Indexor

iShares Files for New Type of Muni Bond ETF

Could be a game changer but why pay 15+ basis points when you can buy individual muni's with the same maturity dates from most discount brokers and eliminate the annual costs of the middleman?

The positive in both scenarios is that buying either a 5-year muni or 5-year muni ETF and holding until maturity during a rising interest rate environment, will eliminate the losses of principal that should develop from ETFs like MUB and TFI.

A Quant Approach to Private Equity

Mebane:

Just curious as to whether you have ever backtested your 10-Month SMA to a 6-Month EMA?

Defending the 'Most Dangerous ETFs': A Response to Don Dion

Dorlan H. Francis:

Your socialist Obama/Pelosi agenda is showing. You may want to continue selling life insurance and refrain from dabbling in the securities business until you have a firmer grasp.

Why You Should Be Keeping an Eye on the PowerShares DB Dollar Bullish ETF

knoc:

The advantage of owning UUP as a proxy instead of simply holding dollars is that UUP will appreciate in value, unlike the money market fund holding dollars. Second, it will act as a hedge against against your foreign bond positions and international stock positions.

International Bond ETFs' Correlation to Equities

Here's a thought:

Take each of the four foreign bond ETFs you mentioned - BWZ, BWX, JGT and WIP - and compare each one to UUP (PowerShares US Dollar Bullish) on a charting service, such as stockcharts.com. You will find each of the foreign bond ETFs have a strong negative correlation to UUP.

While we are always looking for issues that provide additional diversification through negative correlation, do you find that foreign bonds are simply a good diversifier because of their currency "effect?" In other words, as long as the dollar continues to weaken, foreign bonds should provide both diversification and alpha. But if the US dollar begins to strengthen, won't foreign bonds prove to be much less of a diversifier and produce negative alpha just when global stocks are also entering a downward trend?

U.S. Natural Gas Fund: The Beginning of the ETF Unwinding?

Looking at the VIX...

On a closing price basis, VIX hit a high last year of 80.86 on November 11, 2008 (which was also its intraday high). Prior to that, going back through the year 2000, the high had been 45.08 on August 5, 2002 (also its intraday high). The closing low was 9.97 reached on December 14, 2006, although intraday it hit 9.64 the same day.

On March 9, 2008 "when DJIA was 6600" the VIX closed at 49.86, substantially less than "VIX around 90." Somehow I do not believe anyone would care to "die for" any additional information on the VIX as it does not appear to be a statistically important leading indicator of DJIA bottoms or tops.

3 Reasons Why Gold ETFs Are on a Rush

Ron:

TPTB (not TPBT) = The Powers That Be

ETF Trends: New Reality Weighs on Investors and Stocks

Excellent article. I appreciate the sharing of your trend work on such a broad array of asset classes, especially Bonds and Sectors, which are often overlooked. Your Momentum and Market Diary numbers are also routinely ignored by many but actually can provide very good tells. Thank you.

ETF Investing: Buy-and-Hold vs. Moving Averages

Having used Moving Average Crossovers pretty successfully for over 20 years as a risk management tool (exiting US stocks before 1987, 2000 and 2008), I found Theodore Wong's work both useful and interesting. Sadly, it was titled "Moving Average: Holy Grail or Fairy Tale." And Mr. Wong has received several letters from advisors/investors who are questioning the "whipsaws" from the "Holy Grail" of investment strategies, as such a label implies perfection. Yet, I believe his two articles provide stimulating insight into the benefits this methodology can offer for technically oriented investors.

In my humble opinion, there is no "Holy Grail" in investing. As good as I believe moving averages can be for protecting capital, MAC is not a foolproof method and contains several "worts" such as the aforementioned whipsaw problems, optimal time frames in changing markets and single vs. multiple moving averages, among others. Those who believe they have finally found the investment "solution" will likely be disappointed. But those who recognize its limitations yet still use it as another tool in a broader arsenal, could be well rewarded.

Investing will always be more art than science. If the Moving Average Crossover were the "Holy Grail" it would be easy to buy ETFs, put our portfolios on MAC autopilot and collect our profits when we were ready to retire. It's not quite that simple.

I have found Mr. Wong's articles very interesting and look forward to reading his future articles as well. I wonder if he would consider a new title?

What Regulatory Overhaul Means for Some Commodity ETFs

ETP = Exchange Traded Products

PIMCO Treasury ETF on Solid Ground: Is iShares Ready?

PIMCO should be a welcome addition to the ETF marketplace. They will likely begin with the typical lineup of fixed income products mirroring iShares, with similar if not the same performance. But lurking behind could be other fixed income products not currently available in the ETF space and appealing not only to institutional investors but more sophisticated advisors and individual investors as well. This includes active funds, although PIMCO has always managed their active mutual funds closely to a specific index, a startegy even pure index ETF users will find appealing.

Additionally, they could add true validity to the commodity offerings currently available (especially those of iPath that are not part of the BlackRock deal). PIMCO is a big believer in "alternative asset classes." They have a wealth of knowledge about this asset class, including the tax issues that have tripped up many unsuspecting investors. They will likely win back many prior investors and advisors who stopped using PIMCO because of their mutual fund-only access.

Many view PIMCO as Bill Gross. While Mr. Gross built PIMCO into the success it is today, he would be the first to tell you that there are plenty of other bright investment minds helping to run his shop. Access to these individuals through the ETF structure should prove to be a huge edge in the future. And Mr. Gross is not getting any younger. Mohamed El-Erian is well positioned to continue the PIMCO traditions.

Last, PIMCO has always provided excellent support for their products in terms of excellent web sites, telephone contact, fund information and timely performance data for both their funds as well as the underlying indices being targeted. While they will certainly have the ability to keep BlackRock's iShares on their toes, they could eventually overtake iShares in terms of assets, especially when considering the cache that is attached to the PIMCO brand.

Why I'm Exiting Canada, Brazil and Australia ETFs

jse17:

If Sir John Templeton had not passed away one year ago, his portfolio would most likely be down substantially, similar to John Bogle, Warren Buffet and so many other fundamental analysis investors who are always trotted out as examples of "investors to emulate" who also profess fundamental buy-and-hold philosophies.

It is my belief that Sir John Templeton likely knew very few investors who even utilized technical analysis, either in Nassau, the U.S. or abroad. While foreign investing was his forte, and he was very successful in his endeavors, I believe he could have become even more successful had he also combined technical analysis with his fundamental approach.

Many who use technical analysis are very happy they were able to sidestep the brutal downdrafts in most assets classes, not only in 2008, but also in 2000, and 1987, and 1973, etc. Rather than dismissing the technical approach entirely, based upon Sir John Templeton's statement, it might prove beneficial to explore the benefits of incorporating some simple technical methodologies along with your current strategies, if only to reduce your risk exposure.

Tuesday Outlook: Commodities, Global Markets

Dave:

I always appreciate your work. In your chart of WIP you noted: "Are WIPs better than TIPs? Some must think so." There is a big tax difference between the two. Phantom income.

The drawback to holding TIPs in a taxable account is that they generate "phanton income." The principal value is adjusted annually to reflect inflation, and you're forced to pay taxes on the increase - even though you don't actually receive the money until you sell the bond or it matures. iShares will send you a 1099 that calculates your phantom income each year but TIP remains best for QUALIFIED ACCOUNTS only.

WIPs are somewhat different. The monthly distributions made by WIP include the coupon interest accrual and the CPI adjustment on the principal. The fund is able to pay this out by selling a very small
portion of the portfolio every month that there is a positive CPI
adjustment. Since the CPI adjustment is paid out every month, from a tax standpoint, there is no "phantom income" realized by the shareholder.

Hope this helps.

Five Obstacles Facing Active ETFs

nym:

If active managers hedge their positions, the costs will only serve to reduce their returns even further, with the exception of long and broad sell offs like we just witnessed. Historically, such sell offs have not occured very frequently over time.

Just 5 ETFs and You're Set? Buy-n-Hold Silliness Still Carries On

Gary:

Consider your sources: John Bogle? Motley Fool?? Money Magazine???

It might be time to broaden your information horizons.