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Active Traders Embrace ETFs

Charles Schwab released new survey data that shows active investors are big fans of exchange traded funds.

The firm's Active Trader Sentiment survey of individual investors who trade frequently found that 24 percent of active traders are now using ETFs as their primary investment vehicle.

Survey data were derived from responses of more than 700 active traders and investors collected in November of 2008 and January 2009. The data were analyzed by Directive Analytics and have a statistical accuracy of + or – 4.4 percent at 95 percent confidence level.

 

Demand for Gold Exceeds $100 Billion

Dollar demand for gold reached $102 billion in 2008, up 29% from 2007 according to data recently published by the World Gold Council.

In tonnage terms, gold demand rose 4% in 2008 to 3,659 tonnes. 

Investment demand for gold which includes ETFs, bars and coins, was up 64% in 2008, equivalent to inflow of $15 billion.  The industry's marketing arm points out that gold received sustained investor interest against a backdrop of the worst year on record for global stock markets and many other asset classes.

Jewelry demand was up 11% in dollar terms, but down 11% in tonnage terms.  Industrial demand was also down in 2008, declining 7% in tonnage terms.

The average price of gold in 2008 was $872, up 25% from $695 in 2007.

The largest gold ETF is SPDR Gold Shares (Ticker: GLD) which recently surpassed $30 billion in assets.

 

 

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State Street Launches Intermediate Term Bond ETF

State Street recently launched the SPDR Barclays Capital Intermediate Term Credit Bond ETF (Ticker: ITR).

The new ETF provides investors with precise, low-cost access to intermediate term bonds including investment grade corporate and non-corporate bonds with a maturity of 1 to 10 years.

Top fund holdings include bonds issued by General Electric, Citigroup, United Mexican States and Federal Republic of Brazil.

The new ETF carries an expense ratio of 0.15% and will compete with the iShares iBoxx $ Investment Grade Corporate Bond Fund (Ticker: LQD).

 

Lower Expense Ratio for Sector ETFs

State Street Global Advisors has lowered the average expense ratio on its 9 S&P 500 sector ETFs from 0.23% to 0.21%.

The new expense ratio went into effect on January 31, 2009 and continues a trend of lower expenses for ETF investors as assets grow.  When the Select Sector SPDR funds were launched 10 years ago, the expense ratio was 0.65%.

ETFs with the new, lower expense ratio include:

Financial Select Sector SPDR Fund (XLF)

Energy Select Sector SPDR Fund (XLE)

Information Technology Select Sector Index (XLK)

Consumer Staples Select Sector SPDR Fund (XLP)

Health Care Select Sector SPDR Fund (XLV)

Utiliti

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First High-Yield Municipal Bond ETF Launches

Van Eck Global has launched the first high-yield municipal bond ETF.

The Market Vectors High-Yield Municipal Index ETF (HYD) is the first ETF to focus on the high-yield segment of the municipal bond market.

The new ETF has several advantages over traditional mutual funds and closed end funds that focus on the municipal bond market.  In addition to portfolio and price transparency, HYD does not use leverage and carries a net expense ratio of only 0.35%.

HYD tracks an index that has a 25% weighting in investment-grade triple-B bonds and a 75% weighting in below-investment grade bonds.

As of December 31, 2008, the sector weightings were 21.4%, 14.7%, 13.5% and 13.5% to health care, industrial development, special tax and airports respectively.

Exposure to California was 12.3% as of February 9, 2009.

See the Continue Reading »

First Pre-Refunded Municipal Bond ETF Starts Trading

Van Eck Global announced the launch of the first pre-refunded municipal bond ETF.

The Market Vectors Pre-Refunded Municipal Index ETF (PRB) is the first ETF to focus on the pre-refunded segment of the municipal bond market.

Pre-refunded munis are bonds that have been refinanced by their issuers and remain outstanding in the municipal market. The principal and interest of the bonds are secured by Treasury obligations backed by the full faith and credit of the U.S. government.

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

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