ETF XRAY

Potential Frontier ETFs?

By Carl Delfeld of the Chartwell ETF Advisor

I am always getting calls from investors wondering when there will be an exchange-traded fund for markets like Nairobi, Vietnam, Mongolia, Jordan or Kuwait. Regulatory hurdles are one issue and another is the liquidity and company concentration in particular markets.

To put things into perspective, here is some data on overseas stock markets courtesy of Portfolio magazine.

London Stock Exchange
Opened in 1801
3,301 listed companies
$4 trillion market cap

Tokyo Stock Exchange
Opened in 1878
2,422 listed companies
$4.7 trillion market cap

Kuwait Stock Exchange
Opened in 1963
190 listed companies
$106 billion market cap

Nairobi Stock Exchange
Opened in 1954
58 listed companies
$10.7 billion market cap

Tehran Stock Exchange
Opened in 1967
332 listed companies
$32 billion market cap

Hong Kong Stock Exchange
Opened in 1914
1,206 listed companies
$2.2 trillion market cap

Kathmandu Stock Exchange
Opened in 1994
134 listed companies
$2.8 billion market cap

New York Stock Exchange
Opened in 1792
3,617 listed companies
$16.2 trillion market cap

But I think I know what is driving the phone calls. The Kuwait exchange is up 486% over the last five years, Nairobi up 400% and Kathmandu is up 216% while the Dow is up 50% and the FTSE 100 up 42% over the same period.

To stay on top of new ETFs for your global portfolio, go to Chartwell ETF.

Aussie ETF (EWA), Rio Tinto & Banks

By Carl Delfeld of the Chartwell ETF Advisor

The Australian exchange-traded fund (EWA), a steady performer over the past few years, has been a bit topsy turvey during the last quarter. Normally, one would think that the trouble lies with its top holdings which are oriented to energy and commodities: the titans BHP Billiton and Rio Tinto.

Last year, BHP made an all-share bid for Rio which was pushed aside as too low and cash poor. Within the next week, BHP will have to make a decision, sweeten the deal or walk away for six months. It seems doubtful market conditions would improve by then. Given it is an all-share deal, the split of value would not change if share prices fell further and BHP could always alter the exchange ratio.

Despite this, according to the Financial Times, the market still thinks BHP will improve its terms. Rio’s shares are trading 7% cent above the proposed offer and its market capitalisation jumped by $20bn on news of BHP’s approach. Since the offer its shares have outperformed the global sector by 20 per cent.

Rio is off 4% this morning but was up strongly last week. Its share price is up 47% over the last 52 weeks but is trading at a level 28% off its year high. EWA is off 1.9% in early morning trading.

The reality is that for both sides the deal makes even more sense in a bear market than it does in a boom. Pricing power would be improved.

Actually, the problem with the Aussie ETF performance has been the financial sector which represents just under 50% of the ETF holdings, and in particular, its four dominate banks which make up collectively 20% of the exchanges market capitalization. The new government is promoting more competition and has heightened the scrutiny of bank operations. Interloper Bank of the West is also picking up market share using lower pricing as a wedge and the markets fear that overall margins are declining.

Find out how to position Australia in your global ETF portfolio by joining Chartwell ETF.

Do Global Exchanges Follow Country ETFs - Up and Down?

By Carl Delfeld of the Chartwell ETF Advisor and Chartwell Partners Wealth Management

Publicly-traded stocks of global stock exchanges, like many country exchange-traded funds, had a great year in 2007 rising about 70 per cent due to record trading volumes.

But this year is a different matter as the Dow Jones Global Exchanges index has lost 15 per cent of its value already this year, in spite of a recent rally according to the Financial Times. Even though Deutsche Börse announced a tax break that would enhance this year’s earnings by an estimated 10%, its shares remained flat as a pancake though overall, global exchange shares have recently rallied.

This may present an opportunity just like lower prices for many high quality country ETFs like Singapore (EWS) and the Netherlands (EWN). Analysis of the past 30 years by Citigroup shows that volumes in cash equities on the New York Stock Exchange actually increased during recessionary periods.

Exchange shares attract investors because it is a fixed-cost business. Once an exchange has earned enough revenue from tariffs on trading, the additional cost to it of handling ever-larger volumes is marginal so additional revenues are almost pure profit. This means that the companies are normally cash cows. Plus the global exchange market remains abuzz with mergers and consolidation activity which may provide some price support.

But be careful as the valuations of exchanges is both murky and tricky. The sector as a whole is still priced for growth, at about 18 times 2009 earnings.

Chartwell Partners Wealth Management has developed a Global Exchange folio with publicly-traded exchanges weighted in a basket. It will be interesting to see if it outperforms Chartwell's Country ETF Rotation folio.

Weekly ETF Market Update

By Carl Delfeld of the Chartwell ETF Advisor

The Dow Jones industrial average and the ETF that tracks it managed to record its first weekly advance of 2008, even as it fell more than 170 points on Friday. The Dow (DIA) finished the week up 0.89%, the S&P 500 (SPY) ended the week up 0.41% while Nasdaq (QQQQ) lost 0.59%.

The week opened with a plunge in stock prices and the Federal Reserve cutting interest rates by 0.75%, the largest rate cut since 1990. President Bush also presented his economic stimulus package through Congress and it will go to the House floor for a vote early next week.

In overseas markets, Europe was down about 2%; Asia was down about 1% and Latin America was up about 1%. On Friday, Hong Kong (EWH) , Brazil (EWZ) and Australia (EWA) surged. The U.S. dollar was up marginally while gold prices hit record highs in part due to a shut down of major mines in South Africa.

The top-performing sector ETFs for the week was homebuilders, up 15.9%, and regional banks, up 10.7%. Markets are looking ahead to more 4th quarter company earnings releases, the President’s State of the Union address, new home sales reports, durable goods orders, fourth quarter GDP numbers, plus employment and home price reports. The Federal Reserve will also hold its scheduled meeting next Tuesday and it seems the markets expect another rate cut which should lead to a lower U.S. dollar.

Learn more about ETFs and building ETF portfolios at Chartwell ETF.

Asian ETFs Jump, Chartwell Launches World Freedom ETFfolio

By Carl Delfeld of the Chartwell ETF Advisor and Chartwell Partners Wealth Management

Global equity markets and ETFs are trading higher across the board today on yesterday's US fiscal stimulus package and generally improved stock market sentiment. There are particularly sharp gains today of +4.10% in Japan, +6.73% in Hong Kong, and +5.02% in Australia. The European DJ Stoxx 50 this morning is up +1.33%. Their respective exchange-traded funds should have a good day trading on U.S. markets.

Chartwell has introduced another ETFfolio called the Freedom ETFfolio based on the Index of Economic Freedom published by the Heritage Foundation and the Wall Street Journal. It ranks countries based on a grading system that includes ten freedoms such as property rights protection, investment freedom, tax rates, government intervention in the economy, business freedom, freedom from corruption and monetary, fiscal and trade policy. The idea is not just to rank countries but to track movement both up and down and to highlight the proposition that freedom and prosperity are highly correlated.

The Freedom ETFfolio will join the six other folios that are available to investors through Chartwell Partners and the Foliofn platform. These folios include the following:

Global Sector Rotation ETFfolio
Conservative Core ETFfolio
Country Rotation ETFfolio
World Freedom ETFfolio
Asia Opportunity ETFfolio
Global Opportunity ETFfolio
Global Dividend/Income ETFfolio
Global Strategy Long/Short ETFfolio

For more information, contact Carl Delfeld at 719-264-1503.

Will a Recession be Bad for ETFs?

By Carl Delfeld of the Chartwell ETF Advisor and Chartwell Partners Wealth Management

It seems pretty clear that speculating about a U.S. recession is pretty painful for exchange-traded investors but what about when we get there?

Stock markets, as we learned back in Economics 101, are forward - looking mechanisms and seem to always be one step ahead of our emotions. This is what makes investing so difficult.

Because of various failures and missteps by regulators and central banks, global stock markets are currently serving a clearing mechanisms with painful consequences. But a point will be reached when fresh money, from the $3.3 trillion sitting on the sidelines in money market funds, will move into the market. The problem is that it may take a while and ETF prices may have to drop sharply.

But the record of stockmarkets during a recession is quite mixed and sometime counterintuitively quite good. In the nine U.S recessions (zero to negative growth) since World War II, in four of those recessions the stock market actually soared: 40% in 1954, 22% in 1961, 30% in 1980, and 30% in 1991.

Put in place a core & explore ETF portfolio to weather the storm and prepare for better weather at Chartwell ETF.

Bipolar Global ETF Fund Flows Continue in 2008

By Carl Delfeld of the Chartwell ETF Advisor and Chartwell Wealth Management

The bipolar nature of ETF investor fund flow trends in 2007 whereby money went to safety or for riskier above-average returns seems to be continuing in 2008. Other than emerging markets, money market funds were the clear winners in 2007, with inflows of $760bn during the year that lifted their assets to a record $3.1 trillion. Assets in emerging markets funds and exchange-traded funds doubled during the year, to more than $800bn. That compares with just $80bn 10 years ago according to Deborah Brewster of the FT.

Last week saw a record outflow from European equity funds, according to Emerging Portfolio Funds Research. Brad Durham, the managing director of EPFR, said: “Just the notion of US fund flows turning negative is a new phenomenon.”

The flows data, from EPFR, cover both retail and institutional investors. The latter are following the same pattern by lifting their allocations to passive indexed funds at the same time as going into higher-risk alternative investments. Brewster points out that huge inflows to emerging markets can have the effect of being a self-fulfilling prophecy, as the flow of money helps boost the prices of stocks in developing and frontier markets, lifting their already high returns.

But 2008 has been rough going as to emerging market and international country ETF returns. So far only Malaysia (EWM) is in positive territory with the Thai Fund (TF) dropping 21.3%. If you look back at 200 day returns, China (FXI) is still up 46.7% after substantial profit taking and While Ireland (IRL) has been hammered down 39.3%.

Keep on top of global and international ETFs by joining Chartwell ETF.

Australian Growth, Interest Rates and Currency Stay Firm

By Carl Delfeld of the Chartwell ETF Advisor and Chartwell Partners Wealth Management

Data shows that the Australian economy remains robust with labor shortages pointing to higher interest rates down the road. This shoild also firm up the Aussie dollar helping returns of the Australian exchange-traded fund (EWA).
Australia’s already low unemployment fell further, to 4.3 per cent in December, down from 4.5 per cent the previous month, and only slightly ahead of September’s 33-year-low of 4.2 per cent according to the an article by Virginia Marsh of the Financial Times.

The stronger-than-expected data came just two days after Kevin Rudd, Australia’s new prime minister, made a high profile visit to the Reserve Bank. Since he hammered Mr. Howard during the campaign on the interest rate issue, higher rates so soon after coming to power must be a tad uncomfortable.

“We are engaged in a national war against inflation,” Mr Rudd said on Thursday after announcing funding for 20,000 training places in mining, construction, health, community services and other sectors facing the most acute skill shortages. Economists are expecting next week’s data to show core inflation of 3.3 per cent for last year, ahead of the 2-3 per cent band target. Many economists believe there was little prospect of an imminent cut in New Zealand’s rates, the highest in the industrialised world at 8.25 per cent.

The Australian ETF (EWA), while down so far in 2008, was up 3.7% in trading this morning. For more on investing in Australia and ETFs, go to Chartwell ETF.

Which Way Japan Market & ETFs?

By Carl Delfeld of Chartwell ETF Advisor and Chartwell Wealth Management

Which way will Japan exchange-traded funds such as the iShares MSCI Japan (EWJ) go as negative economic news fights what is perceived as very attractive valuations?

Japanese bankruptcies rose to a 4-year high in 2007 as record oil prices and a regulation-induced housing slump slashed profits according to report from barchart. In addition, corporate bankruptcies climbed for a second straight year, rising 6.4% as liabilities surged 4.1% to 5.7 trillion yen ($53.1 billion), the first increase in seven years. Insolvencies in the construction sector rose to a 4-year high after stricter building permit rules caused housing starts to fall to a four-decade low. It is the 1st time since Japan emerged from a recession in 2002 that overall insolvencies gained for back-to-back years.

But despite this bad news, Japanese stocks and ETFs rebounded from a 26-month low as investors snapped up shares of exporters such as Honda, after the yen weakened against the dollar, and as real estate companies clawed back significant losses. The yen recently traded at 107.87 to the dollar, after breaking into 105 territory on Wednesday to reach a 2½-year high acording to the Financial Times.

The Nikkei jumped 2.1 per cent to close at 13,783.45, while the broader Topix rose 2.2 per cent to 1,330.44. Honda, a holding of the Chartwell Global 30, jumped 3.9 per cent to Y3,220, having fallen 11 per cent in value until Wednesday. Toyota gained 3.1 per cent to Y5,470. Sony rose 2.7 per cent to Y5,660.

Real estate stocks gained ground after a UBS report that said shares prices of Japanese real estate companies could “bounce back sharply” with the easing of subprime woes. The Topix real estate index surged 5.7 per cent, while Mitsubishi Estate jumped 7 per cent to Y2,450.

The weakness in the Japanese yen may be short-lived as the unwinding of the carry trade should push yen upward. Valuations on the Japan's market second section, which represents small Japanese companies, appears to be trading collectively at below book value.

Join Chartwell ETF and learn more about which way Japan and Japan ETFs are likely to go.

Smart Swissie (FXP) and Samurai Currency (FXY) ETF Play

By Carl Delfeld of Chartwell Partners Wealth Management

In our Chartwell Global Strategy portfolio, we have had exchange-traded fund positions in both the Swiss Franc (FXP) and Japanese Yen (FXY). My thinking was that the probability that the Japanese yen would strengthen was higher than the long anticipated recovery in the Japanese stock market and that the Swiss franc was a better bet than many European ETFs such as Austria (EWO), Netherlands (EWN) and Belgium (EWK) which have 40% or more exposure to the financial sector.

This currency combination is also a play on the unwinding of the carry trade and general risk aversion in global markets. At some point, valuations for many financial-oriented ETFs will reach a very attractive point for re-entry.

With news of a deepening U.S. economic weakness and a downward tend expected in interest rates, the dollar dropped to a record low against the Swiss franc and its weakest level in two and a half years against the yen on Wednesday. My opinion is that while lower rates help a bit in terms of staving off a recession, their impact is steadily decreasing and the negative impact on the value of the U.S. dollar and our economic standing in the world is of much greater concern.

For more information, contact Carl Delfeld at 719.264.1503.

Consumer Spending and ETFs in Retreat

By Carl Delfeld of the Chartwell ETF Advisor and Chartwell Partners Asset Management

U.S. consumers seem to be reluctant to open their pocketbooks and the impact is showing in the numbers and in the weak performance of exchange-traded funds that track consumer spending such as the iShares S&P Global Consumer Discretionary Sector ETF (RXI).

“The consumer is retreating,” said Richard Berner, chief US economist at Morgan Stanley stated in a Financial Times article. “It is too soon to say cracking, but the consumer is clearly turning cautious at the very least.”

Seasonally adjusted retail sales fell by 0.4 per cent in December, according to the commerce department. Excluding volatile purchases of automobiles and parts, sales were also down by 0.4 per cent, more than the market had expected.

October and November sales were also both revised down, though the November figure remained very strong. Retail sales for all of 2007 grew at the slowest pace for five years. The sales data come hard on the heels of the December jobs market report, which showed that unemployment jumped to 5 per cent.

Chartwell Partners' Global Sector ETF Rotation portfolio has been underweight consumer sensitve sectors and overweight defensive sectors.

Chartwell Global 30 Portfolio Changes and Updates

By Carl Delfeld of the Chartwell ETF Advisorand Chartwell Partners Asset Management.

The Chartwell Global 30 portfolio is a basket of 30 equally weighted multinational companies split evenly between leading U.S. and overseas companies. Founded in 2005, the Chartwell Global 30 portfolio is up 14.46% during the past 12 months versus 0.27% for the S&P 500 index including dividends.

Tata Motors (TTM) and Ford Motor (F) were added earier this year to the Chartwell Global 30 to take advantage of the two companies increasing strength and growing strategic cooperation.

Meanwhile, one of Chartwell 's long-time holdings, Johnson & Johnson (JNJ)is a stalwart that has seen an incredible compounded annual sales growth of more than 11 per cent since it was founded in 1887. I wish my great great grandfather would have left me some shares.

Increasing scientific, regulatory, pricing and cost pressures have added to the task facing for CEO Mr. Bill Weldon, who was interviewed by the Financial Times. He has recently restructured J&J, cutting 4,000 jobs, in an effort to keep the company’s profits growing robustly in the next two potentially difficult years. But while J&J is financially conservative, Weldon believes his biggest impact may be on the company’s approach to innovation and its growing emphasis on emerging markets.

There are eighty projects in their R&D pipeline of which about six could be chosen for fast-track development. One involves J&J’s contact lens business working on a lens that delivers a drug directly to the eyes. Wow!

Meanwhile, another Chartwell Global 30 holding, General Electric (GE) announced today that it plans to double its investments in renewable energies to $6 billion by 2010 in the latest sign of a push by big companies to capitalize on concerns over global warming and pollution.

GE believes that within two years alternative sources such as wind and solar power will account for almost a quarter of its total investments in energy and water, up from 10 per cent in 2006. They estimate a market for renewable energy worth $60billion a year which is expected to expand rapidly.

For more information on the Chartwell Global 30, please contact Carl Delfeld at cdelfeld@comcast.net or 719.264.1503.

Deluge of Economic News Will Impact ETFs

By Carl Delfeld of the Chartwell ETF Advisor

A deluge of corporate profit and economic data will drive global markets and the exchange-traded funds that track them this week.

In particular, US 2007 4th quarter earnings growth for the S&P 500 companies is expected to fall sharply by –11.3%, which represents a dramatic turnaround from just 2-1/2 months ago (Oct 1) when analysts were expecting Q4 earnings growth at +11.5%. The market is so far expecting earnings to show a one-time drop in Q4 and then recover to a growth mode with +5.5% growth in Q1 and +4.5% growth in Q2, according to Thomson Financial as reported by Barchart. Perhaps a bit too optimistic.

This week’s US economic reporting schedule is busy with the following data expected out this week.

Tomorrow brings Dec PPI (expected +0.2% overall and core), Dec retail sales (expected +0.1% overall and +1.2% ex-autos), January Empire manufacturing index (expected down 0.5 points to 9.8), and November business inventories (expected +0.4%).

Wednesday brings the Dec CPI (expected +0.2% overall and core), December industrial production (expected –0.1%), and the January NAHB housing market index (expected unch at 19).

Thursday brings initial unemployment claims (expected +12,000), December housing starts (expected –3.1% to 1.150 mln units), and the January Philadelphia Fed manufacturing index (expected up 0.6 points to –1.0).

Friday brings the early-Jan US consumer confidence index from the University of Michigan (expected –0.6 to 74.9), and Dec leading indicators (expected –0.1%).

Where is the economy headed and how should you adjust your portfolio? Go to Chartwell ETF.

Chartwell ETF To Release White Paper on Global Sector ETF Strategy

By Carl Delfeld of the Chartwell ETF Advisor and Chartwell Wealth Management

Chartwell ETF will release later this month an executive summary of a white paper on a global sector rotation strategy using the ten iShare S&P global sector exchange-traded funds. These ten ETFs make up slices of the S&P Global 1200 which is a composite of seven indices considered as leaders in their respective regions. The market values of the 1,200 companies in the indices represent roughly 70% of the world’s capital markets with a market value exceeding $28 trillion.

Chartwell Partner's Wealth Management Group offers investors a Global Sector Rotation Portfolio which weights and adjusts the weightings of the ten global sector ETFs based on a top down model which is momentum led with a valuation check.

The following is a brief description of these baskets of companies.

The S&P 500 which covers 75% of U.S. markets.

The S&P Europe 350 covers 70% of the region’s market cap across 17 countries.

S&P/TOPIX 150 covers 70% of the Japanese market.

S&P/TSX 60 offers exposure to 60 large-cap, liquid Canadian companies.

S&P/ASX All Australian 50 is comprised of 50 liquid, domestic-oriented Australian companies.

S&P Asia 50 covers 50 leading companies in Asia ex-Japan domiciled in Hong Kong, South Korea, Taiwan and Singapore.

S&P Latin America 40 is a basket of 40 companies from Argentina, Brazil, Chile, and Mexico which offers exposure to 70% of the regions market cap. It is heavily weighted to Brazil and next Mexico.

The 1,200 companies from the above markets are divided into ten sector indexes that are tracked by the ten global sector ETFs.

To receive this executive summary, contact or join Chartwell ETF.

Emerging Markets Lifts Dupont and Industrial Sector ETFs

By Carl Delfeld of the Chartwell ETF Advisor

Many pundits are advising exchange-traded investors to underweight the industrial sector as the US moves into a period of weaker growth or recession. But companies like DuPont (DD) are benefiting from still-strong demand in emerging markets, as well as the boom in biofuels boosting sales of its grain seeds that go into making ethanol reports the Financial Times.

“We expect that continued growth worldwide from our agriculture and nutrition business segment and growth from all of our segments in emerging markets will more than compensate for a slower US economy,” said Charles Holliday, DuPont chairman and chief executive officer. “For the full year 2007, we will deliver 11 per cent or more earnings growth despite a slowing US economy and higher raw material prices.”

The company now expects full year 2007 earnings, due out on January 22, to be at the upper end of its previous range of $3.15 to $3.20 a share, excluding charges. DuPont also raised its earnings outlook for 2008 to $3.35 to $3.55 per share compared with a previous estimate of $3.31 to $3.52.

If you buy into the emerging market growth offsets US weakness outlook, take a look at the S&P Global Industrials (EXI) ETF which has 51% exposure to American companies. Here are its top ten holdings and their weights.

General Electric 13.8%
Siemens AG 4.0%
Boeing 2.7%
United Technologies 2.6%
UPS 2.6%
3M 2.2%
ABB 2.0%
Caterpillar 1.7%
Mitsubishi 1.5%
Emerson Electric 1.5%

Dupont is a constituent of the Chartwell Global 30 and EXI is part of Chartwell's Global Sector Rotation portfolio.

Join Chartwell ETF and receive its white paper executive summary on global sector investing with ETFs

ETF Industry Snapshot of 2007

By Carl Delfeld of the Chartwell ETF Advisor

State Street Global Advisors (SSGA) has published a useful ETF snapshot report that highlights some interesting data and trends. It has many full tables and charts but below is some data that I have gleaned that encapsulates where the ETF industry grew in 2007 and trends that may continue into 2008.

At the end of 2007, 629 ETFs in the US were managed by 19 ETF managers, with assets totaling approximately $608BN. Assets increased by $32BN from $576BN in November. Seventeen new ETFs were added to the market last month.

Overall, the US ETF market exhibited strong growth during 2007. US industry assets increased by approximately $187BN and 270 new ETFs were launched.

In 2007 the largest asset gains were in International ETFs, up $59BN to $164.9BN, and Size ETFs, up $44.6BN to $196.9BN. The Specialty category added 141 new funds in 2007, making it the category with the greatest number of ETFs

Large Cap had the greatest net inflows of all Size/Style ETFs, contributing $21.2BN of the $21.9BN category growth for the month. Small Cap, Mid Cap, and Value categories all had negative inflows for 2007. In December, Energy experienced the greatest net inflows, adding $2.9BN for a year end total of $12.3BN and Energy, Financials, and Technology sectors saw the most significant inflows for the year.

The top three managers in the US ETF marketplace as of December 31, 2007 were BGI, State Street, and Vanguard. Collectively, they accounted for approximately 87% of the US-listed ETF market.

Large Cap outperformed Small Cap for the calendar year for the first time since 1998 according to the DJ Wilshire series. Every style category, with the exception of Small Cap Growth, experienced negative returns in December. Small Cap Value and Mid Cap Value returns showed negative growth in 2007. Financials and Consumer Discretionary were the only sectors in negative territory both for the month and the full year. Eight out of the ten sectors generated positive returns in 2007.

Learn what ETFs you need in your portfolio to meet the challenges of 2008 by going to Chartwell ETF.

TIPs ETF Gains Foreign Following

By Carl Delfeld of the Chartwell ETF Advisor

As inflationary expectations build in the U.S. economy, exchange-traded fund investors around the world are looking for ETF options. In November, 2007, wholesale prices posted their biggest 1-month jump since 1973?

One popular ETF choice is the iShares Lehman Bond ETF (TIP). The Treasury inflation-protected securities (TIPS) are a simple and effective way to eliminate one of the most significant risks to fixed-income investments--inflation risk. TIPs also deliver a real rate of return guaranteed by the United States government. TIPS are guaranteed to keep pace with inflation as defined by the Consumer Price Index.

For example, assume a $1,000 TIPS was purchased with a 3% coupon and also that inflation during the first year was 10%. If this were the case, the face value of the TIPS would adjust upward by 10%, to $1,100. Furthermore, the coupon payment (3%), which is also based on face value, would be $33 (in actuality, payments adjust and are paid semi-annually).

Foreign investors appear to be scooping up these bonds. According to Barchart, the 10-year TIPS issue is popular among foreign central banks as seen by the fact that indirect bidders have taken 42.9% of the last twelve 10-year TIPS auctions, which is well above the average of 35.8% seen across all recent Treasury coupon auctions.

The Treasury today will auction $8 billion in 10-year inflation-adjusted TIPS T-notes. Today’s issue was trading at 2.32% in when-issued trading late yesterday afternoon. The 12-auction averages for the 10-year TIPS auction are as follows: 1.91 bid cover, $68 million in non-competitive bids, 4.48 bp tail to the median yield, 38.28 bp tail to the low yield, and 47% taken at the high yield.

How would the TIP ETF fit into your global portfolio? Go to Chartwell ETF and find out today.

Vanguard's ETF Growth Leads to Gold Medal in Fund Competition

By Carl Delfeld of the Chartwell ETF Advisor

Investors poured $96bn in new money into Vanguard funds and exchange-traded funds in 2007, making it the biggest-selling fund company in the US and ending American Funds' six-year run at the top according to an article by Deborah Brewster of the Financial Times. Vanguard's inflows took its assets under management to for all funds including ETFs to $1,300bn.

Vanguard benefited from strong inflows into money market funds and a decisive jump in ETF assets. In 2007, Vanguard launched ten new ETFs, undercutting its rivals' prices, and sharply cut fees on its existing ETFs. This lead to a gain of $18bn in sales and lifting its ETF assets under management to $41bn. Barclays iShares family of ETFs is still the global leader in ETFs by a wide margin with more that 60% of global ETF assets under management.

American,Vanguard and Barclays have different distribution strategies. Vanguard mostly sells directly to investors. American Funds, which is actively managed, sells only through brokers and financial advisers. Barclay's iShares are primarily marketed to advisors but estimates are that a majority of iShare ETFs are purchased by individual investors.

Vanguard's ETFs are presented in a more simple manner while the iShares amazingly broad menu appeals to investors looking at executing perhaps more sophisticated and active strategies. Vanguard attributed its gains to its low fees, which are less than half the industry average.

In 2007, it launched a Europe-Pacific ETF with annual fee of 0.15 per cent, less than half the level of the equivalent offering from Barclays Global Investors. A few months ago, Vanguard launched a clutch of bond ETFs with fees of 0.11 per cent, a level similar to fees previously offered only to institutional clients.

To learn more about which ETFs are right for you, go to Chartwell ETF.

Will Pakistan Turmoil Affect India ETFs?

By Carl Delfeld of the Chartwell ETF Advisor

So far, the turmoil in Pakistan has not spilled over to impact India markets and the exchange-traded and closed-ended funds that track it such as (IFN) and (INP). Next door neighbor India is closely monitor the progress in Pakistan in the coming weeks for any security challenges that may come about. Keep in mind that there are more Muslims living in India than in Pakistan and that both countries possess nuclear weapons.

A new book reviewed by the Economist argues that the country was able to flout international rules on nuclear non-proliferation because American policymakers thought that securing Pakistan's assistance in defeating the Soviet Union in Afghanistan—and, more recently, President Pervez Musharraf's help in fighting terrorism—were more important than limiting the spread of nuclear bombs.

Since the creation of Pakistan in 1947, the two countries have fought three major wars. The first two stemmed from the conflict over Jammu & Kashmir, the northernmost state of India, which also shares a border with Pakistan. The accession of Jammu & Kashmir to India in 1947 has long been disputed by Pakistan, and the region's primarily Muslim population has endured years of hardship from frequent acts of terrorism.

Since 2004, acording to a message from Matthews Funds, the relationship between Pakistan and India has generally been improving. Even though formal trade with Pakistan has increased fivefold to $1.7 billion in the past three years, it is still less than 1% of India's total trade. Strained political relations have slowed development of economic linkages. Meanwhile, trade between India and China has increased in spite of existing border disputes. However, the potential benefit to trade is enormous, whether it involves Pakistani cement exports to India or Indian corporate participation in the ongoing privatization process in Pakistan.

Although the Indian market powers ahead, you may want to check in with Chartwell ETF to keep abreast of both political and economic developments.

Taiwan Exchange Launches New ETFs

By Carl Delfeld of the Chartwell ETF Advisor

Taiwan is moving ahead with plans to list more exchange-traded funds and have a more international exchange. The Taiwan Stock Exchange plans to list more than a dozen exchange-traded funds (ETFs) from the US, Japan, Korea, Singapore and France during the next six months.

The move marks a leap forward in the internationalisation of the island's capital markets according to Kathrin Hille of the Financial Times.

For example, the exchange should soon list with the cooperation of MSCI, the global index manager, to list its iShares ETF (EWT), which is listed on the New York Stock Exchange, in the local currency in Taiwan this month.

Taiwan is no newcomer to the ETF business. It listed its first ETF in 2004, and now has six such funds, whose total assets under management rank seventh in global securities markets.

Capital outflows from Taiwan have risen as investors are now able to more freely invest in global opportunities following pension reform and deregulation of the asset management market during the past few years.

The Taipei bourse is also negotiating with its Tokyo counterpart regarding mutual listings of each other's ETFs, and will this month discuss mutual listings of ETFs with the Abu Dhabi Securities Market. The presidential election in March will also likely spur a policy of more openess regarding economic ties with mainland China which might foster even the lsiting of Chinese companies on the Taiwan market.

Find out how Taiwan fits into your China investment strategy by joining Chartwell ETF.

Chartwell ETF 2008 Initiatives

By Carl Delfeld of the Chartwell ETF Advisor and Chartwell Wealth Advisors

For 2008, we are launching some new initiatives. One change in our ETF portfolios you will notice right away is the merging of the Core Conservative and the Gone Fishing ETF portfolios. I wanted to emphasize the basic strategy behind all the portfolios which can be referred to as the Core and Explore or Core/Satellite portfolio strategy.

The Core Conservative portfolio aims first to preserve capital through wide diversification and a sizable fixed income component. Around this core portfolio, you need to choose which of the five growth portfolios are suitable for your personal financial situation.

Since I have received numerous requests for a way for members to automatically make portfolios changes, in 2008, I am offering to manage member portfolios on the folioFN.com platform. After a portfolio consultation, I will distribute your capital over Chartwell’s model portfolios and make changes consistent with portfolio changes. The minimum investment for this portfolio service is $500,000.

This service will also give members access to the Chartwell Global 30 portfolio and two new portfolios which because of their frequent adjustments will be available to only private money management clients: the Global Sector Rotation and Country Rotation portfolios

In addition, for members that desire more active equity management and stock picking style of investing, we have begun working with New England Research & Management based in Chicago and Boston. The firm has been actively managing custom portfolios for high net worth clients since 1978 and offers wealth management services to complement portfolio management. Please let me know if you would like a personal introduction to CEO Meg McMullen.

In 2008, we will be integrating our ETFXRAY blog into the Chartwell ETF website and making additional changes to make the site more user friendly.

Planning for our investment tours of Australia and New Zealand in January 2009 and Singapore, Thailand, Malaysia and Vietnam in February 2009 will also move ahead progressively throughout the year. Our partner is luxury travel operator Abercrombie & Kent.

The Chartwell America global think tank whose mission is to make America more competitive and secure by shifting its attention to Asia-Pacific and emerging markets will also be broadening its activities during the year. It will be monitoring the upcoming Taiwan elections and beginning an initiative to deepen our ties with Japan.

Lastly, later this month, I will be publishing an article on why politics is a key consideration in global investing and also releasing an executive summary of a white paper on global sector investing.

Global Equity ETFs Begin New Year, UK Pound Falls

By Carl Delfeld of the Chartwell ETF Advisor

We are off and running in 2009 and global equity markets and the exchange-traded funds that track them opened this morning on a mixed note. The European DJ Stoxx 50 trading down -0.07%, the FTSE Index in London up +0.57% and the DAX Index in Germany unchanged according to Barchart.

Asian markets and ETFs were also mixed with Hong Kong's Hang Seng Index closing down -0.91%, China's CSI 300 Index closing up +0.88% and Japan's Nikkei index closed for a holiday.

The British pound fell to a record low against the euro today on speculation the Bank of England will be forced to lower interest rates further as Europe's 2nd largest economy slows. The pound dropped to 74.05 pence per euro, its lowest since the euro was introduced in 1999. December UK manufacturing was weaker than expected and the Financial Times reported the UK economy faces the worst outlook since the burst of the dot-com bubble 6-years ago.

The BOE forecasts economic growth will slow to 2% this year from above 3% in 2007 and already began lowering interest rates with a 25 bp cut to 5.5% at their Dec 6 monetary policy meeting.

What does this mean for the iShares MSCI UK ETF (EWU)? Go to Chartwell ETF and find out.