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Exchange Traded Funds Exchange traded funds seem to be the new boutique instrument used when investing. But it is not at all a new product. For many years, we have referred to them as closed-end funds as opposed to open-end (normal) mutual funds. Please click on the Brand Name of the ETF companies below to jump to some of the offerings held by FCVA clients:
Claymore/Zacks Sector Rotation ETF (XRO) seeks investment results that correspond generally to the performance of the Zacks Sector Rotation Index. The Fund will normally invest at least 90% of its total assets in common stocks and ADRs that comprise the Index. The Zacks Sector Rotation Index uses a proprietary quantitative methodology developed by Zacks to overweight (as compared to other benchmark indices) sectors with potentially superior risk-return profiles. The objective of the Index is to overweight those sectors that combined have the potential to outperform on a risk-adjusted bases the S&P 500 Index and other benchmark indices. Claymore/Clear Spin-Off ETF (CSD) seeks investment results that correspond generally to the performance of the Clear Spin-off Index (the “Spin-off Index” or “Index”). The Fund will normally invest at least 90% of its total assets in common stock and ADRs that comprise the Index. The Spin-off Index is comprised of approximately 40 stocks. The Spin-off Index selection methodology is designed to identify and actively represent the stock of a group of companies that have recently been spun-off from larger corporations and have the opportunity to better focus on their core market segment and outperform, on a risk-adjusted basis, the Russell Mid-Cap Growth Index and other mid-cap-oriented benchmark indices. Claymore/BNY BRIC ETF (EEB) seeks investment results that correspond generally to the performance of the BNY BRIC Select ADR Index (the “BNY BRIC Index”). The BNY BRIC Index tracks the performance of U.S. exchange-listed depositary receipts in ADR or GDR form that are listed for trading on the New York Stock Exchange (“NYSE”), AMEX and Nasdaq Stock Market (“Nasdaq”) of companies from Brazil, Russia, India and China. Claymore/Zacks Country Rotation ETF (CRO) seeks investment results that correspond generally to the performance of the Zacks Country Rotation Index. The Index uses a proprietary quantitative methodology developed by Zacks to seek to determine those countries with potentially superior risk-return profiles and within those countries select a basket of stocks which have the potential on a risk-adjusted basis to outperform the MSCI EAFE Index and other developed international benchmark indices. Claymore S&P Global Water Index (CGW) seeks investment results that correspond generally to the performance of the S&P Global Water Index. The Water Index tracks a portfolio of 50 global equity securities from developed markets of companies that are involved in water-related businesses. The Fund will normally invest at least 90% of its total assets in common stock and ADRs that comprise the Index. The Investment Adviser seeks a correlation over time of 95% or better between the Fund’s performance and the performance of the Index.
iShares are the world's most extensive family of Exchange Traded Funds (ETFs). iShares combine the advantages of stocks with those of index funds. Like stocks, they are liquid, easy to use, and can be traded in whatever number of shares you wish. Like index funds, they provide diversification, market tracking, and low expenses. The iShares Lehman Aggregate Bond Fund (AGG) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the total United States investment grade bond market as defined by the Lehman Brothers U.S. Aggregate Index. The iShares Lehman U.S. Treasury Inflation Protected Securities Bond Fund (TIP) seeks results that correspond generally to the price and yield performance, before fees and expenses, of the inflation-protected sector of the United States Treasury market as defined by the Lehman Brothers U.S. Treasury TIPS Index. The iShares iBoxx $ High Yield Corporate Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the iBoxx $ Liquid High Yield Index, a corporate bond market index compiled by the International Index Company Limited. The iShares S&P 500 Index Fund (IVV) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of U.S. large-cap stocks, as represented by the Standard & Poor's 500 Index. The iShares S&P MidCap 400 Index Fund (IJH) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of U.S. mid-cap stocks, as represented by the Standard & Poor's MidCap 400 Index. The iShares S&P SmallCap 600 Index Fund (IJR) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of U.S. small-cap stocks, as represented by the Standard & Poor's SmallCap 600 Index. The iShares Cohen & Steers Realty Majors Index Fund (ICF) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of large, actively traded U.S. real estate investment trusts, as represented by the Cohen & Steers Realty Majors Index. The iShares Goldman Sachs Natural Resources Index Fund (IGE) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of U.S.-traded natural resource-related stocks as represented by the Goldman Sachs Natural Resources Sector Index. The iShares MSCI EAFE Index Fund (EFA) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the European, Australian and Far Eastern markets, as measured by the MSCI EAFE Index. The iShares MSCI Emerging Markets Index Fund (EEM) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in emerging markets, as represented by the MSCI Emerging Markets Index. The iShares MSCI Pacific ex-Japan Index Fund (EPP) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Australia, Hong Kong, New Zealand, and Singapore markets, as represented by the MSCI Pacific Free ex-Japan Index. The iShares S&P Global Energy Sector Index Fund (IXC) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of companies that Standard & Poor's deems part of the energy sector of the economy and important to global markets, as represented by the S&P Global Energy Sector Index. The index is a subset of the Standard & Poor's Global 1200 Index. The iShares Comex Gold Trust (IAU) seeks to correspond generally, to the day-to-day movement of the price of gold bullion. The objective of the Gold Trust is for the value to reflect, at any given time, the price of gold owned by the Gold Trust at that time, less the expenses and liabilities of the Gold Trust. The objective of the iShares Silver Trust (SLV) is for the value of the shares of the iShares Silver Trust to reflect, at any given time, the price of silver owned by the iShares Silver Trust at that time, less the iShares Silver Trust's expenses and liabilities.
An interesting "Family" of 58 ETFs somewhat unique in that they offer exposure to the inverse, double the inverse or double the "normal" exposure of several indices. Some we use follow. Think the US stock market is going to decline? Need to port some Alpha from another fund? Try UltraShort S&P500 (SDS). Be careful, if the stock market increases, your value in this ETF will go down twice as fast. The recent degradation of the financial sector forces us to look at ways to both hedge existing financial positions and speculate a bit for quick profits. One way is through the double inverse financial sector ETF. The ticker symbol is SKF.
DB Commodity Index Tracking Fund (DBC) The ETF is a commodity pool managed by DB Commodity Services LLC, and is designed to track the performance of the Deutsche Bank Liquid Commodity Index - Excess Return, which is a rules based index based on six liquid futures contracts on Light Sweet Crude Oil, Heating Oil, Gold, Aluminum, Corn and Wheat. As the first broad commodity ETF, DBC has attracted a great deal of interest. Before investing, however, you might want to read the cautionary article Rolling With Commodities for a simple explanation of how futures based commodity funds generate returns in general and some issues with DBC in particular. DB Oil Fund (DBO) is based on the Deutsche Bank Liquid Commodity Index - Optimum Yield Oil Excess Return™ (Index) and managed by DB Commodity Services LLC. The Index is a rules-based index composed of futures contracts on Light Sweet Crude Oil (WTI) and is intended to reflect the performance of crude oil. A different approach to commodity investing is the agriculture specific fund DB Agriculture Fund (DBA). The PowerShares DB Agriculture Fund is based on the Deutsche Bank Liquid Commodity Index – Optimum Yield Agriculture Excess Return™ and managed by DB Commodity Services LLC. The Index is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities – corn, wheat, soy beans and sugar. The index is intended to reflect the performance of the agricultural sector. FTSE RAFI US 1000 PortfolioIn spite of their unquestioned benefits, traditional market capitalization weighted indexes are fundamentally flawed. By design, overvalued securities will have greater weight in a market capitalization index than their undervalued counterparts. Unavoidably, then, a passive index investor is forced to allocate a disproportionate amount of his portfolio to overvalued securities. The problem has been widely recognized but until recently the only alternative to market capitalization indexes has been in the form of equally weighted indexes. A new approach uses fundamental measures of firm size, sales, cash flow, book value and dividends, that are independent of market influence as a means for weighting a stock index. The first adoption of this approach, called fundamental indexation, has been the RAFI US 1000 Index, and PowerShares has made available an ETF (PRF) that corresponds to the index.
The PowerShares Dynamic MagniQuant Portfolio (PIQ) is based on the Dynamic Magniquant Intellidex. The Index is designed to objectively identify 200 stocks that have the greatest potential for capital appreciation. Intellidex methodology thoroughly evaluates the investment merit of the 2,000 largest U.S. companies by analyzing numerous unique financial characteristics from four broad financial perspectives: fundamental, valuation, timeliness and risk. Continuing the RAFI series, is a group of Sector Funds. One that we have used is the Basic Materials (PRFM) fund that seeks to replicate the FTSE™ Research Affiliates Fundamentals Basic Materials Sector Index. The Index is designed to track the performance of the largest U.S. basic materials equities, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The U.S. basic materials equities with the highest fundamental strength are weighted by their fundamental scores. An interesting PowerShares ETF invests in the securities tracked by Zack's Small Company Index. Looking for a China play? Here's one; certainly not the only one, but worth a look.The PowerShares Golden Dragon Halter USX China Portfolio (PGJ) seeks to replicate, before fees and expenses, the Halter USX China Index™ which is comprised of the U.S. listed securities of companies which derive a majority of their revenue from the People's Republic of China. Currencies PowerShares DB G10 Currency Harvest Fund (DBV) seeks to track the Deutsche Bank G10 Currency Future Harvest Index™ by (1) entering into long futures contracts on the three G10 currencies associated with the highest interest rates, (2) entering into short futures contracts on the three G10 currencies associated with the lowest interest rates, and (3) collateralizing the futures contracts with United States 3-month Treasury bills. Metals Base Metals Fund (DBB) is based on the Deutsche Bank Liquid Commodity Index – Optimum Yield Industrial Metals Excess Return™ (Index) and managed by DB Commodity Services LLC. The Index is a rules-based index composed of futures contracts on some of the most liquid and widely used base metals – aluminum, zinc and copper (grade A). The index is intended to reflect the performance of the industrial metals sector.
SPDRs, is a State Street Global Investors (SSgA) sponsored family of exchange traded funds ("ETFs") offering precise exposure to a variety of indexed equity markets. SPDRs run the gamut of style, sector and capitalization -from mega cap global equities, to technology, to real estate and are an indispensable tool for sophisticated portfolio management. The Dow Jones Wilshire 5000 Index Fund, (TMW) before expenses, seeks to closely match the returns and characteristics of the Dow Jones Wilshire 5000 Index. The approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs. streetTRACKS Gold Shares (GLD) (the only SSgA ETF retaining the streetTRACKS moniker) offer investors a new, innovative, relatively cost efficient and secure way to access the gold market.
VIPERs are exchange-traded funds (ETFs) from the Vanguard Group. Total Stock Market VIPERs (VTI) seeks to track the performance of a benchmark index that measures the investment return of the overall stock market. REIT VIPERs (VNQ) seeks to provide a high level of income and moderate long-term capital appreciation by tracking the performance of a benchmark index that measures the performance of publicly traded equity REITs.
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