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Bernanke's Comments Boost Commodity ETFs

ETF TIMES: Bernanke's pessimistic take on the US economy coupled with speculation of more QE have bolstered ETPs tracking USD-denominated commodity prices

Morningstar ETF Analysts 8 February, 2011 | 6:58PM
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New Listings
Source teamed up with Man Group (EMG), Europe's largest hedge fund firm, to launch a new ETF on the Deutsche Börse. As with all of Source's products, the Man GLG Europe Plus Source ETF uses swaps to tracks the performance of its benchmark index. The Man GLG Europe Plus index is composed of about 200 European equities drawn algorithmically from ideas generated by some 60 brokers specifically for Man GLG. Unlike the similar Marshall Wace's Tops Global Alpha index, the Man GLG is long-only. It has a similar market cap exposure to the broad European equity universe, and GLG has successfully run a version of this portfolio since 2005. However, because of the active nature of this ETF, and specifically to limit Man GLG rivals’ ability to copy the index, investors will have to sacrifice some transparency on the composition of the portfolio, which will only be made available with a two-week delay. The management fee on the fund is 0.75% per annum, although there are also fees paid as commissions to the brokers in exchange for their ideas which are not included in the management fee but are included in the index returns.

State Street launched 12 SPDR ETFs on the Borsa Italiana. The funds had all been previously listed on Euronext Paris and Deutsche Börse. The 12 ETFs all track the performance of MSCI European equity indices, including the broad market MSCI Europe, the MSCI Europe Small-Cap, and ten different sector indices. All but one of these ETFs use physical replication to track the performance of their benchmark indices for a TER of 0.30%, the exception being the small-cap ETF which is swap-based and charges a higher TER of 0.40%.

Best and Worst Performers for the Week of January 31 - February 4
A number of exchange-traded commodities (ETCs) were among the top performing ETPs for the week. Silver-based ETCs had the greatest gains of all, partially as a result of US Federal Reserve Chairman Ben Bernanke's comments that the economy won't fully recover with more job creation, which traders saw as more ammunition for the Fed's bond-buying programme and thus a supporting factor for USD-denominated assets. Greece again had the best performing equity market for the week with the country's bank sector leading the way as Greek bond spreads narrowed.

With the S&P 500 increasing for the week, the index's volatility declined, weighing on Source’s S&P 500 VIX Futures ETF. Similar fundamentals affected the iPath VSTOXX Short-term Futures ETN. Emerging markets were also affected, with investors growing further wary of developing nations due to the turmoil in Egypt, and seeking the safety of developed economies, which appear to be growing steadily once again.

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.