We are currently experiencing technical issues. We appreciate your patience as we investigate.

ETF Times: October 4-8

Agricultural commodities trackers reverse losses, while those betting on US equities' volatility, natural gas, and Indian shares lose

Morningstar ETF Analysts 12 October, 2010 | 5:51PM
Facebook Twitter LinkedIn

New Listings
db x-trackers launched two new fixed income ETFs on the Deutsche Borse. The funds are linked to indices tracking the returns on Eurozone government bonds. One tracks the performance of the iBoxx EUR Sovereigns Eurozone Yield Plus index, which is comprised of bonds from the five Eurozone member nations with the highest five-year yields. Currently, this roster includes Italy, Spain, Belgium, Portugal, and Ireland. The index currently has a yield-to-maturity near 4% and a duration of 6.3 years. The second ETF tracks the performance of the iBoxx EUR Sovereigns Eurozone AAA Total Return index. This includes all Eurozone government bonds that are rated AAA. Currently, Germany, France, Austria, Luxembourg, Finland and the Netherlands are represented in the index, which has a yield-to-maturity of 2.4% and a duration of 6.6 years. These fund’s each have a total expense ratio (TER) of 0.15%.

iShares launched five new currency-hedged equity ETFs on the London Stock Exchange. The underlying benchmarks for the funds are global and single-country equity indices, hedged in either Euros or Pounds Sterling. The ETFs track the performance of the MSCI Japan Monthly EUR Hedged (LSE Ticker Symbol: IJPE), the MSCI World Monthly EUR Hedged (IWDE) and GBP Hedged (IGWD), and the S&P 500 Monthly EUR Hedged (IUSE) and GBP Hedged (IGUS). The currency exposure is hedged using a one-month forward foreign exchange contract, and is not intended to completely eliminate currency exposure but to simply reduce it. The ETFs use physical replication to track the performance of their respective index. Because investing internationally exposes investors to two unique sources of risk -- market and currency -- these ETFs can be useful as they are a simple one-stop solution for investors looking to minimise currency risk. The annual TERs on these ETFs range from 0.45% for the two S&P 500-linked funds, to 0.55% for the MSCI World funds and 0.64% for the MSCI Japan fund -- five basis points more than the un-hedged versions of the iShares ETFs tracking these same indices.

Amundi launched two ETFs on NYSE Euronext Paris exchange. One tracks the performance of the MSCI Europe Energy index, which includes 20 stocks from the European energy sector. It has a TER of 0.25%. The second tracks the performance of the EuroMTS AAA Government index, which consists of AAA-rated bonds from Eurozone issuers. This ETF has a TER of 0.14%.

Best and Worst Performers for the Week of October 4-8
After dominating the list of worst-performers last week, agricultural commodities bounced back in a big way. Corn, sugar, and wheat were the biggest winners. The US Department of Agriculture slashed its expectations for current corn crop yields, sending corn prices higher. Also, Ukraine is limiting its wheat exports, and a dry spell in Brazil is hurting the outlook for the country's sugar crop.

Declining volatility in US equity markets placed the Source S&P 500 VIX futures ETF atop the list of the week’s worst performers. Meanwhile, natural gas prices slid as US inventories continue to sit above five-year averages. Indian equities also had a small decline, likely as a result of profit-taking after a strong run by the market.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Morningstar ETF Analysts  research hundreds of ETFs available to European investors. The Morningstar Rating for ETFs is based on a risk-adjusted performance measure.