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From: Julius Wong	6/15/2009 10:31:18 PM
	of 1325

10 Best ETFs for a Changing Middle East June 15th, 2009 This past weekend’s events in Iran and in Israel are good reminders that the Middle East is a region in transition. The 300 million citizens of the Middle East and North Africa (MENA) nations make up only about 6 percent of the world’s population. But the Mideast plays a disproportionate role in world affairs as its hydrocarbon resources are central to global economic development, and its fractious regional politics often threaten global peace. Economically, the region has seen strong growth in the past decade as crude prices stayed strong and most countries opened themselves up to foreign investment. Since 2000, growth has stayed above 5% in the region and the Middle East is now the second richest part of the emerging world, behind Latin America, - with GDP per capita now around $7,000. Along with other emerging economies, output and shares in the Middle East crashed spectacularly in 2008. Mideast economies have been slower to recover in 2009, however, as low crude prices fed concerns over the ability for Middle Easterners to pay down debt accumulated during the boom. Much of the first quarter was dominated by speculation that Dubai - the high-flying capital of Arab capitalism - might default on its debt. Fears were abated only after its sister cities in the UAE bailed it out. Once the symbol of the Middle East’s rising economic power, the architectural extravagance of Dubai risked being remembered primarily as an expensive folly. The region, however, may yet come roaring back. Crude oil prices have doubled since their lows of earlier this year. Although the rise is largely supply chain and speculation driven, demand from growing emerging economies could outstrip estimates - paving the way back to $100/barrel oil. Sustainable prices at that level should allow for public spending and private capital investment to rise for years to come, and give the region more time to diversify its economy away from hydrocarbons. The Middle East may reap further dividends if efforts to create a lasting Mideast peace, solve the West’s standoff with Iran, and resolve the conflict in Iraq succeed. Paradoxically, those efforts faltering could drive crude prices higher in the short term on supply disruption fears - boosting export earnings for major producers like Saudi Arabia, Kuwait, Iraq and Iran. Not all of the funds listed below are necessarily buys. Some may even be near term short targets if political instability in Iran, Palestine, or elsewhere gets out of control. But over the long term, these 10 funds are certainly ones to watch: 10. iShares MSCI Turkey Investable Market Index (TUR) +35.10% ytd & .06 vol Turkey is one of the few major economies in the Middle East where oil isn’t a factor. Placed between Europe and the Middle East, Turkey’s economy is dependent on exports to an ailing EU. But its strong industrial sector - led by companies like Tekfen (IST:TKFEN) and KOC (IST:KCHOL) - could benefit handsomely from its proximity to major oil producers, through increased exports or activities abroad. 9. Market Vectors Agribusiness (MOO) +36.59% ytd & 1.19 vol The Middle East itself has little arable land, so economic development and burgeoning population growth there are bigger drivers of global food demand than they would be elsewhere. Saudia Arabia and Kuwait have actually taken to purchasing tracts of land in Africa bigger than most US states in an effort to secure their food supply. That new agriculture plus that which is expanding in the region itself will require great amounts of agricultural equipment and supplies. The MOO invests in 44 companies specializing in such things, including Monsnato (MON), Deere (DE) and Komatsu (OTC:KMTUY). 8. PowerShares Global Water Portfolio (PIO) +13.96% ytd & .09 vol The world has an average of 8,500 cubic meters of freshwater resources per person. North Africa and the Middle East has about 1, 000. This poverty of freshwater has made the Middle East the biggest market for desalinization plants and expensive water engineering projects. The PIO invests in 29 global water resources firms - such as Veolia Environnement (EPA:VIE) and Valmont Industries (VMI) - whose expertise in such things are in increasing demand in arid parts of the world. Demand for large desalinization projects, in particular, are dominated by Middle Eastern public works projects funded by oil revenues. 7. Market Vectors Gulf States Index (MES) +15.83% ytd & .02 vol The MES is a broad index that invests exclusively in the Middle Eastern countries that border the Persian Gulf. (Unlike the GULF which invests all over the MENA area.) It is consequently heavy on the finance, real estate, and services names that make up the UAE and Kuwait economies, and lighter on the industrial and telecom names more prominant in North Africa. Its 1.00 expense ratio is the highest of the group, but it ofers a pure play on oil-driven economies. 6. iShares MSCI Israel Capped Investable Market Index (EIS) +39.04% ytd & .02 vol Israel’s dynamic economy is often overshadowed by the political instability in the region. Its tech and pharmaceutical sectors are the envy of the world with names like Teva (TEVA), Check Point (CKP) and Fundtech (FNDT) leading their market niches. Should the Israeli-Palestine issue be settled in the near future, the EIS is sure to benefit as a lasting settlement would remove risk and uncertianty and open up new opportunities for the Israeli economy. 5. Claymore/Robb Report Global Luxury Index (ROB) +13.25% ytd & .00 vol The economic collapse of last year has unsurprisingly hit luxury goods makers more than most. Many of the names in the ROB are quite sensitive to Middle East demand, which in turn depends on the rising price of oil. The best customers for things such as private planes, ultra-luxury automobiles, and luxury soft goods are the hoards of Middle Eastern royals who descend on Fifth Avenue, Rodeo Drive and the Champs Elysée when crude is high. Names such as Dassault Aviation (EPA:AM), LVMH (OTC:LVMUY), and Sothebys (BID) in particular are poised to benefit. 4. PowerShares MENA Frontier Countries Portfolio (PMNA) +13.65% ytd & .01 vol PMNA is a confusingly named Middle East and North Africa fund that is much like its competitor the GULF. It excludes, however, the gulf nations of Qatar, Bahrain, and Oman from its index and carries a higher expense ratio than the WisdomTree offering. It is broadly diversified with a good mix of Morocco and Egyptian firms such as Maroc Telecom (CAS:IAM) and Orascom Construction (CAI:OCIC) , and is good for investors who want to exclude small cap volatility from their holdings as it invests exclusively in large and mids. 3. Claymore/Delta Global Shipping Index (SEA) +31.12% ytd & .19 vol Global demand for oil drives much of the shipping industry, and a recovery in oil prices and Middle East production will mean strong earnings for global shippers. Cude oil accounts for about a sixth of global trade by value, and a greater proportion of goods transported by sea. Companies like EuroNav (EBR:EURN) and Frontline (FRO) derive a majority of their revenue from their oil tanker operations. The SEA invests in 30 shipping and shipping logistics firms, including the two above, which are highly dependent on the resumption of oil shipments and recovering world trade volumes. 2. WisdomTree Middle East Dividend Fund (GULF) N/A & .01 vol The GULF is the best ETF for broad market Middle East and North Africa exposure. It includes more holdings from a wider array of countries than either PMNA or MES, has a lower expense ratio, and is dividend weighted rather than capitalization weighted. It also picks up names like Qutar Shipping Company (DOH:QSHS) and El Ezz Steel (CAI:IRAX) the others miss. GULF lacks volume, however, but no more so than its immediate competition. 1. iShares Dow Jones U.S. Oil Equipment & Services Index (IEZ) +44.22% ytd & .53 vol Either political instability or an emerging market recovery would lead to higher crude oil prices. Investing in Middle Eastern oil producers is problematic, because most are state-owned monopolies. But all major equipment and services companies - such as Schlumberger (SLB) and Baker Hughes (BHI) have large presences in the region. One - Halliburton (HAL) - has even moved its headquarters to Dubai. The IEZ has outperformed crude oil ETFs and indexes of major integrated oil companies ytd, and is the best way to play dearer oil and a dynamic Middle East. etfgrind.com

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From: Julius Wong	6/16/2009 8:50:41 AM
	of 1325

How to Avoid The USO June 16th, 2009 The United States Oil Fund (USO) is again causing controversy as angry investors accuse this ETF of not capturing crude oil’s recent gains. The spot price of WTI crude is up 50% this year, while the USO - which is the most widely traded crude oil ETF - is up a paltry 16.5%. Many investors assume that the USO simply tracks the price of crude oil. It does not. Rather, it invests in near-month crude oil futures. When those futures expire, the fund uses the proceeds to buy new contracts, a process known as rollover. When oil markets are in contango - that is future prices are higher than spot prices - rollover becomes a nightmare for the USO, forcing it to waste money selling oil and buying it back again at a higher price. For instance, say the USO buys a 1 month contract at 50 dollars. One month later the contract comes due. If the fund took physical delivery of the oil, it could keep it for later and sell it at a time of its choice. If the fund were closed-ended, it could sell its contract and cash out. But the USO isn’t set up to store barrels of oil and is designed to be opened ended, so it must rollover. It sells the contract at the market spot price - say 51 dollars - and makes a 1 dollar profit. Next month’s contract, however, is worth 55 dollars. So when the fund buys new futures to replace the old ones it loses 4 dollars. It will make most of that money back selling the new contacts later at a higher price, but so long as oil is in cantango it will never make all of it back as the following month’s contract will be priced yet higher. These monthly losses add up over time. The oil market has been in contango all year, explaining why the USO has so drastically underperformed the spot crude oil price. Investors shouldn’t blame the USO, however, as its investment strategy is clearly stated in its prospectus. Rather, one should be aware that futures - which are inherently closed end instruments - are less than fully compatible with open-ended investment vehicles like ETFs. Funds that invset in futures are destined to poorly track the asset underneath. Futures-based alternatives to the USO exist, but none of them solve the problems inherent in an open ended investment vehicle investing in a closed-end asset. The United States Oil 12 Month Fund (USL) mitigates the contango problem by buying contracts of different maturities, up to one year out. The Powershares DB Oil Fund (DBO) does a similar thing, but both funds have still underperformed the spot crude price by a wide margin. Further complicating matters is that when contango reverses into backwardization, the funds’ roles switch and the USO then outpaces the USL. Knowing which ETF to buy then means keeping close tabs on the futures markets, and accepting that your returns are not likely to coorelate well with the price of the ultimate asset. These shortcomings do not mean that all commodity ETFs are bad investments. Some futures ETFs in other markets have performed admirably, and even a 16% year to date return is hardly something to scoff at. And when futures markets are in backwardization, funds like the USO actually benefit. Further, ETFs like the SPDR Gold Trust (GLD) invest directly in the physical commodity, eliminating the contango problem. It is unlikely that regulators would approve of a fund that hoarded oil for investment purposes, however. Which leaves an opening for a better way to play oil though ETFs. If you want an easy, transparent play on crude it would be better to simply invest in ETFs that track oil related equities. The equation here is much simpler. Rising crude oil prices mean strong earnings growth for companies involved in the extraction and sale of crude oil. Although commodities often outperform commodities producers, this isn’t always the case. And the unavoidable problems faced by ETFs investing in commodity futures, makes commodity linked equities a safer bet. Three ETFs in particular make for good alternative investments to the USO and USL: iShares Dow Jones U.S. Oil Equipment & Services Index (IEZ) +39% ytd This fund invests in oil services and equipment companies like Schlumberger (SLB) and Halliburton (HAL) that derive their revenue from helping the oil majors exract oil more efficiently. Their expertise is especially needed in the harder to get oil made economical at higher crude prices. It’s performed nicely ytd and is heavily traded. iShares Dow Jones U.S. Oil & Gas Exploration & Production Index (IEO) +19% ytd The IEO tracks an index of firms like Apache (APA) and Anadarko (APC) that specialize in finding and producing oil in new areas around the world. Such companies often do better than the majors when crude is high, and worse when the oil price falters. The fund has perfromed nicely - especially year over year - and has good volume. SPDR S&P Internaional Energy Sector (IPW) +18.28 ytd The IPW invests in a broad index of global oil majors like BP (BP) and Total (TOT). A decent performer ytd, it is the best performing oil ETF on a year over year basis, being down only 23% to the USO’s 65%. It has poor volume, however. These funds have seen better gains this year… And fewer losses last year…. But rose less during the last contango-free boom… As you can see the 2 year chart of the USO reveals a that the fund has its charms. It’s not accurate to claim that the USO is a scam, as some have. It simply does exactly what the prospectus says it does, even if its marketing isn’t always entirely honest. But overall Exchange Traded Funds that track futures are more unreliable than those that track equities. Individual investors should leave commodity ETFs to the speculators and the professionals. And all investors should think about playing oil through a broad based equities exposure. etfgrind.com

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From: Julius Wong	6/19/2009 7:46:30 AM
	of 1325

A Better Natural Gas ETF June 17th, 2009 Exchange Traded Funds are useful instruments that can do wonders for your portfolio. ETFs can lower your expense costs, reduce diversification risk and allow you to access previously inaccessible markets. They can even lower your taxes when compared to mutual funds. But one thing ETFs can’t seem to do is track energy prices. ETFs that invest in energy futures have had a terrible time this year as a market condition known as contango has eaten away their returns. The United States Oil Fund (USO) is up 16% ytd, while crude oil itself is up over 50%. This massive underperformance is no secret and no fluke; its the inevitable result of the investment strategy listed in USO’s prospectus. But many investors who thought they were buying a fund that tracked crude oil have been burned. Now with natural gas prices exploding, investors are rushing into the USO’s sister fund - the United States Natural Gas Fund (UNG). But the UNG seems to have even more problems tracking the price of its target commodity. Meanwhile, concern is growing that both funds now have undo influence on thier markets and they could face regulatory pressure in the future. Although ETFs which invest in futures can be useful, a safer and potentially more lucrative strategy exists: investing in a broadly diversified ETF which holds shares in commodity producers. For natural gas the relevant fund is the First Trust ISE/Revere Natural Gas Index Fund (FCG). This fund has stakes in major natural gas names like Devon Energy (DVN), Quicksilver Resources (KWK), and Newfield Exploration (NFX). It’s up 22% this year, while the UNG is down 33%. It carries an identical .60% expense ratio, and isn’t affected by problems in the futures market. Although the FCG is thinly traded, it shouldn’t be. Natural gas prices are well below their historical average, and the FCG is trading at barely 7 times earnings. etfgrind.com

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From: Julius Wong	6/25/2009 7:57:44 AM
	of 1325

Wind ETF Showdown: First Trust (FAN) vs. PowerShares (PWND) June 25, 2009 Wind power companies have been on a roller-coaster ride for a year, but they are attracting attention once again as gas prices march upward and consumers look toward renewable alternatives for investment opportunities and jobs. First Trust Global Wind Energy (FAN) and PowerShares Global Wind Energy (PWND) have responded to the renewed interest, rising 39.73% and 41.92%, respectively, during the three-month period ended June 22. In a June 16 New York Times article, Katie Howell noted that scientists believe that wind power, strategically placed in jet streams, could power up the entire planet. While the push for alternative wind could make both FAN and PWND good holdings for long-haul investors, the funds are different in several key areas. PWND tracks the NASDAQ OMX Clean Edge® Global Wind Energy Index, which is made up of companies that are primarily manufacturers, developers, distributors, installers and users of energy derived from wind sources. PWND’s index is made up of 31 companies, with 33.40% considered large-cap growth, 25% considered mid-cap growth and 30.67% considered small-cap growth. The top three countries represented in PWND are Spain, France and Denmark, with 23.07%, 14.50% and 11.78% allocations, respectively. When it comes to sector allocations, PWND is made up of 43.59% industrials and 42.77% materials. The expense ratio for PWND is 0.75%. First Trust’s FAN charges a slightly lower expense ratio of 0.60% and tracks the ISE Global Wind Energy Index. FAN’s methodology acknowledges that many of the companies participating in the wind energy industry have broader businesses for which they may be better known. FAN uses a variation of the cap-weighted strategy and has 57 stocks in the underlying portfolio. According to the fund’s website, companies that are strictly in the wind business make up 66.67% of the fund, while companies that count wind power among several large products represent the remaining 33.33% of FAN. While both PWND and FAN have relatively low trading volumes, FAN’s three-month average trading volume is double that of PWND’s, at 87,000 and 40,000 shares, respectively. Like PWND, FAN divides its assets between industrials and utilities, which have 46.33% and 44.45% allocations, respectively. Spain is the top-weighted country in FAN’s portfolio, constituting 26.37% of the assets, while the United States and Germany claim 15.78% and 13.92% stakes, respectively. FAN’s and PWND’s top components and the weightings of those components are markedly similar. The top three components in both funds are EDP Renova´veis S.A., Vestas Wind Systems (VWDRY.PK) and Iberdrola Renovables S.A. (IBDRY.PK). EDP Renova´veis recently made headlines stateside as its subsidiary Horizon Wind Energy sold wind-farm power to electric utility AmerenUE. This is a first for an electric utility company, and EDP Renova´veis’ Houston-based Horizon could power up to 26,000 households as a result of the contract. Europe-based Vestas has had a hand in building many wind fields across the globe as the world’s largest producer of large wind turbines. Iberdrola Renovables, based in Madrid, Spain, has tapped Citi (C) to be the depositary bank for a new U.S. ADR program, allowing U.S. investors greater access to the wind giant. While non-sponsored ADRs already exist, these new sponsored receipts will help tie Iberdrola to an important U.S. marketplace. According to Reuters, Iberdrola Renovables has invested 2.2 billion euros in the U.S. since 2006. High-altitude wind power and the transmission of that power may still be years away, but the potential of this kind of alternative energy will provide for a good long-term investment for individuals willing to sit tight in the meantime. Warren Buffett’s Berkshire Hathaway (BRK.A) recently joined the wind power fray with an investment in MidAmerican Energy (MDPWK.PK). Both PWND and FAN have solid allocation strategies, but FAN may currently be the more solid of the two, based on volume and fees alone. As scientists develop the technology that will allow for a large-scale transmission system or wind power storage system, investors can bet on more resources, both public and private, being dedicated to this type of clean energy. seekingalpha.com

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From: pcyhuang	7/5/2009 12:31:23 AM
	of 1325

Investing in a Gloabal Water Portfolio (PIO @$14.84) The investment seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the equity index called the Palisades Global Water index. The fund normally invests at least 90% of total assets in stocks that comprise the Palisades Global Water index and ADRs based on the stocks in the Palisades Global Water index. It normally invests at least 80% of its total assets in securities of companies that generate at least 50% of their revenue from water or water-related activities. The fund is nondiversified. A life version: stockcharts.com Cheers,

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From: pcyhuang	7/5/2009 12:33:52 AM
	of 1325

3 Best Performing ETFs During the 2nd Q Among the best-performing exchange traded funds (ETFs) for the second quarter are those that have some kind of bent toward basic materials and natural resources. This signals that there's some demand around the world, especially in emerging markets, for these products so these countries can resume the growth they enjoyed in the first half of the decade. Market Vectors Coal (NYSE: KOL), up 68% in the second quarter; up 98.6% since March 9 low KOL was one of the top ETFs in the second quarter, gaining 68%. Activity in China is helping keep coal afloat and may help boost the price by increasing value-added taxes to coal producers. Commodities and shipping executives note China’s recent purchases of commodities that include iron, aluminum, copper, nickel, tin, zinc, crude oil [2], canola and soybeans. China is storing these commodities for several reasons: in anticipation of higher prices in annual contracts, for strategic reasons or to insulate domestic producers from any potential falling global prices. The Waxman-Markey Clean Energy Bill passed in the House this week – now it’s on its way to the Senate. The bill has a cap-and-trade system that will not produce a carbon price high enough to spur deployment of clean-coal technology for a long time. Market Vectors Steel (NYSE: SLX), up 52.9% in the second quarter; up 81.5% since March 9 low China is again the big driver here - its $300 billion infrastructure stimulus plan helped boost steel production to an 11-month high in May Simply because of emerging market demand, the steel market is expected to remain tight until 2013. 78% of the growth in steel demand is expected to come from emerging markets from 2007-2013 (and that's excluding China). iShares MSCI Brazil (NYSE: EWZ), up 40.5%in the second quarter; up 60.4% since the March 9 low Brazil is a country that's flush with natural resources, including copper and sugarcane ethanol. Copper is used in pipes and wiring - key components of any recovery that involves new construction. Brazil has a trade surplus with other nations, thanks to its abundant resources. The country also enjoys a growing middle class, the hallmark of a strengthening economy. Source: greenfaucet.com Cheers,

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