Top Five ETFs from Last Week - FAZ, SRS, PGM, GAZ, GLD

Each week, I like to publish the past week's hottest ETFs to share some new trends and niche ETFs (and ETNs) out there (check out this ETF Ticker List full of ~800 - every exchange traded fund I could find) and give investors some new investing/diversification ideas. Last week, it was metals and natural gas taking the lion's share of gains. I made sure to include both conventional and leveraged ETFs in this week's hot list:

Hot List Leveraged ETFs

FAZ - Direxion Daily Financial Bear 3X Shares - Up 8% - You can always count on having either FAS (triple long) or FAZ (triple short) Financials on the list given the volatility in the Financial sector and the constant news cycle regarding either more government oversight, more leadership turnover, TARP paybacks and more. In the near term, it's conceivable that Financials just continue to run. After all, it's looking as though they'll be borrowing at zero and lending for much more for at least another year and the comps from the year prior will continue to look stellar. Amazingly, the mortgage market continues to be propped up by the likes of mortgage modification programs, home buyer tax credits and amazingly, home buyers can still get 0% down loan programs (actually make money on a purchase when considering home buyer tax credit) under an obscure USDA farm loan program (and no, most people taking advantage of this don't own a farm). The question is, when (or if) the government assistance dries up, what that portends for the financial sector at large, which still has skin in the game. YTD, FAS is up 175% and FAZ is down 41%. Not for the faint of heart.

SRS - ProShares UltraShort Real Estate (ETF) - Up 6% - In a flat week for the S&P500, as noted above, Financials didn't fare well, nor did Real Estate. Jitters over redefaults and a breather from recent runups in the sector led to a mild decline for the week in this leveraged ETF.

* Be mindful that there are several leveraged ETFs (by sector/ticker), but investors that are unfamiliar with these instruments should be aware that they lose value over time due to the mechanism of daily rebalancing, which isn't intuitive until you see an example. Therefore, these should really be treated as trades over perhaps a few days, as opposed to "investments" for any great period of time.

Hot List - Sector ETFs (no leverage)

PGM - iPath DJ AIG Platinum TR Sub-Idx ETN - Up 12% -This Platinum ETN continues to run. For a non-leveraged play on precious metal strength/weak dollar trending, PGM is up 88% YTD vs. 33% for GLD, the predominant gold ETF.

GAZ - Barclays iPath Natural Gas - Up 7% - Natural gas has been depressed for some time given that its demand profile is divergent from that of oil and demand in the US has been very light given the recession. GAZ has actually lost half its value YTD. However, there are attempts from various camps to turn the US economy into a natural gas economy and move away from imported oil. Whether this ever comes to fruition in our lifetime is yet to be seen. But, if the administration signals that there's interest in considering a heavier reliance on natural gas, you could expect to see a rapid snap upward. As a consumer, if your expenditures for energy are influenced heavily by natural gas, you may want to consider this or other methods to hedge energy prices for your household.

GLD - SPDR Gold Trust - Up 5% -You can't turn on the TV or radio these days without hearing a pundit espouse the benefits of gold, the gold bubble forming, or whatever gold-oriented agenda their pushing...followed by commercials for gold exchange/retail companies. While gold is correlated with a weak US dollar trend, there are a multitude of weak dollar ETF plays including other precious metals that actually have real-world utility, as well as currencies, treasuries and a even flex CD that rises in value as the dollar declines against BRIC currencies (innovative!). GLD has gained 12% over the past month and 23% over the prior 3 month period.

Disclosure: No position in the aforementioned ETFs.

Comments

[lois30]

I was also in trouble and I am glad I checked the website bit.ly/7YakVI before I talk to my mortgage company and it helped

2009 Nov 30 03:33 AM

[dirtyharry]

If you're going to talk about FAZ as a triple short instead of the double short SKF, then why not mention DRV? It's the triple short in real estate, and will outperform SRS when that index drops. DRV is already trading around two million shares daily, so liquidity is not an issue.

Also, I was a little surprised you failed to mention the move of EDZ, up 11.80% on Friday. The recent problems in Dubai and overbought emerging markets could make EDZ very attractive for some short term swing trades.

2009 Nov 30 08:23 AM

[Everyday Finance]

On DRV, yes it did outperform; missed that one.

On EDZ while it had a big Friday it was only up marginally on the week so not included.

Thanks for your comment

2009 Nov 30 10:18 AM