ETFxray

Hedge Fund ETFs on the Way

By Carl Delfeld of Chartwell ETF and ETFfolios

New hedge fund ETFs are on the way and not a moment too soon.

IndexIQ has filed to launch the first family of ETFs designed to emulate the performance of hedge fund strategies. The funds, branded "IQShares," will use portfolios of other existing ETFs to synthetically replicate the return characteristics of five different hedge fund strategies:

IQ Hedge Multi-Strategy Composite
IQ Hedge Global Macro
IQ Hedge Long/Short Equity
IQ Hedge Event-Driven
IQ Hedge Market Neutral

Index Universe notes that the funds will hold a changing portfolio of other ETFs, including equity, fixed income, commodities and leveraged/inverse ETFs. Together, the portfolios will aim to "generate total return and volatility results … that are substantially similar" to the publicly reported returns of hedge funds following a particular investment approach. The prospectus warns that the funds will try to deliver these returns on a long-term basis; short-term results may vary.

It will be interesting to see what kind of fees these ETFs will have given their fund of funds approach. ETFfolio will build a Hedge Fund ETFfolio weighting these ETFs in a basket.

The prospectus for the hedge fund ETFs is here.

New ETF Hits Gulf Region with Obama

By Carl Delfeld of ChartwellETF.com and ETFpickoftheweek.com

Tomorrow, the Van Eck family of ETFs anticipates the launch of the Market Vectors - Gulf States Index ETF (MES) on NYSE Arca. MES seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Dow Jones GCC Titans 40 IndexSM (Symbol: DJMES). This equity index measures the performance of 40 companies that are either headquartered in countries belonging to the GCC or generating the majority of their revenues in countries belonging to the GCC. By investing in the Fund, market participants have either direct or indirect exposure to the following GCC markets: Kuwait, United Arab Emirates, Qatar, Oman and Bahrain.

The index caps the weight of individual stocks at 8% in each country, with a maximum of 15 companies per country [without an additional cap on country weights upon each quarterly rebalance]. As of its inception on July 10, 2008, country allocations include Kuwait (52.3%), United Arab Emirates (25.8%), Qatar (14.9%), Oman (4.4%) and Bahrain (2.6%). The index is broken down among a number of different sectors; the largest include banks (38.5%), financial services (21.6%), real estate (10.5%), technology (7.6%), construction & materials (7.2%), industrial goods & services (7.1%) and telecommunications (3.6%).

Large cap companies account for 37% of the ETF basket with 48% of the exposure from mid-cap companies. There will be 40 companies in the ETF and the top 25 account for 83% of the baskets value.

Chartwell Introduces ETF Harmony Portfolio Consulting

Chartwell Partners Asset Management has expanded its ETF Architect portfolio consulting services by adding ETF Harmony. ETF Harmony is an intensive and personal investor evaluation process that seeks to match an investor’s personality and goals with their investment portfolios.

“Just like a couple needs to be compatible, an investment portfolio needs to match the personality of an investor’s personality” says Chartwell Managing Director Carl Delfeld. He notes that recent market volatility has highlighted the need for advisors to build portfolios not just based on sound fundamentals but also compatible with the personalities of clients, “otherwise, clients will not stick to the plan and will bail out at the worst possible time.”

Most portfolio consulting models are still based on a series of tired, worn out numbers- oriented questions. As Alan Greenspan put it recently; "...these models do not fully capture what I believe has been……….the innate human responses that result in swings between euphoria and fear that repeat themselves generation after generation with little evidence of a learning curve."

Initially, Chartwell will offer ETF Harmony only to high net worth clients. The personal evaluation process begins with a client responding to a creative list of open ended questions followed by Delfeld flying out for a full day of personal follow up discussions about the client’s investment history, current portfolio, financial goals, personality and investment traits, and risk tolerance.

Next, Delfeld begins the ETF Architect stage and builds an overall portfolio strategy for the client using a core & explore approach with Chartwell’s fifteen ETFfolios as the core investment tool. Finally, the portfolio plan is reviewed by the client, fine tuned, and implemented either by the client or through Chartwell Partners. The fee for this highly customized service is $25,000.

Delfeld noted that he is in discussions with potential partners to offer an ETF Harmony product for the broader market through an automated website-based service (ETFharmony.com).

Chartwell Partners is a global asset management firm that has developed ETFfolios which it uses as building blocks for client portfolio strategies on the FOLIOfn brokerage platform. These ETFfolios include:

Core Conservative ETFfolio
Fixed Income ETFfolio
Global Dividend/Income ETFfolio
World Economic Freedom ETFfolio
Country Rotation ETFfolio
Country Rotation Momentum ETFfolio
Country Rotation Value ETFfolio
American Leadership 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 using a core/satellite strategy. Delfeld was a U.S. Representative to the Asian Development Bank and a consultant to the U.S. Treasury. He 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 about ETF Harmony and ETFfolios as well as media inquiries, contact Carl Delfeld at 719.264.1503 or at cdelfeld@comcast.net

iShares to Launch Five New International ETFs Including Israel, Thailand and Turkey

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

Chartwell is pleased to hear that the Barclays family of iShares exchange-traded funds announced the impending launch of five new ETFs expected to trade on or around March 28, 2008. The five new ETFs are:

iShares MSCI ACWI (All Country World Index) Index Fund (Ticker: ACWI)
iShares MSCI ACWI ex US Index Fund (Ticker: ACWX)
iShares MSCI Israel Capped Investable Market Index Fund (Ticker: EIS)
iShares MSCI Thailand Investable Market Index Fund (Ticker: THD)
iShares MSCI Turkey Investable Market Index Fund (Ticker: TUR)

The All Country ETFs will be a valuable alternative to the global ETFs on the market and Chartwell has long waited for the Israel, Turkey and Thailand ETFs which will become part of the universe of its innovative Chartwell Country Rotation ETFfolio.

I will need to take a closer look and see if the Thailand and Turkey ETFs have a better distribution than the closed-ended funds that I have been using as proxies for these two interesting markets which have been buffeted by political storms.

Which of these new ETFs should become part of your global ETF strategy? Join Chartwell ETF and find out.

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.

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 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.

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.

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.

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.