ETF XRAY

India's Economy and ETF Face New Challenges

By Carl Delfeld of the Chartwell ETF Advisor

India’s government, economy and stock market tracked by the new WisdomTree exchange-traded fund (EPI)face a series of challenges which could dent India's growth and attraction to global ETF investors.

First, higher interest rates have taken the edge off consumer spending in the past year at the same time as exporters have suffered from an appreciating rupee. India’s finance minister, Mr. Chidambaram, forecast growth of 8.7 per cent in the financial year ending March 31, down from 9.6 per cent the previous year according to Jo Johnson of the Financial Times in New Delhi.

Second, inflation is picking up and will likely worsen as political pressure for more spending accelerate in the election year of 2009. The Congress party’s poor performance in all five state assembly elections last year has increased pressure on a bigger budget deficit than warranted.

This will lead to a worsening of debt problems. Expect plenty of handouts aimed at softening the image of widening inequalities between rich and poor, urban and rural areas and upper and lower castes. Including off-balance-sheet expenditures on oil, food and fertilizer subsidies, Morgan Stanley estimates the underlying central government deficit in 2007-08 will be 5.4% of gross domestic product, rather than the government’s official estimate of 3.2%.

Keep on top of India's economy and politics by joining the Chartwell ETF Advisor.

Chartwell ETF's Delfeld to Chair Asian Investment Summit

Exchange-traded fund specialist Carl Delfeld will serve as chairman of an upcoming summit in Hong Kong aimed at helping Asian pension managers to capture global opportunities and manage risk.

The Asian Pensions & Investments Summit 2008 will be held April 21st through 23rd at the Hong Kong Gold Coast Hotel, Kowloon, Hong Kong. Asia's senior investments executives must ensure that the assets they govern are adequately balanced between risk and return, while they comply with evolving regulation. the Asian Pensions & Investments Summit 2008 is a premium forum that addresses the optimal ways to deliver high yields in the midst of pension reform.

Carl will open the summit with an address calling for a global approach using a core/satellite strategy which looks forward and challenges the indexes, carefully considers political risk and highlights the benefits of using ETFs as a core investment tool.

He will be representing Chartwell Partners Asset Management which uses ETFfolios as building blocks to develop and manage ETF global portfolios.

Asian Markets and ETFs Jump Across the Board

By Carl Delfeld of the Chartwell ETF Advisor

Asia-Pacific stocks and ETFs that track them are trading higher according to Barchart almost across the board on some optimism following yesterday's US rally: Japan +1.49%, Hong Kong +3.24%, China +2.75%, Taiwan +1.86%, Australia +1.78%, Singapore +0.54%, South Korea +0.76%, Bombay +0.11%.

Bullish factors in Asia included a 2.8% rally in BHP Billiton (BHP) on higher commodity prices and strength in gas and oil companies with the rally in crude oil prices to a new record high. London-based Standard Chartered Bank, which derives two-thirds of its revenue from Asia, rallied to a 3-week high on a favorable earnings report. And Industrial & C ommercial Bank of China rallied 3.4% after JPMorgan recommended China's largest bank as the "safest exposure to the sector."

In other Asian news, Thailand’s Election Commission on Tuesday found a ­ruling party politician guilty of vote-buying in last year’s general election, dealing a blow to political allies of Thaksin Shinawatra.

High inflation in Vietnam has led to the State Bank of Vietnam, the central bank, trying to drain liquidity from the financial system to hold down the value of the dong against the dollar. The central bank has pulled back its purchases of dollars leading to overnight inter-bank rates for the currency have reached as high as 40 per cent recently.

Stay on top of global news that can impact your ETF portfolio by going to Chartwell ETF.

New SPDR S&P International Dividend ETF Offers More Upside but with Higher Risk

By Carl Delfeld of the Chartwell ETF Advisor

The new SPDR S&P International Dividend exchange-traded fund (DWX) seeks to track the S&P International Dividend Opportunities Index, which includes 100 tradable, exchange-listed stocks from around the world that offer high dividend yields. The stocks included in this index must have a minimum total market capitalization of $1.5 billion, a three-month average daily value traded greater than $10 million, and have traded at least 300,000 shares for each of the preceding six months.

Additionally, for inclusion in the index the stocks must meet the following stability factors: positive 5-year earnings growth and profitability - measured by positive earnings per share over the latest 12-month period. Its expense ratio will be 0.45 percent.

How does this new ETF stack up against one well known WisdomTree alternative DEFA (DWM)? It is substantially different. The analysis below is as using data as of 12/31/07 for DWX and 2/15/08 for DWM.

The index that DWX tracks has much fewer names - 100 for DWX vs. 560 for DEFA (DWM).

The country allocations also differ sharply. The top five for DEFA are UK (23%), France (12.5%), Japan (9.4%), Australia (8.8%) and Italy (7.9%). For DWX, it is UK (25%), Canada (16.8%), Australia (10.5%), Italy (7.8%) and Sweden (7.5%)

In terms of company allocations, the top holding for DEFA is 1.86% and #10 is 1.1%. For DWX, top holding is 3%, #10 is 2.3%.

Sector exposure also quite different. DEFA top 3 are Finance (28.7%), Consumer non-cyclical (14.6%) and Communications (14.3%). BWX caps sector exposure at 25% so Finance is 25% followed by consumer discretionary at (19.6%) and Energy (15.93%).

But the comparison to the Wisdom Tree DEFA ETF (DWM) is not ideal.

First, the index that DWX tracks includes exposure to emerging market countries and mid cap companies while DWM is only developed countries and large cap companies. Perhaps a combination of WisdomTree's Dividend Top 100 (DOO) and Emerging Market High Yield (DEM) ETFs would be a better comparison.

All in all, a blend of both makes sense and I have added both this month to the Chartwell ETF Global Dividend/Income portfolio.

"Investing Along the Orient Express" to Singapore, Malaysia and Thailand (January 26th - February 3rd, 2009)

By Carl Delfeld of the Chartwell ETF Advisor

Five years ago, many analysts believed that Southeast Asian markets would be in trouble due to intense competition from China. However, as I predicted, the region's exchange-traded funds such as Singapore (EWS), Malaysia (EWM) and Thailand (TF) have thrived and may still offer investors a great play on Chinese and Asian growth.

Isn’t it about time you learn more about this dynamic and fascinating region?

Join me on a luxury adventure from Singapore through Kuala Lumpur to Penang and then on to Bangkok.

Travel in style aboard the historic Eastern & Oriental Express and enjoy all the sites and culture of Southeast Asia while also learning more about the region’s investment opportunities. Our nine days begin with three days in Singapore at the Raffles Hotel. After interesting economic, company and regional investment briefings from experts plus a visit to places like the Singapore Stock Exchange during the mornings, enjoy flexible touring options such as cruises, sightseeing or sporting activities in the afternoons and evenings. One morning will be dedicated to Malaysia which has been a steady performer.

On the fourth day, the Eastern & Oriental Express departs Singapore’s Keppel Road station in the morning. Having been welcomed onboard the gleaming carriages, settle into your luxury cabin and, if you wish, meet interesting people from all over the world. Enjoy the passing scenery as the train crosses to Malaysia via the causeway of the Straits of Johor.

Lunch is served in one of the opulent dining cars. Dress for dinner and then spend a relaxing evening in the Bar Car in the company of our resident pianist. During the evening, the E&O arrives at Kuala Lumpur’s magnificent Moorish-style station where you will disembark for a tour before departing for an overnight journey towards Bangkok with side trips to the island of Penang and the River Kwai. Our home for three days in Bangkok will be the prestigious Oriental.

Throughout our trip, we will schedule investment-oriented activities in the mornings allowing you the freedom during afternoons and evenings. The tour is limited to 25 investors.

For more details and a trip brochure, please contact Carl Delfeld at 719.264.1503.

Chartwell Launches Global Innovation Folio

Boulder and Colorado Springs, CO - Chartwell Partners Asset Management has launched another folio, called the Global Innovation 30 Folio.

The folio is based on Business Week's annual feature, The Most Innovative Companies Rankings, which is a collaborative effort with the Boston Consulting Group. The Chartwell Global 30 Innovation folio is managed by Chartwell on FOLIOfn's online brokerage platform.

The rankings of the top fifty companies are determined through a survey that is sent to the top ten executives at 1,500 largest companies in the world asking them to name the most innovative company outside their own industry group.

In building and managing the Global Innovation 30 Folio, Chartwell uses a value approach to select 30 publicly-traded companies from the 50 companies in the rankings and then weights them equally in the folio. Currently, nine of the thirty companies in the Global Innovation 30 Folio are headquartered outside of the United States.

"Innovation drives sustained growth and should lead over time to superior returns for the global companies in the Chartwell Global Innovation 30 Folio", said Carl Delfeld, Managing Director of Chartwell Partners. In addition, Delfeld explained that FOLIOfn was the ideal platform for the folio since it "offers the ability to buy and sell in fractional shares and allows for the rebalancing of the folio in a single, low-cost transaction."

Greg Vigrass, President of FOLIOfn Institutional, commented, "The Chartwell Global Innovation 30 Folio makes excellent use of the versatility and power of the FOLIOfn platform. We are pleased that Chartwell has launched this innovative new investment product and look forward to the continued success of their offering."

The Global Innovation 30 Folio will join the other folios that are available to investors through Chartwell Partners on the FOLIOfn platform. These are the:

Core Conservative ETFfolio
Fixed Income ETFfolio
Global Dividend/Income ETFfolio
World Economic Freedom ETFfolio
Country Rotation ETFfolio
Momentum Country Rotation ETFfolio
Value Country Rotation ETFfolio
Global Sector Rotation ETFfolio
Global Growth ETFfolio
Emerging Markets ETFfolio
Asia-Pacific ETFfolio
China Strategy ETFfolio
Global Long/Short Strategy ETFfolio

Chartwell uses these folios as building blocks to develop custom global portfolios for investors using a core/satellite strategy. The ETFfolios are also available to investment advisors on a sub-advisory basis. Delfeld is a columnist for Forbes Asia, editor of ChartwellETF.com and author of "Think Global, Grow Rich", "The New Global Investor" and "ETF Investing Around the World".

For more information and media inquiries, contact Carl Delfeld at 719.264.1503 or at cdelfeld@comcast.net

ETFs vs. Closed-Ended Funds: New Ireland Fund Frustration

By Carl Delfeld of the Chartwell ETF Advisor and ETFfolio.com

I think of exchange-traded funds and closed-ended funds as cousins. Sometimes I will prefer the closed-ended option because of the weighting of companies since some ETFs can be a bit too top heavy for my taste.

But the key drawback closed-ended funds aside from higher costs and the premium/discount issue is transparency.

The New Ireland Fund (IRL) is a glaring example. I am very keen on Ireland and without an Ireland ETF on the market have little other option but to go with IRL. You may have noticed that IRL has been absolutely hammered in the last few months due to banking issues and the meltdown in its real estate and construction sector. Its two largest holdings (I think) are construction giant CRH PLC and Allied Irish Bank and any smart investor should do some due diligence on these as well as perhaps a few other top holdings.

Here is the problem. Yesterday, I received its report by mail but the holding list was presented as of October 31, 2007!

Even if you go to ETFconnect.com to bring up its holdings you will find data as of 4/30/07! Compare this to the ease of bringing up all the holdings of any ETF any time. Could someone please introduce an Ireland ETF. And please hurry, on a valuation basis, it is the least expensive market in the world.

IRL is a holding in the Country ETF Rotation and the World Economic Freedom ETFfolios.

Taiwan ETF (EWT) is China Power Play

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

Global ETF investors looking for an indirect way to tap China economic growth should consider the Taiwan (EWT) exchange-traded fund.

The first aspect of the Taiwan ETF basket that investors need to be aware of is the large exposure to the semiconductor industry - close to 50%. But keep in mind that the vast majority of semiconductor manufacturing takes place in China. In fact, close to 20% of China's total exports come from Taiwanese firms. 75% of Taiwan's foreign investment also heads to China. More than 1 million Taiwanese actually live and work in China and 75,000 Taiwanese companies have invested there as well.

How is this for a China play?

How will Taiwan's upcoming presidential election affect the Taiwan ETF? Go to Chartwell ETF and find out. Is it a matter of tails you win, heads you win?

The Taiwan market is currently trading about 19 times projected earnings but its 2008 GDP projected growth rate is 4%. (EWT) is down 5.1% so far this year and was up yesterday 1.9% in morning trading while the iShares FTSE/Xinhua China 25 Index (FXI) is down 14.5% for the year.

The slumping semiconducter industry may turn up soon, but when? Should Taiwan be part of your China strategy? Go to Chartwell ETF for some answers.

iShares US Tech Sector ETF vs. Stock Picking

By Carl Delfeld of Chartwell ETF Advisor and ETFfolio.com

iShares has released an interesting overview of how the individual stocks in the Dow Jones U.S. Technology Sector ETF (IYW) basket have done on a risk/reward basis relative to the exchange-traded fund over the three years ending 12/31/07. It also highlights IYW's top ten holdings.

The iShares graph indicates that IYW represented less risk than all of the ten top weighted stocks and that it had an higher average annualized return than all but three of its top ten individual companies; Apple, Google and Hewlett-Packard.

This is a powerful example of the utility of sector ETF investing. iShares also has ETFs for the ten global sectors that make up the S&P Global 1200 representing 70% of world equity markets. Chartwell Partners uses these ten global sector ETFs to manage its Global Sector Rotation ETFfolio.

As economies and companies around the world become more interdependent, investors and advisors need to adapt their strategies to add value and increase the likelihood that they will outperform benchmarks. Where a company is domiciled is becoming less important, what industries and sectors it operates in is becoming more important.

Research shows that since the late 1990s, the importance of developed country factors as a factor in determining relative returns is declining and sector factors are increasing. For example, global sectors account for roughly 40% of total global equity return dispersion up from 15% in 1992.

Join Chartwell ETF today and receive Chartwell 20 page Global Sector ETF Investing White Paper.

Aussie Dollar and Chinese Inflation Surge

By Carl Delfeld of the Chartwell ETF Advisor and ETFfolio.com

ETF investors need to be aware that inflation in the Asia-Pacific region is creating upward pressure on two key currencies. What will be the impact on exchange-traded funds that track markets in the region?

The Australian dollar surged to a three-month high todays as speculation grew after a Reserve Bank of Australia’s policy meeting that further interest rate rises are on the horizon. The central bank raised interest rates by 25 basis points to 7% at its meeting earlier this month in an attempt to stem domestic inflationary pressures. The Australian ETF (EWA) responded positively in trading today, up nearly 2%.

Meanwhile, China recorded an inflation rate above 7 per cent in January – the highest in more than 11 years causing concern and raising the lilelihood that its currency would continue to strengthen to combat inflation. The National Bureau of Statistics on Tuesday said that inflation surged to 7.1 percent from 6.5 percent in December. Producer prices hit a monthly high of 6.1% - the highest in three years - due to winter storms, resulting transportation problems plus higher commodity prices.

The yuan has risen by about 13 per cent against the US dollar since mid-2005 but increased at an annualised rate of about 20% in January.

How are Chinese exports doing in light of the stronger currency and how should your global ETF portfolio be adjusted to take advantage of these developments? You need Chartwell ETF.

Global Export Strength and Global ETFs

By Carl Delfeld of the Chartwell ETF Advisor and ETFfolio.com

While the jury is still out, global exchange-traded fund investors may find some encouragement in recent data that shows that global economic growth is proving to be reslient. Will this buoy global ETFs?

Exports seem to holding relatively firm despite an IMF cut in global growth projections for 2008 from 4.4% to 4.1%. An article in the Financial Times lays out some data to explain why.

export growth, is proving surprisingly resilient.

While US imports fell $13bn in December, the total 2007 import bill was still $2 trillion. The US also has a smaller share of world imports than it once did – 14 compared with 20 per cent in 2000, according to the IMF. Exports from Mexico and Canada also rose strongly in December, compared with both a year and a month earlier.

Demand for exports within Asia is also to some degree offsetting falling demand from the US and Europe. For example, Singapore’s non-oil exports to these two regions, which represent a third of its export market, fell sharply in January, but exports to China rose 10 per cent year-on-year and exports to Indonesia 6 per cent. Chinese exports, meanwhile, remain strong.

Is their something to all the de-coupling talk? Go to Chartwell ETF to learn more.

WisdomTree Set to Launch First India ETF (EPI)

By Carl Delfeld of the Chartwell ETF Advisor

The WisdomTree family of exchange-traded funds will launch the WisdomTree India Earnings ETF under ticker symbol EPI on Friday, February 22nd.

(EPI) will be the industry’s first India ETF with direct investment into local Indian securities and will select from a broad universe of approximately 150 profitable companies included in the WisdomTree India Earnings Index on the annual index screening date. EPI will have an annual fee of 0.88%.

In an earlier press release, WisdomTree explained how EPI will overcome many of the hurdles that so far have prevented an India ETF from coming to market.

The top holdings in the ETF will be Reliance Industries at 13%, ONGC at 6.5%, Infosys Technologies at 5.2%, Bharti Airtel at 3.7% and ICICI Bank at 2.7%. The top three sectors in the ETF basket will be energy, materials and financials.

Should you switch from your current India closed-ended fund or ETN to the new India ETF (EPI)? Go to Chartwell ETF and find out.

South Korean ETF Needs More Financial Reforms

By Carl Delfeld of the Chartwell ETF Advisor

The iShares Korea exchange-traded fund's (EWY) trading pattern is unfortunately starting to look a bit like Japan's. The ETF's top three holdings, Samsung, Posco and Kookmin Bank, account for 30% of assets and all face some market headwinds.

But the key constraint to higher South Korea economic growth and a bull market is its over-regulated financial sector.

Late last year, the "Capital Markets Integration Act" came into effect and could be a building block for more significant reform. While South Korea’s banking sector was liberalized a decade ago, many financial markets were off limits to foreign institutions. South Korea sees the moves of countries like Singapore to become a regional financial services hub, and this legislation is aimed at keep up with the competition.

Should South Korea have a place in your global portfolio? Go to Chartwell ETF to find out.

The most significant part of the act, which will take effect in January 2009, is the move from a positive list system of regulation--under which everything that is not allowed is prohibited--to a negative list, meaning financial groups can do anything that is not expressly prohibited. Some are comparing the changes with the "big bang" in London 20 years ago.

The legislation also gives more running room for asset managers to develop new and more sophisticated products as well as permitting brokerages to provide customers with a wide variety of financial services. If South Korea can build on its strong industrial and tech foundation and broaden into a financial services powerhouse, it should have a significant impact over time. The reforms will also improve disclosure and transparency and help prevent conflicts of interest.

But some believe that the legislation does not go far enough and that South Korea needs to be much friendlier to foreign financial firms to attract the talent and resources necessary to put Seoul on the global financial map.

Chartwell Launches Global Innovation 30 Folio

Chartwell Partners Asset Management has launched another folio, the Global Innovation 30 Folio.
The folio is based on Business Week’s annual The Most Innovative Companies Rankings which is a collaborative effort with the Boston Consulting Group. The Chartwell Global 30 Innovation Folio is managed by Chartwell on FOLIOfn’s online brokerage platform.

The rankings of the top fifty companies are determined through a survey that is sent to the top ten executives at 1,500 largest companies in the world asking them to name the most innovative company outside of their own industry group. There are some surprises on the 2007 list, including four new companies in the top 25 - Disney, Boeing, Genentech, and Cisco Systems. On the other hand, Dell fell from #14 to #22 and 3M fell from #3 to #7.

In building and managing the Global Innovation 30 Folio, Chartwell uses a value approach to select 30 publicly-traded companies from the 50 companies in the rankings and then weights them equally in the folio. Currently, nine of the thirty companies in the Global Innovation 30 Folio are headquartered outside of the United States.

“Innovation drives sustained growth and should lead over time to superior returns for the global companies in the Chartwell Global Innovation 30 Folio”, says Carl Delfeld, Managing Director of Chartwell Partners. In addition, Delfeld explained that FOLIOfn was the ideal platform for the folio since it “offers the ability to buy and sell in fractional shares and allows for the rebalancing of the folio in a single low cost transaction.”

The Global Innovation 30 Folio will join the ten other folios that are available to investors through Chartwell Partners on the FOLIOfn platform. These are the:

Core Conservative ETFfolio
Fixed Income ETFfolio
Global Dividend/Income ETFfolio
World Economic Freedom ETFfolio
Country Rotation ETFfolio
Global Sector Rotation ETFfolio
Global Growth ETFfolio
Emerging Markets ETFfolio
Asia-Pacific ETFfolio
China Strategy ETFfolio
Global Long/Short Strategy ETFfolio

Chartwell uses the above folios as building blocks to develop custom global portfolios using a flexible core/satellite strategy. For more information and media inquiries, contact Carl Delfeld at 719.264.1503 or at cdelfeld@comcast.net.

Singapore ETF (EWS) Priced for Global Recession

By Carl Delfeld of the Chartwell ETF Advisor

Some country exchange-traded funds like Singapore (EWS) are already pricing in the impact of a global recession. Is this market confirmation of a worldwide slowdown or an opportunity for global value investors?

Singapore cut its economic growth forecast for 2008 on Thursday after the first quarterly contraction since 2003, blaming a slowdown in the US. The government said on Thursday that it had cut is economic forecast for this year to 4-6% from 4.5-6.5%. GDP growth last year was 7.7% against 8.2% in 2006.

But is everyone just buying into the global recession story without thinking independently?

Jürgen Hambrecht, head of BASF, one of the world's biggest manufacturers, said during a recent interview with the Financial Times: "I am glad to say that business in general does not show the panicking approach of the financial industry"

In a pan-European survey of expectations by the NTC Economics consultancy, 56 per cent of European manufacturers expected sales volumes to rise in the coming year compared with 12 per cent forecasting a decline.

With sales last year estimated at €58bn ($84bn), Germany-based BASF is the world's biggest chemicals producer. It sells more than 100,000 products across the world in industries from construction to textiles. About 60 per cent of the company's sales are in Europe, a fifth in North America and a sixth from Asia-Pacific.

Find out what Chartwell ETF thinks about Singapore right now.

Some Welcome News on International Markets Buoys ETFs

By Carl Delfeld of the Chartwell ETF Advisor

Amid all the doom and gloom, here is some positive news that should help some international exchange-traded funds.

Japan’s economy expanded by 3.7% in the last quarter, more than double many predictions, thanks in part to a jump in exports to the rest of Asia and emerging markets. The data suggested that Japan may be more resilient to any US recession than previously thought. (EWJ) jumped nicely.

The Aussie dollar and ETF was given an added boost by an expectation-beating employment report that reinforced expectations that Australian interest rates were set to rise. Australia added 26,800 new jobs in January, far exceeding expectations for a rise of 15,000 and taking unemployment to its lowest level in more than 33 years. (EWA) snapped back after a string of bad days.

On the banking front, also some welcome news. Nordic Swedbank reported a strong 5.7% rise in fourth-quarter operating profit thanks to strong economic growth in the region, and as it remained largely immune from the turmoil in credit markets. Its shares were up 9.2%. Zurich Financial, meanwhile, announced its full-year net profit rose by 20%. Not bad.

Sweden’s central bank, the Riksbank, which is the oldest central bank in the world and a vigilant inflation hawk, surprised financial markets with a rate increase which helped firm up (EWD)

And there was also some good news about America. Today’s December U.S. trade deficit report is expected to narrow to -$61.5 bilion, much lower than the record high of -$67.6 billion posted in August 2006.

To stay on top of global markets and ETFs that track them, go to Chartwell ETF.

Chartwell Launches American Leadership ETFfolio

By Carl Delfeld of the Chartwell ETF Advisor

ETF specialist Chartwell Partners Asset Management has launched another ETFfolio for investors: the American Leadership ETFfolio. It is a portfolio of sector ETFs representing areas in which America has a strong competitive position in the global economy. The American Leadership ETFfolio is managed by Chartwell on the FOLIOfn brokerage platform.

This ETFfolio contains exchange-traded funds offering exposure to sectors that the U.S. demonstrates a strong competitive advantage. Examples include financial services, transportation and logistics, technology and biotechnology, software, medical devices, oil equipment and services, timber management and aerospace and defense.

The American Leadership ETFfolio will join the nine other ETFfolios that are available through Chartwell Partners on the FOLIOfn platform. These ETFfolios are the:

Core Conservative ETFfolio
Fixed Income ETFfolio
Global Dividend/Income ETFfolio
World Economic Freedom ETFfolio
Country Rotation ETFfolio
Global Sector Rotation ETFfolio
Asia-Pacific ETFfolio
Global Long/Short Strategy ETFfolio
Global Growth ETFfolio

Chartwell Managing Director Carl Delfeld explained that an allocation to baskets of American companies that are in businesses where America plays a leadership role makes sense since these firms have a higher likelihood of sustained growth and also have the best chance of penetrating new markets such as emerging markets like China and India.

Chartwell uses its ten ETFfolios as building blocks to manage global portfolios using a core/satellite strategy. Delfeld is a columnist for Forbes Asia and is the author of "Think Global, Grow Rich", "The New Global Investor" and "ETF Investing Around the World".

For more information and media inquiries, contact Carl Delfeld at 719.264.1503 or at cdelfeld@comcast.net

China ETFs Still On Expensive Side

By Carl Delfeld of the Chartwell ETF Advisor and ETFfolio.com

China exchange-traded funds have been amongst the hardest hit ETFs this year. Valuations are difficult to pin down but consider the "A" share market of shares available to only Chinese citizens and certain institutional investors. The only option for these shares is the Morgan Stanley A share fund (CAF) which normally trades at a 30% discount to NAV.

These domestically listed shares are trading on 37 times this year’s earnings which means they are still the world’s most expensive.

But it gets worse if you consider the quality of earnings and the likelihood that growth, margins and profits will likely be rated down in the near future. Morgan Stanley reckons investment and non-operational income contributed 21 per cent of third-quarter EPS for non-insurers. The Financial Times reports that the bluer chip MSCI China index of companies listed abroad has forecast EPS growth of 22 per cent. Of this, 8-10 percentage points is from renminbi appreciation and 5-7 percentage points from an effective cut in corporate taxes.

So despite the fallback in prices, p/e's for the Shanghai market are still very high, the quality of earnings is relatively poor and projections of forward earnings are likely to be geared back as global growth slows.

Perhaps you need to learn more about the China Strategy ETFfolio or join Chartwell ETF to stay on top of the China story.

South Korean ETF Held Back By Financial Issues

By Carl Delfeld of the Chartwell ETF Advisor

The iShares Korea exchange-traded fund's (EWY) trading pattern is unfortunately starting to look a bit like Japan's. The ETF's top three holdings; Samsung, Posco and Kookmin Bank account for 30% of assets and all face some market headwinds.

But the key constraint to higher South Korea economic growth and a bull market is its overegulated financial sector.

Late last year, the "Capital Markets Integration Act” came into effect and could be a building block for more significant reform. While South Korea’s banking sector was liberalized a decade ago, many financial markets were off limits to foreign institutions. South Korea sees the moves of countries like Singapore to become a regional financial services hub and this legislation is aimed at keep up with the competition.

The most significant part of the act, which will take effect in January 2009, is the move from a positive list system of regulation - under which everything that is not allowed is prohibited - to a negative list, meaning financial groups can do anything that is not expressly prohibited. Some are comparing the changes to the "big bang" in London twenty years ago.

The legislation also gives more running room for asset managers to develop new and more sophisticated products as well as permitting brokerages to provide customers with a wide variety of financial services. If South Korea can build on its strong industrial and tech foundation and broaden into a financial services powerhouse, it should have a significant impact over time. The reforms will also improve disclosure and transparency and help prevent conflicts of interest.

But some believe that the legislation does not go far enough and that South Korea needs to be much friendlier to foreign financial firms to attract the talent and resources necessary to put Seoul on the global financial map.

Another issue in these times of financial uncertainty is that Korean banks are structurally more vulnerable to credit issues than their Asian counterparts. Unlike their peers, they lend more than they attract in deposits. This is especially important since in 2007 as savers switched funds out of banks, partly as a result of deregulation, and lending volumes jumped. Last year loan/deposit ratios stood at around 120 per cent. The Financial Times notes that Korean won deposits, which made up 64 per cent of liabilities in 2003, fell to just 50 per cent by the third quarter of 2007, according to Credit Suisse.

This increasing reliance on capital market funding plus keen competition for deposits, has raised financing costs and probably depressed bank profit margins as well.

The South Korean market is trading at about 12 times forward earnings according to S&P data.

To learn more about South Korea and other Asia-Pacific markets, go to Chartwell ETF.

The Global Sector ETF Spread

By Carl Delfeld of the Chartwell ETF Advisor

The ten global exchange-traded funds that make up the S&P Global 1200 are a useful tool for ETF investors since they cover 70% of world equity value. They also allow advisors and investors the flexibility to execute a smart strategy to overweight or underweight global sectors.

So far this year, the best performing global sector has been the iShares S&P Global Healthcare Sector (IXJ) which is down 7.1% while the worst performing global sector has been the iShares S&P Global Technology Sector (IXN) which is down 14.8%. This spread of over 7% is significant but a look at a shorter timeframe highlights why a rotation strategy of shifting into undervalued sectors can pay off.

For the last ten days of January, the iShares S&P Global Materials (MXI) was up 9.1% and the Consumer Discretionary Sector ETF (RXI) was up 8.3%. Meanwhile, during the same ten days, Global Healthcare (IXJ) was down 2.8%.

The Global Consumer Discretionary Sector ETF (RXI) is up 2.24% today in mid-day trading.

The ten global sector ETFs which are listed below have anywhere from 30% to 65% invested in U.S. companies:

iShares S&P Global Consumer Discretionary (RXI)
iShares S&P Global Consumer Staples (KXI)
iShares S&P Global Health Care (IXJ)
iShares S&P Global Energy (IXC)
iShares S&P Global Industrials (EXI)
iShares S&P Global Technology (IXN)
iShares S&P Global Telecommunications (IXP)
iShares S&P Global Utilities (JXI)
iShares S&P Global Materials (MXI)
iShares S&P Global Financials (IXG)

To learn how to receive a copy of Chartwell's Global Sector ETF Investing white paper and for media inquiries, contact Carl Delfeld at 719.264.1503 or go to Chartwell ETF.

Chartwell Launches World Economic Freedom ETFfolio

By Carl Delfeld of the Chartwell ETF Advisor

The ETF specialist, Chartwell Partners, has launched another global ETFfolio, the World Freedom ETFfolio, which is based on the Index of Economic Freedom published by the Heritage Foundation and the Wall Street Journal. The ETFfolio is managed by Chartwell Partners on FOLIOfn’s online brokerage platform.

The index 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 World Economic Freedom ETFfolio will join the nine other folios that are available through Chartwell Partners on the FOLIOfn platform. These ETFfolios are the:

Core Conservative ETFfolio
Fixed Income ETFfolio
Global Dividend/Income ETFfolio
World Economic Freedom ETFfolio
Country Rotation ETFfolio
Global Sector Rotation ETFfolio
Emerging Markets ETFfolio
Asia-Pacific ETFfolio
Global Long/Short Strategy ETFfolio
Global Growth ETFfolio

Chartwell uses a Core/Satellite strategy to allocate client investments amongst the ETFfolios based on an assessment of client goals, time horizon, and risk factors. For more information, contact Carl Delfeld at 719.264.1503.

Chartwell ETF Announces Investment Tour of Singapore, Malaysia and Thailand

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

Five years ago, many analysts believed that Southeast Asian markets would be in trouble due to intense competition from China. However, as I predicted, the region has thrived and offers investors a great play on Asian growth.

Isn’t it about time you learn more about this dynamic and fascinating region? Join me on a luxury adventure from Singapore through Kuala Lumpur to Penang and then on to Bangkok from January 26th to February 3rd, 2009.

Travel in style aboard the historic Eastern & Oriental Express and enjoy all the sites and culture of Southeast Asia while also learning more about the region’s investment opportunities. Our adventure begins with three days in Singapore at the Raffles Hotel. After interesting economic, company and regional investment briefings from experts plus a visit to places like the Singapore Stock Exchange during the mornings, enjoy flexible touring options such as cruises, sightseeing or sporting activities in the afternoons and evenings. One morning will be dedicated to Malaysia which has been a steady performer.

On the fourth day, the Eastern & Oriental Express departs Singapore’s Keppel Road station in the morning. Having been welcomed onboard the gleaming carriages, settle into your luxury cabin and, if you wish, meet interesting people from all over the world. Enjoy the passing scenery as the train crosses to Malaysia via the causeway of the Straits of Johor.

The E&O will pause at Kuala Lumpur’s magnificent Moorish-style station before departing for an overnight journey towards Bangkok with side trips to the island of Penang and the River Kwai. Our home for three days in Bangkok will be the prestigious Oriental. Throughout our trip, we will schedule investment-oriented activities in the mornings allowing you the freedom during afternoons and evenings.

The tour is limited to 25 investors. For more information, go to Chartwell ETF or contact Carl Delfeld at 719.264.1503.

Chartwell ETF Releases White Paper on Global Sector Investing

By Carl Delfeld of the Chartwell ETF Advisor

Today ChartwellETF.com and Chartwell Partners Wealth Management released an executive summary of a white paper; Global Sector ETF Investing at the World Money Show in Orlando.

The white paper focuses on the S&P Global 1200 index and the ten global sectors it breaks down into, all available through exchange-traded funds, which offer investors and advisors a transparent, liquid, flexible and low cost approach to building a global portfolio.

Here are a few of the white paper's conclusions.

As economies and companies around the world become more interdependent, investors and advisors need to adapt their strategies to add value and increase the likelihood that they will outperform benchmarks. Where a company is domiciled is becoming less important, what industries and sectors it operates in is becoming more important.

Research shows that since the late 1990s, the importance of developed country factors as a factor in determining relative returns is declining and sector factors are increasing. For example, global sectors now account for roughly 40% of total global equity return dispersion, up from 15% in 1992.

A portfolio of the ten exchange-traded funds that track each global sector can be an effective tool to build a core global portfolio since it offers exposure to 70% of world equity markets. It is also a flexible strategy offering opportunities to rotate into global sectors with price momentum as well as undervalued sectors. Combining a global sector portfolio with stock picking - Chartwell's sector plus strategy - is also an option for investors and advisors.

The executive summary includes a profile of the ten global sector ETFs including their top ten holdings and weightings in the S&P Global 1200, sector performance over the past 90, 30 and 10 days, comparisons of the sector ETFs in terms of volatility, return and risk with other international ETFs, global sector exposure for single-country ETFs, plus some potential global sector investment strategies.

The ten global sector ETFs which are listed below have anywhere from 30% to 65% invested in U.S. companies:

iShares S&P Global Consumer Discretionary (RXI)
iShares S&P Global Consumer Staples (KXI)
iShares S&P Global Health Care (IXJ)
iShares S&P Global Energy (IXC)
iShares S&P Global Industrials (EXI)
iShares S&P Global Technology (IXN)
iShares S&P Global Telecommunications (IXP)
iShares S&P Global Utilities (JXI)
iShares S&P Global Materials (MXI)
iShares S&P Global Financials (IXG)

To request a copy of Global Sector ETF Investing and for media inquiries, contact Carl Delfeld at 719.264.1503 or at cdelfeld@comcast.net.

Chartwell ETF Awaits WisdomTree India (EPI)

By Carl Delfeld of the Chartwell ETF Advisor

With all the exchange-traded choices for investors eager to tap into the China story, I have been waiting for some action on the India ETF front.

The WisdomTree family of exchange-traded funds will be launching a new India ETF (EPI) later this month. Here is what looks like to be the advantages over current India ETFs.

The companies in the EPI basket will be weighted by earnings rather than market value. Hopefully, that will lead to a less top heavy portfolio. In addition, the index will contain about 150 companies.

It will be the first India country ETF that gives U.S. investors access to local shares in the Indian market with no derivatives.

As an ETF, EPI will likely be a tax efficient structure while ETN tax status is uncertain after ruling on Currency ETNs and implications for equities and commodities ETNs.

I am very curious about what companies get into the ETF basket as well as the pattern of weightings. The real action and value in India is at the smaller company side of the market, not the mega caps which remain overvalued.

Go to Chartwell ETF for more on the opportunities and challenges of investing in India.

The New Hao China Smaller Company ETF

By Carl Delfeld of the Chartwell ETF Advisor

The Claymore/AlphaShares China Small Cap Index ETF (AMEX: HAO) began trading this week offering yet another way to get at the China growth story.

Claymore's HAO ETF has an expense ratio of 0.70%. It includes about 120 different companies all weighted by market cap. The benchmark sets a minimum market-cap size of $200 million and a maximum of $1.5 billion and no one company can exceed 5% of total exposure.

Smaller companies tend to be privately owned which is an advantage but valuations still appear pricey. The average p/e ratio is 35 and average price to book of companies in the index is 4.2. The HAO ETF is also trading at a 6% premium to NAV.

Below are the ten top holdings.

BEIJING ENTERPRISES HOLDINGS 2.99 %
CHAODA MODERN AGRICULTURE 2.89 %
SINOFERT HOLDINGS LTD 2.40 %
WUXI PHARMATECH INC - ADR 1.98 %
CHINA SHIPPING CONTAINER 1.96 %
SOHU.COM INC 1.96 %
NETEASE.COM INC-ADR 1.93 %
SHANGHAI JIN JIANG INTERNATIONAL 1.84 %
CNPC HONG KONG LTD 1.76 %
JIANGSU EXPRESSWAY CO LTD 1.75 %

For advice on the best way to invest in the China story, go to Chartwell ETF.