ETF Daily News'  Instablog

Jason Kelly (of a website we wish not to promote) came out with a story last Friday that has sadly duped some in the investment community. Playing off of the deluge of creative ETF’s that have been introduced as of late, his article claimed a release of two new ETFs that would provide 100X leverage under the trading symbols (SOAR) and (SINK). His original post begins as follows:

“Kelly Capital is proud to announce on Friday the 13th the world’s first pair of 100x leveraged ETFs: Kelly Daily Nasdaq 100 Bull 100x Shares (SOAR) and Kelly Daily Nasdaq 100 Bear 100x Shares (SINK). The investments seek to replicate, net of expenses, 10,000% of the daily performance of the Nasdaq in the case of SOAR, and 10,000% of the inverse daily performance in the case of SINK. The funds will invest at least 80% of assets in securites that comprise the index. They will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The funds are nondiversified.”

Natural gas prices have been dropping as of late which we have found is a direct result of new technologies opening up previously inaccessible domestic natural gas reserves. Gas prices rose a few years back over concerns that domestic natural gas reserves were being depleted and the gap was going to have to be filled with more expensive imported sources, but the rising prices led to new technologies that opened up previously unaffordable domestic natural gas reserves. As the supply of natural gas rose, prices fell. 

The pitfall to the current low natural gas prices is the sustanability of these low prices to continue. As the higher prices lead to the new technologies allowing for drillers to tap into non conventional natural gas resources, lower natural gas prices limit the money available to tap into future gas deposits. We have found that unconventional shale gas wells deplete very rapidly, paying out 60 to 90% of their production in the first year. It takes a great deal of drilling to maintain overall production rates, and in a low-price environment like today's, the prospects for additional drilling are dubious. The longer prices remain too low to sustain increased drilling, the more tension there will be for the price to slingshot. Combine that with the governments push to offer credits towards natural gas vehicles, and a recovery in manufacturing, and the demand could well exceed the current natural gas reserves.

The outlook for low natural gas prices seems dim. What better time to introduce a new vehicle to invest in natural gas. With all of the controversy surrounding the United States Natural Gas Fund (UNG) just barely in the rear view mirror, UNG's sponsor is launching yet another natural gas ETF this Wednesday. This ETF aims to mitigate the effects of contango. When a commodity is in contango, the cost of a near-month contract is cheaper than a far-month contract. As US Commodity Funds did with oil, introducing of  the United States 12 Month Oil Fund, LP (USL) , the fund generally will hold a complete basket of the next 12 months’ futures contracts (as opposed to UNG, which simply holds the upcoming month). Two weeks before the expiration of the nearest-month contract, the fund will roll forward another month, picking up the then-12-months-out contract.  

OOK Advisors, LLC will begin trading of its TXF Large Companies ETF (TXF) tomorrow November 4th. The fund will be made up exclusively of stocks issued by Texas’s publicly traded companies. Based on the SPADE Texas Index, this will be the second state based ETF introduced by OOK Advisors, and is closely following the release of the Oklahoma ETF (OOK) which began trading last Thursday. The Oklahoma ETF has been relatively flat since inception and has experienced low volume.

“We believe there are some outstanding companies in Texas with proven abilities that will make this fund a great vehicle to invest in Texas with us,” said Keith Geary, chairman of the Geary Companies.

WHAT IS THE SPADE® TEXAS INDEX AND HOW IS IT CREATED AND MAINTAINED?
The SPADE® Texas Index (the “Underlying Index”) was created and developed by ISBC/SPADE® Indexes LLC (the “Index Administrator”) and licensed to OOK Advisors, LLC (the “Advisor”) for use in an exchange traded fund and related ETF options
products.

Tomorrow, November 3rd, Charles Schwab will be listing four new ETFs on the NYSE. The ETFs are as follows: Schwab U.S. Broad Market ETF (SCHB), Schwab U.S. Large-Cap ETF (SCHX), Schwab U.S. Small-Cap ETF (SCHA) and the Schwab International Equity ETF (SCHF). Schwab is in a good position to stake out the new ETF territory. While other money managers felt the pullback caused by economic distress, Schwab brought in $113 billion through brokerage services and funds. Schwab is hosting a press briefing today at Manhattan's Hilton Hotel in New York to discuss their foray into ETFs. You can find a brief summary of each below.

Schwab U.S. Broad Market ETF (SCHB)

Investment objective

Today, China launched its ChiNext exchange, which is specifically designed for smaller, more speculative listings. It's been compared to the NASDAQ and was created to enable high-growth companies in the early stages of development to meet their financing needs. The new board is intended to help smaller Chinese companies in a financial system that has long favored big, state-owned companies.

28 stocks formed the first batch of companies listed on the ChiNEXT and all 28 stocks at least doubled in value in intraday trading. Marketwatch quotes Francis Lun, general manager at Fulbright Securities as saying, "It shows the immaturity of the Chinese market. Everybody is out for a quick profit, without considering the actual worth of the company. The risk is that all the money will go into the GEM [ChiNext] board. ChiNext is designed to fund innovation and risk taking. Hence, overvaluation is a worry."