ETF Times: October 25-29

With Lyxor launching four inverse ETFs last week, investors are reminded why caution should be exercised if they expect to hold an inverse ETF for more than a day

Morningstar ETF Analysts 2 November, 2010 | 5:24PM
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Following their launch on the Deutsche Borse last week, Lyxor launched four inverse ETFs on the Borsa Italiana. They are all sector funds based on STOXX Europe 600 super sector indices, including oil & gas, basic resources, banks, and automobiles & parts. Each ETF charges a total expense ratio (TER) of 0.45%. The usual caveats about inverse funds apply; because these products provide exposure to the daily inverse performance of the index, over a longer period of time the returns will likely diverge from the simple inverse of the index’s performance. Investors should therefore exercise caution if their expected holding period is longer than a day.

db x-trackers launched two ETFs on the Deutsche Borse. The two funds track the performance of iBoxx corporate fixed income indices, divided into one following the bond issues from the financials sector and one excluding the obligations of the financials sector. The two ETFs each charge a TER of 0.20%. The firm also launched 24 fixed income ETFs on the SIX Swiss Exchange. The funds track the performance of a variety of indices, including US and Eurozone sovereign bond and money markets, inflation-linked bonds, corporate credit (linked to credit default swap indices), corporate credits and emerging market bonds, as well as a couple of inverse indices.

Best and Worst Performers for the Week of October 25-29
Precious metals were amongst the top performers for the week. Palladium, a precious metal primarily used in the catalytic converters used to detoxify automobile emissions, increased in price as the global auto demand is expected to rise. Silver prices enjoyed a boost from rising demand in Asia.

Once again, the worst performers of the week were led by volatility futures ETNs. They were followed by Greek and Swedish equities, and livestock futures, which were pressured by greater supply as hog weights increased.

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.

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

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