Amid the flurry of new ETFs coming to market this week, it appears I missed the launch of First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID) on Tuesday (11/17/09). This ETF focuses on stocks in the electric energy infrastructure and distribution grid subsector. The fund will typically invest in companies engaged in electric grid, metering equipment and devices, networks, energy storage and management, and enabling software used within the smart grid infrastructure.

The underlying index uses a modified capitalization weighting with “pure play” companies receiving an 80% allocation and “diversified” companies receiving just a 20% allocation. The expense ratio will be capped at 0.70% for two years.

Be careful what you wish for. For all the leveraged fund critics that either do not like or do not understand daily (or monthly) reset of leverage and want a vehicle without path-dependent performance, your wish has come true. However, unless you bought them yesterday, you will not be getting the exact 2x or 3x index exposure you desire. You can’t have everything.

Five new ETNs (exchange-traded notes), dubbed ETN+, from Barclays began trading yesterday (11/18/2009). When Barclays sold their iShares business, it appears that all their marketing and product naming people were also part of the deal. Here are the official names, but they won’t give you any clue as to the leverage employed:

Three sponsors launched new ETFs on Tuesday 11/17/09, making for 97 (93 ETFs and 4 ETNs) new exchange-traded product listings so far this year. The three new funds are the IQ ARB Merger Arbitrage ETF (MNA), PIMCO Enhanced Short Maturity Strategy Fund (MINT), and PowerShares Build America Bonds Portfolio (BAB).

IQ ARB Merger Arbitrage ETF (MNA) seeks to achieve capital appreciation by investing in global companies for which there has been a public announcement of a takeover by an acquirer. This approach is based on a passive strategy of owning certain announced takeover targets with the goal of generating returns that are representative of global merger arbitrage activity. The Index also includes short exposure to global equities as a partial equity market hedge. Additional information can be found in the press release (pdf), summary page, and fact sheet (pdf).

The iShares Diversified Alternative Trust (ALT), a new multi-asset class multi-strategy ETF, was launched yesterday (11/16/2009). Its stated objective is “to maximize absolute returns from investments with historically low correlation to traditional asset classes, while seeking to control the risks and volatility inherent in futures and forward contracts by taking long and short positions in historically correlated assets.”

The iShares product line has historically focused on providing “beta” exposure to various asset classes and indexes. By that, we mean its product offerings have tried to match various indexes from both a risk and reward standpoint.

A few months ago I wrote an article about how the 80-20 rule does not apply to ETFs. When it comes to ETF trading, 92% of the activity is confined to just 8% of the actively listed ETFs. I dubbed it the ETF 92-8 Rule. I received several requests to publish a list of the “vital few”, those 8% of the ETF universe that dominate all trading.

Back in April, I divided all the listed ETFs into Liquidity Tiers, based on their average daily value traded (ADVT). Each higher tier represents an order of magnitude improvement in ADVT. I continue to use this method because it results in a bell-shaped distribution, and the use of ADVT overcomes one of the weaknesses of a volume-only approach.

The number of funds on ETF Deathwatch edged up to 113 this month from 111 in October. The count consists of 78 ETFs and 35 ETNs that failed to generate at least $100,000 in average daily value traded (ADVT) for the past month.

E-TRACS CMCI Short Platinum Excess Return (PTD) heads the list again this month. I haven’t checked, but my guess is that PTD holds the record for number of times at the top of the list. PTD saw action on only three days in September and did the same in October, with the other 19 days being zero volume days. However, it did manage to boost trading by 100 shares over September, making for 600 total shares traded last month. Although PTD hasn’t traded in a few days, there are shares available for purchase at $34.02 this morning. If you want to sell, the bid is only $33.62.

Yesterday, November 3, 2009, marked a watershed event for the ETF landscape. It’s the day that Schwab (SCHW), absent from the ETF industry for past 16 years, upped the ante for any company thinking about getting into the business. Charles Schwab Investment Management, Inc. launched its first four ETFs.

At first glance, the new Schwab ETFs are nothing special – just four broad based core holdings, just like dozens already available from other fund companies. But look closer, and you will see they are also the lowest fee funds within each of their respective asset classes.

PIMCO kicked off the month of November with two new ETFs yesterday (11/02/2009). These are the 1st and 2nd launched in November, the 6th and 7th ETFs from PIMCO, and the 999th and 1,000th listed for U.S. trading.

PIMCO 3-7 Year U.S. Treasury Index ETF (FIVZ) (FIVZ information page) is designed to capture the return of the bellwether 5-year Treasury note. FIVZ has two primary competitors: iShares Barclays 3-7 Year Treasury (IEI) (IEI overview) with a weighted average maturity of 4.9 years and an expense ratio of 0.15%; SPDR Barclays Intermediate Term Treasury (ITE) (ITE overview) with a weighted average maturity of 4.3 years and an expense ratio of 0.13%.

The world of exchange-traded funds passed a milestone today (November 2, 2009) with the listing of the 1,000^th product in the US. The quantity of 1,000 includes a combination of 903 ETFs and 97 ETNs.

Eleven new ETFs and one new ETN were launched in October. No products were delisted. This net increase of 12 brings the official count of active listings at the end of October to 880: 796 ETFs and 84 ETNs.

The total value of shares traded for the month was $1.567 trillion, a surge of +19% from the $1.312 trillion of September. ETF volume averaged 1.59 billion shares per day. Trading in SPDR S&P 500 (SPY) averaged $21.7 billion per day, accounting for more than 30% of all ETF value traded.

If you haven’t heard of E-TRACS, you aren’t the only one. This family of exchange-traded products has gone nowhere. Every product they offer, except one, is on my Deathwatch list. Their products have meager assets and almost no trading volume, but the sponsors keep on plugging along. It’s impressive, in a way.

Now E-TRACS has launched yet another potentially doomed product: UBS E-TRACS DJ-UBS Commodity Index Total Return ETN (DJCI) began trading on October 29, 2009. For all practical purposes, there is nothing to distinguish DJCI from several other ETFs and ETNs that track similar broad commodity indexes. If ever there were a “Me Too” product, this is it. The only possible reason I can see to create this fund is that regulators are trying to cap the size of commodity-based exchange-traded securities. E-TRACS may think they will get some spillover buying from investors who are locked out of better-known funds.

As I read the various reviews of the new Oklahoma ETF that was launched earlier this week, I was struck by an odd sensation – nearly every review had a different name for the fund. I went to the website to get to the bottom of this little mystery and came away even more confused. So, I contacted OOK Advisors, the fund’s manager, for clarification.

It turns out that this is not the Oklahoma ETF, the SPADE Oklahoma Index Fund, nor any other combination of words containing “Oklahoma”. The fund’s full legal name is simply “OOK, Inc.”, making it only nine characters in length, of which one third are punctuation and spaces. The ticker symbol is OOK, producing an industry-standard combination of name & ticker of: OOK, Inc. (OOK).

On Tuesday IndexIQ announced (pdf) the introduction of two new ETFs designed to protect investors from inflation: IQ CPI Inflation Hedged ETF (CPI) and IQ ARB Global Resources ETF (GRES).

The IQ CPI Inflation Hedged ETF (CPI) seeks to hedge against changes in the U.S. inflation rate by providing a “real return,” or a return above the rate of inflation as measured by changes in the Consumer Price Index.

Jefferies is taking advantage of the uncertainty surrounding CFTC activity in the ETF marketplace by launching two more commodity-oriented funds that bypass CFTC intervention. The Jefferies | TR/J CRB Global Agriculture Equity Index Fund (CRBA) and the Jefferies | TR/J CRB Global Industrial Metals Equity Index Fund (CRBI) began trading today. Both ETFs invest in equities of commodity producers – not the actual commodities.

Those of you that have known me a while are aware I have been speaking on the subject of ETFs and mutual funds at various national conferences since 1994. In fact, maybe we even met at one of the shows. I was recently invited to participate on the ETF Panel at the 2009 San Francisco Money Show, where I met many people for the first time and renewed some old friendships.

Claymore/AlphaShares China All-Cap ETF (YAO) began trading today (October 19, 2009), becoming the third China-focused ETF from Claymore and the 11th China-focused exchange-traded product listed in the US.

The underlying index, created by AlphaShares, is designed to capture the investable universe of publicly-traded companies based in mainland China. The “investable” criteria excludes China A and B shares while including companies listed in Hong Kong, New York, and available through Depository Receipts. The current country weightings are China 76.0%, Hong Kong 23.4%, USA 0.4%, and Singapore 0.2%.

Ron Rowland

Yesterday JPMorgan Chase (JPM) reported quarterly earnings of 82 cents a share, up from nine cents for the same period last year. Even the most optimistic analysts had expected no more than 65 cents for the quarter. Needless to say, shares in JPM and its peers rose nicely on the news. Pundits who were forecasting the death of Wall Street just a few months ago are now re-thinking that prediction.

Proper disclosure means different things to different people. In the investment “advice” world, proper disclosure is different for Registered Investment Advisors than brokers or insurance agents. In the investment “publishing” world, publishers typically try to hide behind their “freedom of speech” rights. However, in the past, the Federal Trade Commission (FTC) has gotten involved in areas where financial regulators feared to tread.

With many new media (blogs, twitter, content aggregation sites) outlets operating in unregulated wild frontier mode, the FTC has saw fit to try to restore some sense of order. FTC 16 CFR Part 255 says that effective December 1, those that review products must disclose any connection with advertisers.

The “official” number of exchange-traded products on Deathwatch dropped for the second month in a row. This month’s list contains 111 names, seven fewer than last month.

E-TRACS CMCI Short Platinum Excess Return (PTD) heads the list again this month. PTD saw action on only three days in September, with a total of 500 shares traded for the entire month. The other 18 days were all zero volume days. The last trade took place back on September 17. Many ETF investors have never heard of E-TRACS, which may be why 90% of their product line is on ETF Deathwatch this, and every, month.

Despite the flop of their first actively managed ETF, Grail Advisors launched four more on October 2. The June 9 press release heralded these new ETFs as “the industry’s first traditional actively-managed ETFs using a single manager approach.”

RiverPark Advisors (RP) will be the primary sub-advisor for all four ETFs, and Wedgewood Partners will be a second sub-advisor on one fund. The four funds and their active managers are: