ETF XRAY

Crude ETFs Track Surging Oil Prices

By Carl Delfeld of the Chartwell ETF Advisor

Exchange-traded funds that track oil prices have done so inconsistently. The Claymore Oil Up ETF (UCR) is up 22% since its inception in November last year while West Texas Intermediate crude is up 45%. UCR is up 1.14% in mid-day trading.

Crude oil prices surged to fresh highs on Wednesday amid renewed dollar weakness as investors sought refuge from a second wave of credit turmoil. Nymex December West Texas Intermediate gained $1 at $97.70 a barrel while ICE December Brent rose $83 cents to $94.09 a barrel in volatile trading shortly after the release of the latest US weekly inventories data

US crude stocks fell 0.8m barrel last week and stocks at Cushing, Oklahoma, the delivery point for WTI, as a bullish factor for prices.

The closure of several North Sea oil production platforms because of bad weather helped drive prices up and ConocoPhillips and BP were expected to reduce production in the area ahead of a powerful storm.

Clean Energy Goes Global with ETF

Powershares has introduced a Global Clean Energy (PBD) exchange-traded fund which tracks the WilderHill New Energy Global Innovation Index. Companies in the ETF basket have innovative technologies and services focus on the generation and use of cleaner energy, conservation, efficiency and the advancement of renewable energy in general. The Index uses an equal-weighting methodology modified by sector and market capitalization bands, to provide diversification across the clean energy industry.

A majority of the companies in the index will be international companies and non-U.S. companies have been a driving force behind significant growth in clean energy investment, accounting in 2006 for $18.7 billion, or 67% of global asset financing alone. The U.S. accounts for 27% of this ETF's exposure, with Germany at 17% and Japan with 12%.

This ETF has a decidedly small company, growth tilt with 49% of the companies in the basket in the category of small cap growth and 27% listed as mid cap growth. There is food balance and diversification with no single company representing more than 3% of the baslet. The expense ratio is 0.75%.

Posted by Carl Delfeld of the Chartwell ETF Advisor

Energy Drives Canadian ETF and Currency

The Canadian exchange-traded fund (EWC) has been a solid performer primarily due to its position on the sweetspot of energy and commodities not to mention the strength of its currency known affectionately as the loonie.

Since 2002, the FT reports that the Canadian dollar has risen almost 50 per cent against the US dollar. It has also been strong against other currencies – but the US accounts for more than 80 per cent of Canadian exports and 60 per cent of imports.

The weak US dollar explains much of the move and even year to date the loonie is up 5% against the dollar. But with mining and manufacturing making up 20 per cent of gross domestic product, it has been the commodities boom that has pushed the Canadian dollar to extreme levels of overvaluation. Sure, the trade balance has surged but the current exchange rate of 1.08 to the US dollar pretty much assumes that commodity prices rise for ever. About 55% of the Canadian ETF's exposure is to either enrgy or banking and much of the banking activity is supporting energy and commodity projects.

By Carl Delfeld of the Chartwell ETF Advisor

Global & Domestic Energy ETFs Compared

iShares S&P Global Energy (IXC) is challenging its December high of $116. I thought it would be interesting to compare the trading ranges of IXC with its domestic energy cousin XLE. Both ETFs are trading near their 52 week high and way above their 50 & 200 day moving averages.

50 day moving averages:
IXC - 108.55
XLE - 58.92
200 day moving averages:
IXC -106.47
XLE - 57.05

By DE Smith / MyPortfolioView

Using Commodity ETFs

My opinion is that commodity exchange-traded funds or ETFs should not be used as a short term play but rather to more effectively diversify and buffer your ETF portfolio. Nobody can really say where say silver, gold, or oil prices will be in a year - just that they will bounce around and not be correlated with equity prices.

Commodity ETFs such as Barclays Global Investors' popular iShares Silver Trust (AMEX:SLV - News) has reached $1.8 billion in assets. United States Oil (AMEX:USO - News) has also been popular, reaching $400 million since its launch in April 2006.

Jesse Emspak of IBD takes a closer look at SLV and discusses some of the tax implications of commodity ETFs. They often invest in futures. A portion of those gains are taxed at higher rates than capital gains from stocks. Gold and silver are also taxed as collectibles, not securities, putting the long-term gains rate at 28%. Some ETFs are limited liability companies or partnerships, which are taxed even if no distribution is made.

By Carl Delfeld of the Chartwell ETF Advisor

Global Utilites, Energy ETFs Stay Firm While Real Estate Pulls Back

While global markets have been turbulent, three sectors and the exchange-traded funds (ETFs) that track them have done fairly well as investors looked for safety and energy prices climbed.

Global Energy Sector ETFs such as (IXG) had a strong week as the price of crude oil moved back over $60 a barrel and Global Utilities Funds like iShares S&P Global Utilities Sector (JXI) and WisdomTree International Utilities Sector (DBU) represent the classic defensive sector, extended their winning streak to seven straight weeks. But Global Real Estate funds and ETFs such as the SPDR DJ Wilshire International Real Estate ETF (RWX) saw their seven week, $6 billion run of inflows come to an end as investors factored in their fears of slower than predicted economic growth into demand projections for commercial space.

There are also several domesatic utility options such as S&P Select Utilities SPDR (XLU), iShares Dow Jones U.S. Utilities Sector Index (IDU) and the Vanguard Utilities (VPU).

By Carl Delfeld of the Chartwell ETF Advisor

Merrill Lynch Market Oil Service Holdrs OIH

There has been a lot said recently about OIH being near its low. Its point & figure chart shows a narrowed trading range and the possibility of breaking through its bearish resistance at $142 and a double top. Click here for the latest news articles. Also notice that Exxon Mobil Corp. [XOM] and Chevron Corp. [CVX] who between them demand 35% of the assets. Recently both have reversed into columns of X’s and may very well help OIH maintain its current demand status.

By DE Smith of MyPortfolioview.com

New ETFs in time for Valentine's Day

Pending Launches

First Trust (NYSE: FFA) will roll out two new ETFs on Valentine's Day: the First Trust NASDAQ Clean Edge U.S. Liquid Series Trust (NDAQ: QCLN) and First Trust NASDAQ-100 Ex-Technology Sector Index Fund (NDAQ: QQXT).

In a twist, First Trust will also roll out a Unit Investment Trust [UIT] version of the Clean Edge fund. The UIT will function as an actively screened version of the ETF; First Trust will choose stocks within the index that it thinks will beat the market. Investors will pay a hefty 3.95 percent sales charge for the service, compared to just 60 basis points for the straight ETF.

First Trust laid out plans to launch the following funds:
First Trust ISE-Revere Natural Gas Index Fund (AMEX: FNG): This ETF tracks the recently ISE-Revere Natural Gas Index, an equal-weighted bogie consisting of 30 companies that derive a significant portion of their revenue from natural gas. The index is quantitatively screened to select companies with good value characteristics and the potential to outperform the market.

Barclays Global Investors has filed for an ETF tied to the price of natural gas futures, creating a potential arbitrage play between equity- and futures-based exposures.

First Trust ISE Water Index Fund (AMEX: FWT): This fund will track the ISE Water Index, a cap-weighted index of (currently) the 36 largest companies that derive the bulk of their revenue from the potable water and wastewater indexes.
First Trust Chindia Index Fund (AMEX: FCI): Introducing a new word to the investing lexicon, the "Chindia" fund tracks the performance of 40 Chinese and Indian companies with American Depository Receipts trading on U.S. exchanges. While the ADR exposure may not be ideal, the fund will no doubt appeal to individual investors hot to access these hot markets. There's no word yet on the balance of China vs. India weighting.

All funds will list on the American Stock Exchange. Expense ratios have not been disclosed.