Schwab Introduces Three Commission-Free Bond ETFs

Schwab added to its lineup of low cost ETFs last Thursday (8/5/10) with the introduction of its first three fixed income funds: Schwab U.S. TIPS ETF (SCHP), Schwab Intermediate-Term U.S. Treasury ETF (SCHR), and Schwab Short-Term U.S. Treasury ETF (SCHO).

These new offerings follow Schwab’s game plan of targeting core asset classes with extremely low expense ratios and commission-free trading for customers of Schwab brokerage.  That game plan differentiates Schwab from competitors and has worked well so far.  The firm has accumulated $1.4 billion in ETF assets since the launch of its first ETFs just nine months ago.

Schwab U.S. TIPS ETF (SCHP) will track the Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index with an expense ratio of 0.14%.  SCHP will face off against iShares Barclays TIPS Fund (TIP), SPDR Barclays Capital TIPS ETF (IPE), and PIMCO Broad U.S. TIPS Index Fund (TIPZ).  The three competitors have expense ratios of 0.19% to 0.20%.

Schwab Intermediate-Term U.S. Treasury ETF (SCHR) will track the Barclays Capital U.S. 3-10 Treasury Bond Index with an expense ratio of 0.12%.  No other ETFs are based on this index, although iShares and PIMCO both have funds tracking 3-7 year Treasury bonds.

Schwab Short-Term U.S. Treasury ETF (SCHO) will follow the Barclays Capital U.S. 1-3 Treasury Bond Index with an expense ratio of 0.12%.  It will directly compete against iShares Barclays 1-3 Year Treasury (SHY) with its 0.15% expense ratio and PIMCO 1-3 Year Treasury Index Fund (TUZ), which has a 0.09% expense ratio.

Disclosure covering writer, editor, and publisher:  Long SHY and TIP.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

ETF Deathwatch for June 2010

The number of exchange-traded products (ETPs) on ETF Deathwatch fell again this month.  The count now stands at just 86 (56 ETFs and 30 ETNs), the lowest level since the November 2008 ETF Deathwatch list.

Does this mean the ETF industry is at full health?  I’m not ready to jump to that conclusion for a couple of reasons.  First, our list is based on trading activity, and and trading activity across the entire ETF spectrum was up +57% last month.  If you assume that all ETFs had a 57% increase in trading, then only 66 of the 99 names on the May ETF Deathwatch list would have carried over to this month.

Second, the closing of 12 leveraged ETFs from Rydex means fewer products were eligible this month.  Third, 116 new ETFs and ETNs came out in the last six months that are currently excluded from eligibility.  Many of those products will find their way to this list in the next few months.

I think this all adds up to a temporary decline in the number of products on the list.  My guess is that the Deathwatch list will be back up in triple digits before the summer is over.

There were 28 new funds launched last November, and now that they are at least six months old, they have lost their Deathwatch immunity.  It appears to have been a pretty good crop because 26 of the 28 managed to avoid the list.  The two that entered Deathwatch status are PIMCO 3-7 Year U.S. Treasury Index ETF (FIVZ) and TXF Large Companies ETF (TXF).

Many observers may be surprised that PIMCO now has two products on ETF Deathwatch:  FIVZ and TENZ.  Both are adorned with the PIMCO name and both represent widely followed benchmark bond categories.  So what went wrong?  In a word, the problem is marketing.  PIMCO 7-15 Year U.S. Treasury Index Fund (TENZ) was launched more than eight months ago, but PIMCO has never announced this product – not even a press release.  If they are counting on a “build it, they will come” asset-gathering approach, they may need to rethink that plan.

Meanwhile, no one who has read this column before should be surprised that E-TRACS ETNs are again occupying the top three slots this month.   E-TRACS CMCI Short Platinum Excess Return ETN (PTD) takes top honors.  According to my data sources, there was only a single trade in PTD all month – 100 shares changed hands on May 7.  Another data source I use shows zero volume for the month.

Listed below are the 68 products on ETF Deathwatch for June that failed to generate at least $100,000 in average daily value traded (ADVT) during the past month.

ETF Deathwatch - June 2010

Rank	Ticker	Name	Age (mths)	Avg Daily Volume	Avg Daily Value Traded
1	PTD	E-TRACS CMCI Short Platinum Exc Ret ETN	25	5	$150
2	UBC	E-TRACS CMCI Livestock Total Return ETN	26	125	$2,501
3	UBN	E-TRACS CMCI Energy Total Return ETN	26	315	$4,380
4	RFF	Grail RP Financials ETF	8	205	$5,460
5	JEM	Barclays GEMS Currency Index ETN	28	130	$5,603
6	GBB	iPath GBP/USD Exchange Rate ETN	37	145	$5,781
7	ADZ	PowerShares DB Agriculture Short ETN	26	230	$8,786
8	BVT	Elements Ben Graham Total Mkt Value ETN	22	880	$9,130
9	JYN	iPath JPY/USD Exchange Rate ETN	37	155	$10,060
10	BHH	HOLDRS B2B Internet ETF	125	21,433	$10,768
11	BVL	Elements Ben Graham Large Cap Value ETN	22	1,345	$11,114
12	AGF	PowerShares DB Agriculture Long ETN	26	840	$11,903
13	PGD	Barclays Asian&Gulf Currency Reval. ETN	24	245	$12,245
14	FUE	Elements MLCX Biofuels ETN	28	1,845	$13,049
15	DOD	Elements Dogs of the Dow Total Return ETN	31	1,825	$13,225
16	GWO	Elements CS Global Warming ETN	26	2,650	$16,612
17	TXF	TXF Large Companies ETF	7	465	$16,752
18	OOK	OOK, Inc.	7	645	$20,499
19	DPU	PowerShares DB Commodity Long ETN	25	1,480	$21,788
20	GVT	Grail American Beacon Large Cap Value	13	690	$21,861
21	MKH	HOLDRS Merrill Lynch Market 2000+	119	480	$22,373
22	EEH	Elements Spec LgCap US Sector Mo ETN	34	2,705	$22,510
23	USV	E-TRACS CMCI Silver Total Return ETN	26	885	$23,149
24	EEN	Claymore/BNY Mellon EW Euro-Pacific LDRs	40	1,415	$23,828
25	UBD	Claymore U.S. Capital Markets Bond ETF	28	470	$24,503
26	PBTQ	PowerShares Global Biotech Portfolio	21	1,070	$25,017
27	EXB	Claymore/Beacon Gbl Exch, Brkrs, & Asst Mgrs	36	2,060	$25,047
28	RPX	Grail RP Growth ETF	8	925	$25,355
29	TZD	iShares S&P Target Date 2010 Index Fund	19	880	$25,574
30	WMH	HOLDRS Wireless	117	605	$25,704
31	PMA	PowerShares Active Mega-Cap Portfolio	26	1,140	$25,722
32	UBM	E-TRACS CMCI Industrial Metals TR ETN	26	1,415	$27,295
33	EKH	HOLDRS Europe 2001	114	495	$27,339
34	JJS	iPath DJ-UBS Softs ETN	24	675	$28,366
35	TZO	iShares S&P Target Date 2035 Index Fund	19	950	$28,458
36	JYF	WisdomTree Dreyfus Japan Yen	25	1,070	$30,799
37	JFT	First Trust Enhanced 130/30 Large Cap ETN	25	1,207	$35,633
38	GRN	iPath Global Carbon ETN	24	1,260	$36,065
39	TDD	TDX Independence 2010	32	1,595	$36,920
40	JVS	Javelin DJ Islamic Market International	11	870	$37,147
41	RPQ	Grail RP Technology ETF	8	1,305	$37,655
42	ULQ	Claymore U.S. Cap Mkts Micro-Trm Fxd Inc	28	778	$38,726
43	BDH	HOLDRS Broadband ETF	124	4,000	$43,965
44	FDD	First Trust DJ STOXX European Select Div	34	3,950	$46,216
45	PQZ	PowerShares Active Alpha Multi-Cap	26	3,020	$50,633
46	PJO	PowerShares FTSE RAFI Japan	36	1,375	$50,852
47	TZE	iShares S&P Target Date 2015 Index Fund	19	1,725	$50,957
48	IWL	iShares Russell Top 200 Index Fund	8	1,995	$52,382
49	PQSC	PowerShares FTSE Nasdaq Small Cap	26	2,220	$52,861
50	DJCI	UBS E-TRACS DJ-UBS Commodity TR ETN	7	210	$53,586
51	CRBA	Jefferies|TR/J CRB Global Agriculture Equity	7	1,470	$54,053
52	TZG	iShares S&P Target Date 2020 Index Fund	19	1,860	$55,654
53	TZI	iShares S&P Target Date 2025 Index Fund	19	1,900	$57,105
54	PAO	PowerShares Auto Balanced Growth NFA	25	5,210	$58,117
55	TENZ	PIMCO 7-15 Year U.S. Treasury Index Fund	9	770	$59,182
56	BSC	Elements Ben Graham Small Cap Value ETN	22	5,285	$59,433
57	BDG	PowerShares DB Base Metals Lng ETN	24	2,890	$59,723
58	GRES	IQ ARB Global Resources ETF	7	2,340	$60,469
59	LD	iPath DJ-UBS Lead ETN	24	1,350	$63,220
60	RWG	Grail RP Focused Large Cap Growth ETF	8	2,425	$65,244
61	FIVZ	PIMCO 3-7 Year U.S. Treasury Index ETF	7	870	$66,715
62	PTRP	PowerShares Glb Progressive Transport.	21	2,690	$68,969
63	UAG	E-TRACS CMCI Agriculture TR ETN	26	3,825	$70,290
64	TGR	iShares S&P Target Date Retirement Inc.	19	2,545	$71,925
65	MCRO	IQ Hedge Macro Tracker ETF	12	2,810	$72,970
66	PNXQ	PowerShares Nasdaq Next Q	26	2,955	$74,635
67	DEF	Claymore/Sabrient Defender	42	3,530	$75,060
68	ERO	iPath EUR/USD Exchange Rate ETN	37	1,530	$75,144
69	UBG	E-TRACS CMCI Gold Total Return ETN	26	2,305	$77,353
70	CRBI	Jefferies|TR/J CRB Global Ind Metals Equity	7	2,145	$79,983
71	BWV	iPath CBOE S&P 500 BuyWrite Index ETN	37	1,880	$81,047
72	TDX	TDX Independence In-Target	32	3,234	$81,050
73	FUD	E-TRACS CMCI Food Total Return ETN	26	4,400	$82,097
74	TZL	iShares S&P Target Date 2030 Index Fund	19	2,790	$82,713
75	TDH	TDX Independence 2020	32	4,002	$83,540
76	PLK	PowerShares Active Low Duration	26	3,315	$84,045
77	TWQ	ProShares UltraShort Russell3000	11	3,575	$84,860
78	RYU	Rydex S&P Equal Weight Utilities	43	1,900	$85,761
79	RWV	RevenueShares Navellier Overall A-100	16	2,740	$86,230
80	PZJ	PowerShares Zacks Small Cap	52	4,535	$87,514
81	IPW	SPDR S&P International Energy	23	3,785	$88,614
82	TDN	TDX Independence 2030	32	4,831	$88,872
83	NUCL	iShares S&P Global Nuclear Energy	24	2,520	$91,508
84	IFEU	iShares FTSE EPRA/NAREIT Europe	31	3,755	$92,606
85	IFNA	iShares FTSE NAREIT North America	31	2,560	$93,350
86	XGC	Claymore/BNY Mellon Intl Small Cap LDRs	38	5,225	$97,928

Past issues of ETF Deathwatch are available here.

Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

ETF Deathwatch for April 2010

The number of exchange-traded products (ETPs) on ETF Deathwatch grew again this month.  For April, the quantity is 108 (76 ETFs and 32 ETNs), up from 104 for March.

Thirteen new funds launched last September, and now that they are at least six months old they have lost their Deathwatch immunity.  Nine of these have generated enough investor attention to avoid the list, but four did not.  Joining ETF Deathwatch for the first time this month are PIMCO 7-15 Year U.S. Treasury (TENZ), EGS Dow Jones Emerging Markets Financials Titans (EFN), SPDR Nuveen S&P VRDO Municipal Bond (VRD), and iShares Russell Top 200 Index Fund (IWL).

Topping this month’s list are E-TRACS CMCI Livestock Total Return ETN (UBC) and E-TRACS CMCI Short Platinum Excess Return ETN (PTD), which both averaged less than 100 shares traded per day in March.  UBC traded on just six of 23 market while PTD could muster only three.  Six other E-TRACS are on the list this month.  They have now been on the market for two years and have failed to attract any investor interest.  One has to wonder how much longer UBS will subsidize these products.

Two WisdomTree funds are on the list month, even after they shuttered ten funds in March.  WisdomTree Dreyfus Japan Yen (JYF), one of their actively-managed funds, is #29 on the list and WisdomTree LargeCap Growth (ROI), the first GARP ETF, is #68 on the list.

Listed below are the 108 products on ETF Deathwatch for April that failed to generate at least $100,000 in average daily value traded (ADVT) during the past month.

ETF Deathwatch - April 2010

Rank	Ticker	Name	Age (mths)	Avg Daily Volume	Avg Daily Value Traded
1	UBC	E-TRACS CMCI Livestock Total Return ETN	24	61	$1,164
2	PTD	E-TRACS CMCI Short Platinum Exc Ret ETN	23	57	$1,744
3	BVL	Elements Ben Graham Large Cap Value ETN	20	291	$2,970
4	GWO	Elements CS Global Warming ETN	24	430	$2,984
5	GVT	Grail American Beacon Large Cap Value	11	113	$3,638
6	UBN	E-TRACS CMCI Energy Total Return ETN	24	257	$3,810
7	GBB	iPath GBP/USD Exchange Rate ETN	35	143	$5,804
8	EEH	Elements Spec LgCap US Sector Mo ETN	32	909	$7,823
9	PMA	PowerShares Active Mega-Cap Portfolio	24	370	$8,586
10	JEM	Barclays GEMS Currency Index ETN	26	213	$9,732
11	PQSC	PowerShares FTSE Nasdaq Small Cap	24	470	$11,322
12	TWQ	ProShares UltraShort Russell3000	9	530	$12,025
13	GRN	iPath Global Carbon ETN	22	522	$12,539
14	FUE	Elements MLCX Biofuels ETN	26	1,696	$12,652
15	STH	Claymore/Sabrient Stealth	43	882	$14,227
16	BHH	HOLDRS B2B Internet ETF	123	31,641	$14,399
17	BVT	Elements Ben Graham Total Mkt Value ETN	20	1,322	$14,531
18	CRO	Claymore/Zacks Country Rotation	33	913	$14,989
19	ADZ	PowerShares DB Agriculture Short ETN	24	435	$15,266
20	BDG	PowerShares DB Base Metals Lng ETN	22	704	$16,106
21	JYN	iPath JPY/USD Exchange Rate ETN	35	283	$18,307
22	PTRP	PowerShares Glb Progressive Transport.	19	678	$18,575
23	USV	E-TRACS CMCI Silver Total Return ETN	24	770	$18,815
24	EXB	Claymore/Beacon Gbl Exch, Brkrs, & Asst Mgrs	34	1,439	$19,101
25	PNXQ	PowerShares Nasdaq Next Q	24	730	$19,117
26	DOD	Elements Dogs of the Dow Total Return ETN	29	2,691	$19,526
27	TENZ	PIMCO 7-15 Year U.S. Treasury Index Fund	7	270	$20,135
28	JVS	Javelin DJ Islamic Market International	9	439	$20,994
29	JYF	WisdomTree Dreyfus Japan Yen	23	748	$21,470
30	AGF	PowerShares DB Agriculture Long ETN	24	1,483	$22,469
31	EKH	HOLDRS Europe 2001	112	357	$22,495
32	IFEU	iShares FTSE EPRA/NAREIT Europe	29	822	$23,279
33	EEN	Claymore/BNY Mellon EW Euro-Pacific LDRs	38	1,361	$25,030
34	RTW	Rydex Inverse 2x S&P Technology	22	1,435	$25,380
35	FDD	First Trust DJ STOXX European Select Div	31	1,948	$25,957
36	TZO	iShares S&P Target Date 2035 Index Fund	17	848	$26,175
37	UBG	E-TRACS CMCI Gold Total Return ETN	24	904	$27,275
38	RHO	Rydex Inverse 2x S&P Health Care	22	905	$27,413
39	PGD	Barclays Asian&Gulf Currency Reval. ETN	22	565	$28,068
40	PBTQ	PowerShares Global Biotech Portfolio	19	1,126	$28,630
41	TZD	iShares S&P Target Date 2010 Index Fund	17	991	$29,018
42	AYT	Barclays GEMS Asia 8 ETN	19	626	$29,519
43	UAG	E-TRACS CMCI Agriculture TR ETN	24	1,535	$29,967
44	ERO	iPath EUR/USD Exchange Rate ETN	35	583	$30,706
45	IWL	iShares Russell Top 200 Index Fund	6	1,157	$30,776
46	UBD	Claymore U.S. Capital Markets Bond ETF	26	648	$31,731
47	UBM	E-TRACS CMCI Industrial Metals TR ETN	24	1,504	$32,192
48	JFT	First Trust Enhanced 130/30 Large Cap ETN	23	1,099	$34,216
49	TLL	ProShares UltraShort Telecom	24	2,530	$36,432
50	WMW	Elements Mrngstr Wide Moat Focus ETN	30	3,500	$38,040
51	TZL	iShares S&P Target Date 2030 Index Fund	17	1,274	$39,422
52	TZG	iShares S&P Target Date 2020 Index Fund	17	1,374	$41,701
53	TZE	iShares S&P Target Date 2015 Index Fund	17	1,422	$42,577
54	ULQ	Claymore U.S. Cap Mkts Micro-Trm Fxd Inc	26	868	$43,245
55	TDD	TDX Independence 2010	30	1,870	$43,456
56	XRU	CurrencyShares Russian Ruble Shares	17	1,313	$44,140
57	PIQ	PowerShares Dynamic Magniquant	42	2,122	$45,645
58	BSC	Elements Ben Graham Small Cap Value ETN	20	4,091	$47,359
59	PAO	PowerShares Auto Balanced Growth NFA	23	4,157	$48,482
60	IPW	SPDR S&P International Energy	20	1,913	$49,095
61	DEF	Claymore/Sabrient Defender	40	2,304	$49,686
62	IPU	SPDR S&P International Utilities	20	2,309	$49,717
63	IPS	SPDR S&P International Consumer Staples	20	1,787	$51,252
64	TZV	iShares S&P Target Date 2040 Index Fund	17	1,726	$53,581
65	XGC	Claymore/BNY Mellon Intl Small Cap LDRs	36	2,687	$54,278
66	UWC	ProShares Ultra Russell3000	9	883	$57,095
67	WMH	HOLDRS Wireless	115	1,239	$57,169
68	ROI	WisdomTree LargeCap Growth	16	1,674	$57,306
69	TZI	iShares S&P Target Date 2025 Index Fund	17	1,900	$58,561
70	TGR	iShares S&P Target Date Retirement Inc.	17	2,104	$59,462
71	FUD	E-TRACS CMCI Food Total Return ETN	24	3,009	$59,928
72	SJL	ProShares UltraShort Russell Midcap Value	38	2,735	$60,215
73	RWV	RevenueShares Navellier Overall A-100	14	1,865	$60,385
74	PJM	PowerShares Dynamic Small Cap	41	3,191	$63,936
75	PCA	PowerShares Auto Balanced NFA	23	5,235	$63,981
76	PSTL	PowerShares Global Steel Portfolio	19	2,961	$67,896
77	VRD	SPDR S&P VRDO Municipal Bond ETF	6	2,391	$71,773
78	FPX	First Trust US IPO Index Fund	48	3,474	$72,349
79	RHM	Rydex 2x S&P Health Care	22	1,035	$73,495
80	PEF	PowerShares FTSE RAFI Europe	34	2,217	$75,777
81	FVI	First Trust Value Line Equity Allocation	40	4,183	$76,411
82	INR	Market Vectors Indian Rupee/USD ETN	25	1,961	$76,958
83	PTO	PowerShares Auto Growth NFA	23	6,861	$77,301
84	INY	SPDR Barclays New York Muni Bond	30	3,465	$78,307
85	REC	Rydex Inverse 2x S&P Energy	22	15,578	$79,926
86	JJS	iPath DJ-UBS Softs ETN	22	1,748	$80,535
87	MKH	HOLDRS Merrill Lynch Market 2000+	117	1,643	$81,022
88	MCRO	IQ Hedge Macro Tracker ETF	10	3,126	$82,664
89	BDH	HOLDRS Broadband ETF	122	7,265	$83,398
90	FAD	First Trust Multi Cap Growth AlphaDEX	35	3,235	$83,927
91	PIC	PowerShares Dynamic Insurance	54	5,565	$84,115
92	EFN	EGS DJ Emerging Markets Financials Titans	7	1,917	$85,247
93	GXF	Global X FTSE Nordic 30 ETF	7	5,057	$85,681
94	EZJ	ProShares Ultra MSCI Japan	10	1,243	$86,549
95	EEO	EGS DJ Emg Mkts Energy Titans	10	1,843	$86,692
96	AGA	PowerShares DB Agriculture Dbl Short ETN	24	1,978	$88,369
97	OTR	Claymore/Ocean Tomo Growth	36	3,591	$88,458
98	PQBW	PowerShares Nasdaq 100 Buy/Write	22	4,030	$89,034
99	PKW	PowerShares Buyback Achievers	40	4,226	$91,884
100	PWO	PowerShares Dynamic OTC	84	2,148	$92,610
101	IFAS	iShares FTSE EPRA/NAREIT Asia	29	3,278	$94,301
102	URR	Market Vectors Double Long Euro ETN	23	3,158	$94,596
103	LVL	Claymore/BBD High Income	34	6,426	$94,869
104	IPN	SPDR S&P International Industrial	20	3,869	$95,144
105	JJE	iPath DJ-UBS Energy ETN	30	4,004	$97,298
106	IST	SPDR S&P International Telecom	20	4,239	$97,749
107	PTE	PowerShares Dynamic Telecom & Wireless	53	6,804	$97,774
108	TDV	TDX Independence 2040	30	5,287	$98,437

Past issues of ETF Deathwatch are available here.

Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

03/24/10   Portugal Joins Greece in Europe’s Basement

Editor’s Corner

Portugal Joins Greece in Europe’s Basement

Ron Rowland

Europe was again in the headlines, this time less because of Greece but because Portugal had its sovereign debt downgraded by Fitch Ratings. Our first question is why anyone still pays attention to Fitch or any other rating agency. Their recent track record for predicting defaults is not exactly stellar. Nonetheless, Fitch may have a point about Portugal, which is the “P” in the now-famous PIIGS acronym. The Euro currency dropped to a ten-month low against the dollar as evidence piled up that Greece is not the only member with credit problems. A summit meeting tomorrow in Brussels seems unlikely to resolve anything. Since none of the options are pleasant, political leaders will postpone serious action for as long as possible. Europe is no different from the U.S. in that regard.

None of this prevented U.S. equity benchmarks from hitting new 52-week highs in the last few days. The S&P 500 broke above its January high last week and now seems to regard the 1150 area as support instead of resistance. Today the uptrend took a rest, ostensibly because of the Portugal news, but it may have just been break time. The passage of health care reform legislation did not have the negative market impact anticipated by some critics; if anything, removal of the uncertainty may have been a positive influence.

While the housing sector is still in bad shape and unemployment is still high in most places, other economic indicators continue pointing toward recovery. Treasury bonds were crushed today after an auction of five-year notes drew unexpectedly light interest from indirect bidders – a category which includes foreign central banks. Those notes had their worst intraday move since last August. The benchmark ten-year bond yield increased to 3.83%, its highest level since the first trading day of the year. Another factor: PIMCO bond guru Bill Gross railed against federal deficit spending in his monthly investor letter. Gross was also pessimistic about most of Europe, which is in even worse fiscal shape than the U.S. and lacks some of our advantages.

Sectors

A majority of sectors gained momentum in the last week, with Telecom improving the most and breaking into the top half of the list. Health Care also received a boost as the reform package seems to be, on balance, favorable for the industry. Consumer Discretionary held on to the top spot and Industrials (which includes Transports) strengthened its hold on second place. Utilities and Energy are lagging badly and continue to duel for last place; unlike most other sectors, both failed to hit new 52-week highs. This week Energy is on the bottom as crude oil prices seem to have stalled in the low $80s.

Styles

Not much has changed in the Style rankings, but we will note that momentum scores in the 50 neighborhood are historically not sustainable for long. This does not mean a market decline is imminent; a sideways consolidation would also serve to bring down the scores. Small Caps are still providing leadership while Mega Cap is lagging.

International

Global rankings became a little more compressed this past week as Canada took a break from its recent run. The U.S. is close behind and could easily capture the top spot if the dollar rally continues. Latin America slipped in the rankings after improving the prior week. Weakness in commodity prices and strength in the dollar are the main culprits. China moved off the bottom but is really not going anywhere. Europe is back in the basement as the Euro problems continue.

Note:

The charts above depict both the relative strength and absolute strength of various market sectors, styles, and geographic locations on an intermediate-term basis. Each grouping is sorted (top to bottom) by relative strength. The magnitude of the displayed RSM value is a measure of absolute strength, which is our proprietary method of measuring and reporting the intermediate-term strength as an annualized value.

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Charles Lindbergh

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ETF Stats for February 2010

(updated version) 

17 new exchange traded products (ETPs) launched in February: 16 ETFs and one ETN.  No products were delisted.  The number of US-listed products now stands at 964 (873 ETFs and 91 ETNs).

February ended the three-month streak where new product launches exceeded 20.  It was also the second month in a row with no closures, but that streak will not be extended as WisdomTree plans to close 10 funds in March.

Notional trading of ETPs hit $1.420 trillion in February, up +4.6% from $1.357 trillion in January.  Trading in SDPR S&P 500 (SPY) exceeded $478 billion for the month, accounting for 33.7% of all ETP value traded.

82 products (8.5%) had an average daily value traded (ADVT) of $100 million or more.  There were 104 (10.8%) in the ETF Deathwatch classification (ADVT below $100,000 and more than six months on the market).

February 2010 Month End	ETFs	ETNs	Total
Currently Listed U.S.	873	91	964
Listed as of 12/31/2009	836	89	925
New Introductions for Month	16	1	17
Delistings/Closures for Month	0	0	0
Net Change for Month	+16	+1	+17
New Introductions YTD	37	2	39
Delistings/Closures YTD	0	0	0
Net Change YTD	+37	+2	+39
ADVT > $1 Billion	14	0	14
ADVT > $100 Million	81	1	82
On Deathwatch at End of Month	71	33	104
% on Deathwatch	8.1%	36.3%	10.8%

 

New products launched in February (in chronological order):

1. PIMCO Short Term Municipal Bond Strategy Fund (SMMU) (PIMCO Adds Short-Term Munis to ETF Menu)
2. ProShares UltraPro Dow30 (UDOW) (ProShares ETFs Go 3X)
3. ProShares UltraPro S&P MidCap400 (UMDD)
4. ProShares UltraPro QQQ (TQQQ)
5. ProShares UltraPro Russell2000 (URTY)
6. ProShares UltraPro Short Dow30 (SDOW)
7. ProShares UltraPro Short S&P MidCap400 (SMDD)
8. ProShares UltraPro Short QQQ (SQQQ)
9. ProShares UltraPro Short Russell2000 (SRTY)
10. GlobalShares FTSE Developed Countries ex US Fund (GSD) (Another Unneeded ETF from Old Mutual)
11. EGS INDXX China Infrastructure Index Fund (CHXX) (Emerging Global Launches China Infrastructure ETF)
12. Market Vectors Egypt Index ETF (EGPT) (Egypt Now Available to ETF Investors)
13. PowerShares CEF Income Composite Portfolio (PCEF) (Closed-End Funds Inside an ETF)
14. Credit Suisse Long/Short Liquid Index ETN (CSLS) (Do Not Buy CSLS)
15. EGS INDXX Brazil Infrastructure Index Fund (BRXX) (New Brazil Infrastructure ETF)
16. Direxion Daily 2-Year Treasury Bull 3x Shares (TWOL) (Leveraged & Inverse Short Term Bond ETFs)
17. Direxion Daily 2-Year Treasury Bear 3x Shares (TWOZ)

Product closures/delistings in February:

none

Previous monthly statistics reports are available here.

Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

PIMCO Adds Short-Term Munis to ETF Menu: SMMU

Fixed-income giant PIMCO launched its third actively-managed ETF on Wednesday (2/3/2010) of this week. PIMCO Short Term Municipal Bond Strategy Fund (SMMU) targets the short end of the tax-free muni bond space. Maturity of the fund’s holdings will be in the one-year to three-year range.

Intentionally or not, the SMMU introduction is well timed. Talk in Washington of increasing tax rates has many high-net-worth investors looking for tax-free places to park their assets. Meanwhile, stock market performance is anything but impressive so far in 2010. SMMU will compete with three other ETFs in its niche: iShares S&P Short-Term National Muni Bond (SUB), SPDR Barclays Short Term Municipal Bond (SHM), and Market Vectors Short Municipal (SMB).

SMMU differs from the others in being actively-managed. The portfolio will be run by veteran bond manager John Cummings. Whether his skill will translate into better investment results is unknown as yet, of course, but it may not matter. The PIMCO brand name carries a lot of weight, and their previous ETF offerings have been generally successful in attracting assets.

The new ETF has a gross expense ratio of 0.55%, currently capped by the sponsor at 0.35%. Sister fund PIMCO Intermediate Municipal Bond Strategy Fund (MUNI) has the same fee cap and came to market in December 2009. Net assets for MUNI are around $13 million as of this writing. We suspect that its lower risk profile will allow SMMU to grow to that size very soon and probably even larger.

PIMCO SMMU info page and Prospectus (PDF format)

Other posts mentioning PIMCO ETFs

Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

MINT: A Conservative Way to Stash Cash

Investors are often conditioned to believe that cash is king, or that it is at least a good idea to keep some of your assets in cash to preserve your portfolio’s liquidity. After all, emergencies and unforeseen expenses happen. While this all makes sense, most cash investments offer meager rates of return. To get a decent yield on a traditional bank certificate of deposit (CD), you have to lock-up your money for four or five years. Then inflation becomes a concern.

U.S. Treasuries have historically been a safe and popular alternative for cash holdings. However, yields on these investments have plunged as the Federal Reserve injects vast amounts of liquidity into the economy. Short-term money market accounts are not much better. You should consider yourself lucky if you are getting 1%.

Nonetheless, smart investors always keep some cash on hand. This week’s pick is an ETF issued by bond giant PIMCO for this very purpose. PIMCO is one of the world’s largest bond mutual fund managers. The firm recently entered the ETF game, and one of its offerings may appeal to cash investors: PIMCO Enhanced Short Maturity Strategy Fund (MINT). MINT is barely three months old but has already amassed more than $59 million in assets and trades more than 200,000 shares on an average day. These are impressive figures for any new ETF, much less one that is not very exciting. MINT is an actively traded ETF, which so far haven’t attracted much investor interest. PIMCO seems to have overcome that obstacle with this ETF.

MINT is a possible alternative to money market funds for many investors. The ETF holds only investment-grade short-term fixed income instruments – no riskier fare like emerging markets bonds or high-yielding corporate bonds. MINT has about 400 different holdings, fully disclosed to investors every day. MINT does not use options, futures, or swaps to help generate returns, another aspect that may appeal to more conservative investors. All of MINT’s holdings are denominated in U.S. dollars. Investors should keep in mind the 0.35% expense ratio.

MINT is certainly not as glamorous as many ETFs. Nearly half of its assets reside in investment-grade credit securities and another 36% is in government debt. The remainder is allocated to mortgage securities. Given the short maturity of its holdings, MINT should effectively reduce volatility for investors seeking to enhance the return on their cash while keeping risk minimized. MINT is currently trading just over its issue price of $100 at $100.27 – exactly where it should be. To go with a stable cash equivalent not tied to long-term CDs, buy PIMCO’s MINT.

Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

Unemployment and the Investor

Investors received the latest jobs data from the Labor Department on Friday.  December’s unemployment rate was unchanged at 10%. Employers cut 85,000 positions from their payrolls and dashed hopes that jobs would be added at the end of 2009.  Last month’s cuts added to the over seven million lost jobs in the last two years.  However, the Bureau revised November numbers by showing 4,000 additional jobs.  This breaks the 22-month streak in lost jobs. Stocks reacted positively to the news on Friday, but we wonder how the persistent unemployment affects investors – especially since so many jobs have been lost during the current downturn.

In October, we discussed how jobs numbers could be declining while the market was rising. Our humble conclusion related to companies cutting operating expenses in order to show better-than-expected numbers to investors.  Improved efficiency rather than top-line growth was driving earnings.  There could be other reasons, though. Two weeks ago Pimco’s co-CEO Mohamed El-Erian pointed out how the government stimulus package is continuing to work its way through the economy.  This is the reason we’ve seen a steadily appreciating market since last March. El-Erian said, “We’re on a sugar high.  It feels good for a while but is unsustainable.”

No doubt stimulus money is affecting the job market. As late as November, the White House boasted saving 640,000 jobs by stimulus spending so far.  Though we could debate their numbers – and Washington figures usually can’t pass muster of an independent audit – injecting money into any business sector will usually be a healthy thing.  The current 10% might be higher had not the Feds pumped more into the economy.

The better question relates to you, dear investor.  What do you invest in while unemployment is so high?  Keep in mind, the US economy has lost 7.2 million jobs which is significantly greater than the amount of jobs cut during the previous four economic downturns.  Rapid recovery will be more difficult with this sort of weight on the economy.  We’re not exactly dealing with an-early 80’s economy with $1 trillion in national debt.  Instead, we are shouldering 12-times the debt load with a more service-based economy.  When job recovery happens, it doesn’t appear that it will look the same as it did in the 80’s or 90’s.  That’s the broad view.

Here’s a better picture of unemployment by the Bureau of Labor Statistics’ sectors.  This may help you see where businesses are willing to invest and where you might want to invest (or avoid) in US stocks or funds.

Unemployment Rate by Sector (as of 12/31/09):

Sector/Industry	Rate
Construction	22.7%
Agriculture	19.7%
Leisure/Hospitality	12.6%
Manufacturing	11.9%
Professional/Business Services	10.3%
Wholesale/Retail Trade	9.1%
Transportation/Utilities	9.0%
Information	8.5%
Financial Services	7.2%
Education/Health	5.6%
Government Workers	3.6%

ETF Stats for December 2009: Listings at 925

There were 23 new ETFs and no new ETNs launched in December.  Six ETFs were delisted.  The net increase of 17 pushed the quantity of listed products to 925 (836 ETFs and 89 ETNs) at the end of 2009, an increase of 80 for the year.  If the pace of the past six months keeps up, then we should reach the 1,000 level by mid-year.

During 2009 there were a total 136 new ETP launches, consisting of 127 ETFs and 9 ETNs.  This was only the fourth largest number of new launches in a calendar year, falling below the levels of the previous three years and less than half of the 291 new introductions in 2007.

Delistings and closures numbered 56 (51 ETFs and 5 ETNs) for 2009.  This was the second largest on record, coming in just shy of the 58 delistings in 2008.

December 2009 Month End	ETFs	ETNs	Total
Currently Listed U.S.	836	89	925
Listed as of 12/31/2008	760	85	845
New Introductions for Month	23	0	23
Delistings/Closures for Month	6	0	6
Net Change for Month	+17	0	+17
New Introductions YTD	127	9	136
Delistings/Closures YTD	51	5	56
Net Change YTD	+76	+4	+80
On Deathwatch at End of Month	78	40	118
% on Deathwatch	9.3%	44.9%	12.8%

Notes: The ETF counts include MacroShares, which technically are not ETFs.  The new introductions and closings quantities do not include the XGC extreme makeover in July 2009.

New products launched in December (in chronological order):

1. Global X China Consumer ETF (CHIQ) (article on CHIQ and CHII)
2. Global X China Industrial ETF (CHII)
3. PIMCO Intermediate Municipal Bond Strategy Fund (MUNI) (article on MUNI)
4. Direxion Daily China Bear 3x Shares (CZI) (article on CZI, CZM, LHB, and LBJ)
5. Direxion Daily China Bull 3x Shares (CZM)
6. Direxion Daily Latin America 3x Bear Shares (LHB)
7. Direxion Daily Latin America 3x Bull Shares (LBJ)
8. Claymore China Technology ETF (CQQQ) (article on CQQQ)
9. GlobalShares FTSE Emerging Markets Fund (GSR) (article on GSR)
10. FaithShares Catholic Values Fund (FCV) (article on FCV, FOC, FMV, FZB, and FKL)
11. FaithShares Christian Values Fund (FOC)
12. FaithShares Methodist Values Fund (FMV)
13. Global X China Technology ETF (CHIB) (article on CHIB)
14. iShares 10+ Year Credit Bond Fund (CLY) (article on CLY and GLJ)
15. iShares 10+ Year Government/Credit Bond Fund (GLJ)
16. Global X China Financials ETF (CHIX) (article on CHIX)
17. Schwab U.S. Large-Cap Growth ETF (SCHG) (article on SCHG and SCHV)
18. Schwab U.S. Large-Cap Value ETF (SCHV)
19. FaithShares Baptist Values Fund (FZB) (article on FCV, FOC, FMV, FZB, and FKL)
20. FaithShares Lutheran Values Fund (FKL)
21. Global X China Energy ETF (CHIE) (article on CHIE)
22. SPDR Barclays Capital Short Term Corporate Bond ETF (SCPB) (article on SCPB)
23. WisdomTree International Hedged Equity Fund (HEDJ) (article on HEDJ)

Product closures/delistings in December:

1. Claymore/Morningstar Manufacturing Super Sector Index ETF (MZG) (article on MZG, MZN, MZO, and UEM)
2. Claymore/Morningstar Information Super Sector Index ETF (MZN)
3. Claymore/Morningstar Services Super Sector Index ETF (MZO)
4. Claymore U.S.-1 – The Capital Markets Index ETF (UEM)
5. MacroShares Major Metro Housing Down (DMM) (article on closure and a separate article on their expense ratio)
6. MacroShares Major Metro Housing Up (UMM)

Previous monthly statistics reports are available here.

Disclosure covering writer, editor, and publisher: Participating in DMM and UMM liquidation. No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

ETF Stats for November 2009: Active Listings at 908

There were 23 new ETFs and five new ETNs launched in November.  No products were delisted.  The net increase of 28 pushed the quantity of listed products to 908, the first time the count has been above 900.

In theory, each hundred new products should come quicker than the previous since it represents a smaller percentage increase.  However, it took 18 months for the list to grow from 800 to 900 while the climb from 700 to 800 took just four months.

In fact, the 400, 500, 600, 700, and 800 levels were all eclipsed during the 18-month period prior to the one just completed.  In other words, new listings grew at only 15% over the past 18 months versus more than 100% in the previous 18-month span.

Even with that dramatic decline in the growth rate, the number of new listings in November was the highest in twelve months.  This was still far below the record of 50 launched in January 2007.  The pace is picking up once again but remains well below the rapid climb we saw from 2006-2008 when the number of products increased by 279% (an annualized growth rate of 56% per year).

November 2009 Month End	ETFs	ETNs	Total
Currently Listed U.S.	819	89	908
Listed as of 12/31/2008	760	85	845
New Introductions for Month	23	5	28
Delistings/Closures for Month	0	0	0
Net Change for Month	+23	+5	+28
New Introductions YTD	104	9	113
Delistings/Closures YTD	45	5	50
Net Change YTD	+59	+4	+63
On Deathwatch at End of Month	88	40	128
% on Deathwatch	10.7%	44.9%	14.1%

Notes: The ETF counts include MacroShares, which technically are not ETFs.  The new introductions and closings quantities do not include the XGC extreme makeover in July.

New products launched in November (in chronological order):

• PIMCO 3-7 Year U.S. Treasury Index ETF (FIVZ) (article on FIVZ and ZROZ)
• PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ)
• Schwab U.S. Broad Market ETF (SCHB) (article on Schwab launch)
• Schwab U.S. Large-Cap ETF (SCHX)
• Schwab U.S. Small-Cap ETF (SCHA)
• Schwab International Equity ETF (SCHF)
• TXF Large Companies ETF (TXF) (article on TXF)
• Market Vectors Junior Gold Miners ETF (GDXJ) (article on GDXJ)
• iShares Diversified Alternative Trust (ALT) (article on ALT)
• IQ ARB Merger Arbitrage ETF (MNA) (article on MNA, MINT, and BAB)
• PIMCO Enhanced Short Maturity Strategy Fund (MINT)
• PowerShares Build America Bonds Portfolio (BAB)
• First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID) (article on GRID)
• United States 12 Month Natural Gas Fund (UNL) (article on UNL)
• Barclays S&P 500 3x Long 2009 ETN+ (BXUB) (article on new ETN+ products)
• Barclays S&P 500 2x Long 2009 ETN+ (BXUC)
• Barclays S&P 500 1x Short 2009 ETN+ (BXDB)
• Barclays S&P 500 2x Short 2009 ETN+ (BXDC)
• Barclays S&P 500 3x Short 2009 ETN+ (BXDD)
• iShares S&P India Nifty 50 Index Fund (INDY) (article on INDY)
• Vanguard Short-Term Government Bond ETF (VGSH) (article on new Vanguard ETFs)
• Vanguard Intermediate-Term Government Bond ETF (VGIT)
• Vanguard Long-Term Government Bond ETF (VGLT)
• Vanguard Short-Term Corporate Bond ETF (VCSH)
• Vanguard Intermediate-Term Corporate Bond ETF (VCIT)
• Vanguard Long-Term Corporate Bond ETF (VCLT)
• Vanguard Mortgage-Backed Securities ETF (VMBS)
• Market Vectors Poland ETF (PLND) (article on PLND)

Product closures/delistings in November:

None

Previous ETF monthly statistics reports are available here.

Disclosure covering writer, editor, and publisher: Long GDXJ.  No positions in any of the other securities mentioned. No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

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