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ETF Update: New Diamond Offering?, Bleeding Mutual Funds, ETN Benefits, July Performance

Tom, Paul Weisbruch of RevenueShares here. How do we get our ETFs, at least the core broad based ones (RWL, RWK, RWJ) into your monthly performance reports? Thank you.

Why Small-Cap ETFs Could Be Ready to Rally

Tom, Paul Weisbruch of RevenueShares here. How does RWJ (RevenueShares Small Cap) not make this list? Up 19.57% YTD and up approximately 40% from the March 9th lows.

Seems like a shoe in on this list. Thanks.

Random Friday Notes on ETFs, Ratings, the Dollar and the Reflation Trade

Get this jacka-- above off the site.

Recent Performance of Key ETFs

No RevenueShares in here? RWL, RWK, RWJ, RTR, RWW, among some of the best performers YTD.

ETF Deathwatch: April 2009

Ron thanks for the monthly coverage on this, it is quite unique. Although I agree that trading volume is good as an "initial" screen, there are two factors I hope you can build into this analysis. Number 1 is Net Creations vs. Net Redemptions. If a fund doesn't trade much, but all of the volume when it does trade is new buyers, then that fund, and fund company should have a very positive Creation to Redemption ratio and this is why ETF companies are in business in the first place. ETF companies don't "make money" by having lots of volume. They make money with their management fees (i.e. expense ratios), so having a large amount of net buyers is what really matters to the fund company. If SPY for example traded 100 million shares one day and 75% of that volume were long sellers and short sellers using the SPY to hedge their long portfolios, that does not help the fund company's bottom line. All it does is help the "volume" story along, which in theory can draw in long buyers of the ETF, and hopefully for State Street's case, more buy and hold users than simply day traders. If we measured the mutual fund industry by "volume" alone we might determine that the most heavily traded mutual funds last year were the "best" when in reality the most heavily traded ones saw the most net outflows of assets.

The Second factor is the viability of the issuer. I don't think you can put ETFs on Deathwatch notice simply by volume alone. Rydex, and iShares for instance have a few on this list, but this situation should be treated like it is in any industry. If from a business standpoint, as an issuer you have 100 ETFs and 20 of them haven't gained popularity yet (i.e. low trading volume), if your business as a whole is profitable you can support those less popular, and possibly money losing ETFs for quite a long time in order to maintain a broad product lineup for you customers. Many businesses function like this...some departments are money losers or break even ventures, but are "kept open" by the cash cows within the business. That said, the stronger the financial position of the issuer, trading volume should be less of a concern, as there are no "rules" that the ETF needs to be shut down because it doesn't trade that much. Thanks.

2 Low Volume ETFs That Fly Under the Radar

Shouldn't RWK (RevenueShares Mid Cap) +6.5% YTD vs MDY (Mid Cap Spyder) +1.6% be on this list as well as RWJ (RevenueShares Small Cap) -1.1% YTD vs. IJR (Small Cap IShares) -5.9%?

Direxion 3x Financial ETFs Go Certifiably Crazy

People attempt to use FAS for amplified long exposure to the XLF, that's a fair assumption no? Why not just use something vanilla like RWW instead of XLF that is long only (equity), and doesn't use futures and options so there's no need to worry about the daily resetting and the longer term frustrating performance. RWW up 84% in the past 1 month versus XLF up 70%...seems like a no brainer to me.

Dead ETFs Walking

Basically it's up to the issuer's solvency. Having ETFs with little volume is obviously not desirable, but it all depends on the sales/distribution effort, and it becomes largely a judgment call on the ETF issuer's part whether or not they want to close the doors. That said, a company with a few profitable ETFs can easily sustain a few other products in their lineup that might not have any trading volume since the costs of running them are minimal and fixed for the omst part. Lose a bit here, make it up somewhere else, etc etc.

The ETF Billion Dollar Club

I would suggest as a solution to retail investors then to place your orders around NAV, not between the bid/ask. You will get filled...trading volume notwithstanding. No arbitrageur will allow your bid or offer, if above or below the NAV of the fund to just sit out there for hours. If you give yourself a few cents of "room" around the NAV you are even more assured to get filled. We are talking pennies here.

Simply go to a tool like Google Finance and type in an ETF symbol, i.e. "XYZ.IV" This will give you the "real value" of the underlying basket. It doesn't matter if the spread between bid/ask is a dollar wide. The Authorized Participants that are watching these ETFs will trade against your order provided it is near NAV and they can arb it. Example: If NAV (IV) is $20, and the bid ask is $19.50-$20.50 and you are a buyer at $20.10, you will get filled. Someone will short the ETF shares to you at $20.10, and then create the basket at $20 and pocket the 10 cents. Does this work for all ETFs no, some ETNs have IV's that are more difficult to ascertain since they are tracking baskets of futures and other derivatives.

The ETF Billion Dollar Club

re: above comment, I meant to use the word "track"

"and most ETFs that track" liquid indexes

The ETF Billion Dollar Club

"High liquidity means you don’t have to worry about whether someone will take the other side of your trade."

What I don't understand, is that if you simply call an ETF market making firm (Susquehanna, Sloan Securities, Knight) they will almost always be able to make a market within pennies around the bid/ask on the screen. This notion of ETFs trading like closed end funds is largely isolated to the fixed income sector, and most ETFs that trade liquid indexes are VERY liquid even though some may have light trading volume. It's all about what is in the indexes, NOT the trading volume. If you don't believe it, call an ETF institutional market making desk some time and ask for a market.