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Volatility ETNs Begin Trading

Barclays Bank PLC has listed two new ETNs that provide investors with exposure to the CBOE Volatility Index or VIX.

The iPath S&P 500 VIX Short-Term Futures ETN (VXX) and the iPath S&P 500 VIX Mid-Term Futures ETN (VXZ) track indexes tied to the implied volatility of the S&P 500 Index at various points along the volatility forward curve

VXX targets a constant weighted average future maturity of one month and VXZ targets a constant weighted average futures maturity of five months.

See the iPath ETN Directory for a complete listing.

Two New Fixed Income ETFs Start Trading

State Street Global Advisors added two more ETFs to its stable of fixed income funds.

The SPDR Barclays Capital Short Term International Treasury Bond ETF (BWZ) and the SPDR Barclays Capital Mortgage Backed Bond ETF (MBG) are designed to provide investors with cost-efficient exposure to precise segments of the fixed income market.

BWZ tracks the price and yield performance of the Barclays Capital 1-3 Year Global Treasury ex-US Capped Index which includes 229 issues with remaining maturities of one to three years from 21 investment-grade countries outside of the United States. The fund's expense ratio is 0.35 percent.

MBG tracks the price and yield of the Barclays Capital U.S.

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Northern Trust to Close ETFs

Northern Trust has announced that it intends to exit the ETF business.

The 17 Northern Trust funds will stop trading on February 9 and liquidation will take place on February 20.

Launched in 2008, the Northern Trust ETFs were designed to track international, single-country benchmarks.  The funds had collectively attracted a total of $33 million in assets as of December 31, 2008.

The ETFs that will close include:

NETS™ S&P/ASX 200 Index Fund (Australia) (AUS)

NETS™ BEL 20® Index Fund (Belgium) (BRU)

NETS™ Hang Seng China Enterprises Index Fund (SNO)

NETS™ CAC40® Index Fund (France) (FRC)

NETS™ DAX® Index Fund (Germany) (DAX)

NETS™ Hang Seng Index Fund (

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Airline ETF Takes Off

Claymore launched the industry's first exchange traded fund that invests in global passenger airline companies.

The Claymore Airline ETF (FAA) tracks the NYSE Arca Global Airline Index.  The index is weighted approximately 70% in US airlines and 30% in international airlines.

As of December 31, 2008, the top five Index constituents were AMR Corp (AMR), Continental Airlines Inc (CAL), Southwest Airlines Co (LUV), JetBlue Airways Corp (JBLU) and Delta Airlines Inc (DAL).

See the Claymore ETF directory for a complete listing.

Two International Fixed Income ETFs Start Trading

Barclays Global Investors launched two new ETFs that invest in international treasury bonds.

The iShares S&P/Citigroup International Treasury Bond Fund (IGOV) and the iShares S&P/Citigroup 1-3 Year International Treasury Bond Fund (ISHG) offer convenient, cost-effective, liquid ways to access the international fixed income markets.

The underlying indexes for the funds are broad, diverse and market value-weighted designed to measure the performance of Treasury bonds issued in local currencies by developed market countries outside of the U.S.

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Van Eck Launches Indonesia Fund

Van Eck Global launched the Market Vectors Indonesia ETF (IDX), the first ETF focused on Indonesia available to U.S. investors.

Indonesia has the largest economy in Southeast Asia and is one of the most rapidly developing nations in the emerging markets universe. The Fund  also offers potential diversification benefits since Indonesia has historically had one of Southeast Asia’s lower equity correlations with the developed markets

Top holdings include Bank Central Asia (8.8%), Telekomunikasi Indonesia (7.5%) and Bank Rakyat Indonesia (7.0%).

See the Van Eck Global ETF directory for a complete listing.

WisdomTree Income Funds Change Name

WisdomTree announced a name change for the firm's suite of dividend income funds.

The funds currently known as High Yield Equity, will change their names to Equity Income.

WisdomTree executives stated that the equity income name better articulates the investment strategy of these six funds which focus on the highest dividend-yielding stocks in their respective indexes.

See the WisdomTree ETF directory for a complete listing of the funds.

The new and former fund names are:

Ticker   New Fund Name   Previous Name
DHS   WisdomTree Equity Income Fund   WisdomTree
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ETF Assets Climb 12% in December

ETF assets grew $56.6 billion or 12% to $534 billion in December according to a report published by State Street Global Advisors.

The largest growth was in International ETFs, up $14 billion or 16% and Size/Market-Cap ETFs, up $26 billion or 17%. Sector ETFs declined $1.4 billion or 3%.

The 12% growth for ETFs compares well to all asset classes which experienced smaller increases for the month.  U.S. equities (S&P 500) were up 1.1%, international equities (EAFE) were up 6.0%, U.S. treasuries were up 3.4% and bonds were up 3.7%.

State Street continued to gain share in December, up 4 points to 30%.  For all of 2008, State Street saw $70 billion of net inflows into the SPDR ETF family.

 

300% MidCap ETFs Start Trading

2 new 300% ETFs that track the Russell MidCap Index began trading last week.

The Direxion Mid Cap Bull 3x Shares (MWJ) and Direxion Mid Cap Bear 3x Shares (MWN) offer investors leveraged exposure to a segment of the equity market that has an average market cap of $5.2 billion.

The correlation sought by the bull and bear funds is generally a multiple on returns of the index/benchmark.

For example, on a given day, if the Russell MidCap Index gains 1%, the Direxion Mid Cap Bull 3x ETF is managed to gain approximately 3% (3%= 300% of 1%). If the same index decreased 1%, the Direxion Mid Cap 3x Bear ETF is managed to gain approximately 3%.

See the Direxion ETF directory for a complete listing.

Another Carbon Fund Launches

XShares Advisors has launched an exchange traded product that provides exposure to the European carbon market while avoiding counterparty risk.

The AirShares EU Carbon Allowances Fund (ASO) is a commodity pool that provides investors with investment results tied to a basket of futures contracts of EUAs.  An EUA is an entitlement to emit one metric ton of carbon dioxide equivalent that is transferable under the European Union Greenhouse Gas Emissions Trading Scheme (EU ETS).

According to XShares, the global carbon market is on track to top $100 billion in the near future.

Barclays introduced the iPath Global Carbon ETN (GRN) earlier in 2008.  An ETN is a debt instrument and carries with it counterparty credit risk.  The XShares product avoids credit risk by investing directly in futures contracts.

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