AROUND THE WORLD OF ETFS

March 02, 2007

 

Seeing The World

Vanguard isn't the only company looking toward Canada for better international exposure. In fact, SSgA beat Vanguard to the punch with the launch of its new SPDR MSCI ACWI ex-U.S. ETF (AMEX: CWI), which tracks the performance of substantially all investable markets outside the U.S. (including Canada).

The exciting new fund charges 35 basis points, higher than the Vanguard ETF but substantially lower than other comparable products.

Lucky Seven

Investors who want to fine-tune their commodities exposure got a new set of options in January, as PowerShares launched seven sector-based commodity ETFs onto the AMEX. The new ETFs were launched in partnership with Deutsche Bank, and follow in the footsteps of the broad-based PowerShares DB Commodity Index Fund (AMEX: DBC), the first (and still the largest) commodity index ETF in the U.S. The new funds are the:

PowerShares DB Energy Fund (AMEX: DBE)
PowerShares DB Oil Fund (AMEX: DBO)
PowerShares DB Precious Metals Fund (AMEX: DBP)
PowerShares DB Gold Fund (AMEX: DGL)
PowerShares DB Silver Fund (AMEX: DBS)
PowerShares DB Base Metals Fund (AMEX: DBB)
PowerShares DB Agriculture Fund (AMEX: DBA)

Like DBC, the funds track the performance of fully collateralized futures investments. They also rely on Deutsche Bank's "Optimum Yield" strategy, which attempts to improve the "roll yield" for the funds. Although Deutsche Bank claims incredible backtested results (it says the PowerShares DB Oil Fund outperformed the Goldman Sachs Crude Oil Total Return Index by more than 12 percent in the past year alone), the "Optimum Yield" strategy remains a bit untested.

The oil, gold and silver funds will charge 50 basis points; the other funds will charge 75 basis points. Those expenses will be covered by the collateral interest income, which will approach 5 percent per year based on current interest rates.

Out of the box, the Agriculture fund attracted the most assets, gathering over $40 million in its first few weeks on the market.

Defending Claymore

Claymore Advisors rolled out five new ETFs onto the AMEX on December 15. The Claymore/Clear Spin-Off ETF (AMEX: CSD) is a quantitatively screened portfolio of companies that have been spun off from other companies, while the Claymore/Ocean Tomo Patent ETF (AMEX: OTP) focuses on companies with strong pools of intellectual capital. The LGA Green ETF (AMEX: GRN) is a quantitatively screened portfolio of companies with strong environmental performance records, and the Claymore/Sabrient Defender ETF (AMEX: DEF) is a deep value fund meant to hold its value when markets fall. All the funds charge 69 basis points in annual expenses.

iPath India

The hottest new exchange-traded product to hit the market recently is not an ETF at all, but rather, an exchange-traded note (ETN) from Barclays Bank. The iPath India ETN (AMEX: INP), which is technically a debt security but trades like an ETF, launched on December 20 and gathered more than $200 million in assets in its first month on the market. The fund offers U.S. investors the first indexed access to the domestic market of India, and charges just 75 basis points for the privilege.

Five New PowerShares

PowerShares rolled out five new ETFs onto the AMEX on Friday, December 1. The most interesting of the new funds is the PowerShares Financial Preferred Portfolio (AMEX: PGF), which tracks the performance of "preferred stock" from major financial companies. Preferred stock is an unusual class of stock that operates somewhere in the gray zone between stocks and bonds, providing higher income and lower risk, but less upside than traditional equities. PGF is the first preferred stock ETF to hit the market.

The other funds are:

PowerShares Dynamic Large Cap (AMEX:PJF)
PowerShares Dynamic Mid Cap (AMEX:PFM)
PowerShares Dynamic Small Cap (AMEX:PJM)
PowerShares Value Line Industry Rotation (AMEX:PYN)

The expense ratios range from 60-70 basis points.

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