaked oil prices earlier this week but now oil is rebounding going into the weekend of February 26th.
As of Friday afternoon February 25th, Oil ETFs are predicting more turmoil and higher oil prices. A quick look at three key oil related ETFs — USO the United States Oil Fund, DBO the PowerShares DB Oil Fund and XOP the SPDR S&P Oil and Gas Exploration and Production ETF — show them all trending upward mid day. See chart below:
Market participants are likely hedging their oil exposure leading into the two day weekend as further developments occur in Libya as well as other Middle Eastern hotspots.
The three oil ETFs highlighted above have been a decent investment this year, although their performance year to date differs considerably. See the year to date chart below:
How could one oil ETF be up 10% this year while another is just breaking even? It’s all in the details people. XOP, the only product that invests in the companies that are involved in oil and gas exploration, has seen the biggest rise year to date in part because contango has not been an issue diminishing performance. DBO, a oil futures product that employs an optimised approach to selecting which oil futures contract to invest in, has successfully mitigated some of contango’s effects. Finally USO, which robotically purchases the next month’s oil futures contract, has likely suffered the most from contango. As you can see, the underlying approaches of all three ETFs yield substantial differences in performance and it pays to understand them before making an investment. For more information about contango, see the recent U.S. News and World Reports story Magoon Capital contributed to.
For now it appears oil’s behavior will continue to be closely tied to the latest headlines and video from the Middle East — not the global economic recovery — and that has Wall Street hedging its bets.
It’s that time of year for holiday music, colder weather and the odd investing phenomenon known as window dressing to take place. For some reason, some money managers begin to purchase the best performing securities of the year towards the end of the year causing these top performers to melt upward in price. This historic trend, dubbed window dressing, is supposed to occur because money managers know that investors review the holdings in their portfolios at year end and compare them to the best performing securities in the marketplace that year. Presumably money managers want to demonstrate they owned the best performers — even if only for a short time. Thus they “dress” their portfolio before the year end portfolio snapshot (window) takes place. Yes Virginia, we live in an odd investment world…
I thought it would be interesting to take a look at the top 20 ETF/ETN melt up candidates this year. Doing so may provide a way to gauge the melt up affect on ETPs (exchange traded portfolios) and even yield a few investment ideas. After the break, I’ve compiled the latest year to date ETP performance report from Index Universe.com, which I believe has the cleanest ETP data in the industry. This report includes all ETPs, except leveraged and inverse products, and is sorted by year to date performance. Click through the break to view the performance chart and associated observations… Continue Reading