ETF Update: New Asia ETF, Commodity ETFs, Base Metal Prices

New Global ETF Gives Exact Exposure To Asia

Barclays Global Investors has expanded on the Asian invasion within equity markets with a new ETF that takes investors deeper into the continent.

The iShares MSCI All Country Asia ex-Japan Index Fund (AAXJ) is listed on Nasdaq, and it offers broad, diversified access to the equity markets in Hong Kong, China, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand, reports ETF Express. The expense ratio is set at 0.74%.

The goal of this ETF is to give exposure to developed Asian equity markets, without the impact of Japan and Australia. At the same time, emerging markets such as Indonesia and Thailand are expressed.

Commodity ETFs Become Portfolio Staples

When it comes to commodity ETFs, choosing among the many available isn’t always a simple task.

Investors have realized that prices for things like oil and corn can surge even as the rest of the market spoils. Ian Salisbury for The Wall Street Journal reports that many financial advisers are now keeping a small portion of investors’ assets in commodities to smooth overall volatility in a portfolio.

But constructing an index of commodities can be a challenge. Stock indexes often contain companies weighted by market capitalization - but that’s not possible with commodities. This means index designers have to take a different route, and it yields wildly different results.

Compare the iShares S&P GSCI Commodity Indexed Trust. It has 78% in energy and 2% in precious metals. As a result, it is up higher despite the recent declines in oil. The Greenhaven Continuous Commodity Index has 47% in agriculture and 18% in energy, and it’s up 2% since launching in late January.

Many other commodity ETFs and ETNs sit somewhere between those two extremes.

Index designers have different ways of decided how much of which commodity to include. One way is to estimate how much of a commodity is produced in a year. But commodities are not like equities and the closest thing you can get to market-cap weighting is to estimate production.

• iShares S&P GSCI Commodity-Indexed Trust (GSG), up 11.2% year-to-date
• GreenHaven Continuous Commodity Index (GCC), down 0.3% since Jan. 24 inception
• iPath Dow Jones-AIG Commodity Index TR (DJP), up 2% year-to-date

Base Metal Prices Are Boosting ETFs

You could be carrying some of the day’s biggest ETF rallies right in your pocket.

Copper, nickel and other base metals surged today as the dollar weakened and oil prices crept back up, report Pratima Desai and Julie Crust for Reuters.

Nickel also rose 7.3% on news that Xstrata (XSRAF.PK) was suspending operations at its Falcondo ferronickel mining facility in the Dominican Republic. Nickel is mainly used in the production of stainless steel. One analyst says that because of the news, the market should be brought close to balance instead of being oversupplied.

Copper also shot up 12 cents. It has been slightly depressed this year, falling more than 15% since reaching a record high on July 2. The decrease came after markets started pricing in slow demand growth from China, which is a top consumer of the metal.

Lead ticked up 6.2% at the close on Monday after stockpiles earmarked for withdrawal shot up 11% to their highest level since July 2006, reports Chanyaporn Chanjaroen for Bloomberg. The price of lead has fallen 29% this year.

• iPath DJ AIG Nickel (JJN), down 31% year-to-date
• iPath DJ AIG Copper (JJC), down 9.1% year-to-date
• iPath DJ AIG Lead (LD), down 4.4% year-to-date
• PowerShares DB Base Metals (DBB), down 0.6% year-to-date

Comments

[sprintracer:]

You didn't mention any of the Elements - Rodgers ETNs like RJI, which I think has the most extensive list of various commodities under one fund.

2008 Aug 20 12:32 PM

[CLH:]

Those commodity ETFs look like losers to me after an eight year bull. Ill pass.

2008 Aug 20 12:42 PM

[SoYouThinkY...:]

I added up to date charts and data for commodity ETFs and ETNs to my website. GLD (Gold), LD (Lead), NIB (Cocoa) and BAL (Cotton) all look strong.

Take a look at soyouthinkyoucaninvest...

I also compiled a complete list of all the commodity ETF and ETNs available to US investors as well as detailed data on each and saved them in a convenient google docs spreadsheet that everyone can view and download.

Take a look at soyouthinkyoucaninvest...

Jan 18 08:59 PM