ETF XRAY

First Trust to Launch European Dividend ETF

The First Trust family of exchange-traded funds plans to launch the First Trust DJ STOXX Select
Dividend 30 Index Fund (FDD). This ETF will seek investment results that correspond generally to the price and yield (before expenses) of the Dow Jones STOXX Select Dividend 30 Index made up of European companies. The current yield on the index is 4.72%.

The Index is a dividend weighted index of 30 stocks selected from the Dow Jones STOXX 600 Index which includes high-dividend yielding companies across 18 European countries that have a positive five year dividend-per-share growth rate and a dividend to earnings-per-share ratio of 60% or less.

The top holdings in the ETF basket are Lloyds TSB Group at 5.84% and Vodafone at 5.5%. The pattern of weightings in the seem to be more equally weighted than market cap ETFs. 38% of the companies in the basket are from the financial sector and 23% from the telcom sector.

By Carl Delfeld of the Chartwell ETF Advisor

European ETFs Look Strong

Spain continues to look strong. EWP is well above its bullish support level and hit a new 52 week highs earlier this month. EWP is up 51.23% from its 52 week low of $38.22. That’s pretty impressive, but can EWP maintain this blazing pace? The European regions 21 ETFs since January 3, 2006 are up an average of 39.09%. The possibility for double digit gains in this incredible region seems pretty likely.

By DE Smith of MyPortfolioView

European Funds and ETFs Suffer Outflows

Exchange-traded fund investors can gain from tracking where the big global equity managers are placing their bets. For the second week in June showed redemptions from Western European equity funds and ETFs totaled $1.74 billion - and an additional $200 million flowed out of these funds on June 14 according to EPFR Global’s new daily fund flow service despite a day of strong fund performances. Solid growth, data showing wages growing faster than inflation, the ECB’s assertion that interest rates are still accommodative and the Swiss central bank’s recent hike all suggest interest rates in this region have yet to peak, raising fresh questions about the strength of future corporate earnings and M & A activity.

Japan and China funds extended their losing runs and global equity funds also suffered a rare week of net outflows. Pacific Equity Funds were hit with redemptions for a third straight week as they continue to pay for their heavy exposure to Japan and China. But year-to-date outflows from China and Greater China fund groups now total $4.8 billion versus combined net inflows of $10.46 billion during 2006

EPFR Global noted that among the week’s winners were Emerging Markets Bond Funds and Latin America equity funds. But the most eye-catching numbers were posted by US equity funds, which chalked up net inflows of $9.8 billion – largely on the strength of a $10.2 billion net inflow into the SPDR S&P 500 ETF – and renewed interest in growth stocks.

Posted by Carl Delfeld of the Chartwell ETF Advisor

Six Popular Regional ETFs Move to the Downside by 5% Plus

Each of the following ETFs has recently reversed in value between 5% – 7%. For more information on each of the following ETFs you can login to your MyPortfolioView account by clicking here.

By DE Smith of MyPortfolioView

iShares MSCI Spain Index (EWP)

> The government has avoided politically painful economic reform and, with the economy still apparently performing well, is not going to change course before the next election, due in March 2008. Indeed, it will probably not take any radical initiatives if re-elected. If the opposition Popular Party were to form a government, it would talk more of reform, but on its past record in government probably only make modest changes to policies.

> GDP growth is expected to slow to just over 2% over the forecast period, from 3.9% in 2006. As a result of high indebtedness on the part of households and companies, domestic consumer and investment demand growth will grow less than in recent years. Net exports should cease to exert a drag on economic growth. The current-account deficit, although narrowing, will remain in the red.

> High property prices and an expansion of housebuilding activity to 9% mean that there is a significant risk that a downturn in the property market could cause a severe negative shock to the economy both through the impact on general consumer confidence and through loss of jobs in the construction sector. Our central forecast of an orderly slowdown could prove over-optimistic and the shock could instead lead to recession and prolonged economic weakness.

By DE Smith of MyPortfolioView

iShares MSCI Austria Index (EWO)

The below point & figure chart shows the volatility of (EWO) Austria’s ETF year to date. Its been a bumpy January and February for EWO giving up 10.87%. From its March low of $3367 EWO rallied 21.69% to reach $4,096 by April. The overall trend of EWO has been upward, but with great resistance. As of today Austria is in a column of O’s giving up more and more of its gains and threatening to dip below where it began the year.

By DE Smith of MyPortfolioView

German ETF (EWG) Buoyed by Stronger Economic Growth

There was good news for the German exchange-traded fund (EWG) as the German economy grew at its fastest rate for five years between April and June boosted by higher domestic demand. The economy grew 0.9% in the quarter - despite lower export growth - a level not seen since the first quarter of 2001.

Numbers for the previous quarter were also revised upwards, a sign that Europe's largest economy is finally achieving sustained economic growth. Investment in construction and equipment above all contributed to the economic upturn in the second quarter." Hochtief - Germany's largest builder posted a rise of 8.7% in its profits for the second quarter. Much of the World Cup, hosted by Germany, took place during this second quarter, which also acted as a fillip to the economy.

(Click image for larger view)

By DE Smith of MyPortfolioView

Are European ETFs Too Popular?

It seems like everyone is jumping on the European ETF bandwagon. Is it time to swim against this storming tide?

A Merrill Lynch report discussed by the Street.com's Brett Arends shows that record numbers of fund managers believe Europe has the best profit outlook over the next 12 months. And an astonishing net 56% of asset allocators say they already are overweight European equities in relation to their benchmarks.

Arends notes that the net figure, which has soared from just 35% two months ago, is found by deducting the bears from the bulls. In the details of the survey, you find that two-thirds of fund managers surveyed are either "moderately" or "aggressively" overweight European equities. Meanwhile, a measly 12% are underweight Europe. Some markets in countries like Switzerland and Spain appear expensive while others look cheap compared to US markets.

This would give anyone pause but the mommentum players will still pile in making a bearish position difficult. Perhaps it is a good time to take some money of the table. But the politics of Europe may be part of why European markets iare sailing forward. The election of a center-right coalition in Sweden last October and the recent election of pro-market forces in France may point to a mini Reagan revolution in Europe.

By Carl Delfeld of the Chartwell ETF Advisor

Overall Pullback of European ETFs

Overall pullback in Europe – Of the 21 Exchange Traded Funds tracked in the Region of Europe all but 6 have recently reversed into a column of O’s. Just a few weeks ago all were in columns of X’s for their demand status. Of the 21 ETFs (EWD) iShares MSCI Sweden has performed the best at 58.36% over the last 18 months.


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German ETF Flies With Two Engines

The Germany exchange-traded fund (EWG) has companies at the top of its ETF basket that are undisputably first class multinationals - Siemens, BMW, Allianz, DaimlerChrysler and BASF. For some time, I have argued therefore that the German ETF was tied more to the fortunes of global growth and especially markets like India and China than its slow growth home economy.

But now we are seeing improvement at home as companies increase capital spending and Germans start to open their pocketbooks. This could be a second engine. Germany’s economic recovery is broadening, with domestic investment particularly strong. Ralph Atkins of the FT reports that falling unemployment should also feed through into stronger consumer spending – long the country’s Achilles heel. Imports were up 1.7 per cent in the first quarter of 2007, reflecting the improvement in domestic demand, although March’s figures also showed a fall compared with February. Germany is still the world's largest exporter and although German export growth lost momentum in the first three months of this year, the underlying trend remains strong.

The German ETF (EWG) is up 16% so far this year and is part of a couple of Chartwell's seven ETF portfolios.

By Carl Delfeld of the Chartwell ETF Advisor

EWO Ishares Msci Austria Index Fund

Top Sectors as of 4/30/2007
23.21% Banks
14.78% Real Estate
14.67% Materials
12.83% Telecommunication Services
11.45% Energy
9.76% Capital Goods
6.27% Utilities
3.26% Insurance
2.33% Transportation
1.23% Consumer Services

Moving Averages:
50 Day | $38.61
200 Day | $34.47

DE Smith of MyPortfolioView.com

iShares MSCI France Index (EWQ)

Below are two interesting charts that our regular readers may find interesting. The first is the growth of a 100 share position in EWQ over the last 17 months with 2007 YTD gains highlighted in yellow. The second is a summary view of European ETFs. Keep in mind that the returns listed under the % column goes back to January 3, 2006. The only ETF that has had a recent downturn is EWO Ishares Msci Austria Index Fund, however the per share value point and figure chart is still in a colum of X's.

(Click on chart for larger view)

(Click on chat for larger view)

By DE Smith | MyPortfolioView

Big Mergers Drive Markets and ETFs

One of the factors driving global markets and the exchange-traded funds that track them are big mergers. Here are just a few and the ETFs that are affected by the activity.

The Swiss Nestle company will buy the Gerber baby-food business from the Swiss pharmaceutical multinational Novartis in a $5.5 billion all cash deal (EWL)

Barclays Bank PLC of Britian bid $91 billion for the Netherlands' largest bank ABN Amro NV (EWU), (EWN)

French leading retailer Carrefour is aiming to become the same in Brazil by buying Atacadao (EWQ) , (EWZ)

British pharma AstraZeneca is buying US based MedImmune for $16 billion (EWU)

In general, these transactions boost share prices not to mention generate some nice fees for financial firms involved in the deals.

By Carl Delfeld of the Chartwell ETF Advisor

iShares MSCI Austria Index (EWO)

Austria has had a great couple of years. Though it started out the year a little bumpy the value of 100 shares as tracked by this chart is up 11% YTD. At the top of the chart is a summary of the position owned showing a 47.40% increase in value since January 3, 2006.

(Click on image for larger view)

By DE Smith | MyPortfolioView.com

iShares S&P Europe 350 Index (IEV)

IShares S&P Europe 350 exchange traded fund (IEV) has spent less than six months in five years in supply (column of O’s). Instead it has maintained a demand status (Column of X’s) and pumped out some nice annualized returns. Besides the nice appreciation IEV also enjoys a 1.99% dividend yield.

By DE Smith of MyPortfolioView

European Bank Consolidation Helps ETF

The likely bid by Barclays PLC, the sponsor of iShares exchange-traded funds, for Dutch bank ABN AMRO is just the most visible sign of expected consolidation in the international banking sector. Chartwell has long recommended Barclays as a great play on global growth.

The Economist points out that the break-up of ABN AMRO might lead to the dismantling of other conglomerates, such as ING, Fortis or even Allianz/Dresdner. It could also stimulate swaps of specialist banking divisions throughout the continent. Europe's banks, used to a comfortable ride around their own neighbourhoods, might enter their own demolition derby.

To tap into this trend, ETF investors may wish to look at WisdomTree's International Financial Sector ETF (DRF). Its top four holdings are HSBC at 6.55%, Royal Bank of Scotland , 3.6%, and Lloyds and Barclays at 3.2%. 38% of the ETFs exposure is to the United Kingdom and Australia.

By Carl Delfeld of the Chartwell ETF Advisor

Asian, European ETFs Open Higher

European equities opened higher on Thursday as banking and insurance stocks benefited from some solid results, while rallying oil prices lifted the energy sector. The decision by the Bank of England to hold its benchmark rate steady at 5.25% even as the European Central Bank (ECB) raised rates is also a plus. The overnight 2% rise in Japan's Nikkei 225 index also set a positive tone for today.

Neil Dennis of the Financial Times reported that The Anglo Irish Bank, a top holding in WisdomTree's International Financial Sector exchange-traded fund or ETF (DRF) gained 6.1 per cent to €16.35 after saying it expected earnings per share for the six months to March 31 to be nearly 40 per cent up on last year.

Dutch insurer Aegon, a leading compnay in the Netherlands ETF (EWN) surprised the market with a 2 per cent rise in full-year net profit, driving its shares 3.5 per cent higher to €15.03. Despite recording fewer one-time gains, the company reported a strong fourth quarter where net earnings easily beat market expectations. The company announced a 22 per cent rise in its annual dividend to €0.55. Fortis, the Dutch-Belgian financial services group and the largest holding in the Belgium ETF (EWK), gained 1.9 per cent

By Carl Delfeld of the Chartwell ETF Advisor

Ericsson Lead Swedish ETF

Before investing in a country specific exchange-traded fund (ETF), look under the hood and see what companies are weighted the highest in the ETF basket. The top company may account for more than you think. In the case of the Sweden ETF (EWD) the telcom equipment maker Ericsson accounts for 21% of the basket.

This is a good thing since Ericsson is a great company and attractve stock. With telco out of favor, Ericsson is up only 5% over the last 12 months but it has a 25% return on equity and a much stronger balance sheet than its peers. Just over 40% of all telephone calls worldwide go through an Ericsson system. Sounds crystal clear to me. Other top companies in the Sweden ETF include Svenska, Sandvik, Volvo and Atlas Copco.

Join me as I lead a small group of smart investors to visit Stockholm and Copenhagen in June 2007.

By Carl Delfeld of the Chartwell ETF Advisor

European ETFs Lose Ground

While most of the headlines this week were about sharp stock market and exchange-traded funds or ETF pullbacks in America and Asia, Neil Dennis of the Financial Times reports that European equity markets gave up opening gains and turned lower today, heading for weekly losses of nearly 5 per cent as turbulent trading resumed.

By mid morning, the FTSE Eurofirst 300 was down 0.4 per cent to 1,462.49, taking its losses over the last five session to 4.8 per cent, its worst weekly decline since March 2003. Frankfurt’s Xetra Dax was 0.5 per cent lower at 6,609.7 the CAC 40 in Paris fell 0.6 per cent to 5,425.07 and London’s FTSE 100 slipped 0.2 per cent to 6,102. The FTSE 100 fell 14.5 points, 0.2 per cent, to 6,102.3 by midday.

The most actively traded broad European ETF is the S&P Europe 350 (IEV). This ETF basket has 350 companies in it from across Europe led by the UK, Germany and France. It is down so far today 0.62%.

iShares MSCI Sweden Index Fund - EWD

MyPortfolioView.com

DJ Euro STOXX 50 ETF - FEZ

MyPortfolioView

Flows Favor Southeast Asia and Europe ETFs

Cambridge-based Emerging Portfolio Fund Research (EPFR) reports that the theme for February appears to be small is beautiful. Between them Malaysia, Singapore and Taiwan Country Funds took in a net $321 million – with flows into Barclay’s iShares ETFs accounting for a significant share of that new money -- while China ETFs and Greater China Funds combined for net outflows of $74.4 million. The BRICs Equity ETFs and Funds, which invest in Brazil, Russia, India and China, only netted $29.7 million, a far cry from this time last year when these funds were averaging net inflows of $240 million a week.

Europe Equity ETFs and Funds enjoyed their best week since late October, taking in over $1 billion as investors bet that growth in the Eurozone will continue to exceed expectations and that mergers and acquisitions activity will push regional equity markets even higher.

EPFR tracks equity and bond fund flows, cross border capital flows, country and sector allocations, and company holdings data from its universe of 15,000 international, emerging markets and US funds with $7 trillion in assets. EPFR data comes directly from funds or their administrators and includes funds registered in the major domiciles of North America, Europe, Asia and other offshore domiciles

Spain ETF Grows with Immigrants

The Spain ETF (EWP) has been growing along with the robust Spanish economy and immigrants have been part of the growth mix. Spain, with a population of 44.4m - has 4.6m immigrants. For many of the immigrants who have flooded into Spain in the past five years, the country holds the promise of a living that would take months or years to earn in their country of origin.

Victoria Burnett of the Financial Times writes that about one third of immigrants to Spain come from Latin America, eliminating the language barrier that in many societies proves an impediment to integration. The country's 370,000 or so Romanian immigrants quickly pick up Spanish, which is similar to their mother tongue.

A generally tolerant attitude combined with a long history of emigration has made Spaniards more open to newcomers. The Spanish economy has grown every year for the past decade and is expected to grow 3.7 per cent this year.

By Carl Delfeld of the Chartwell ETF Advisor

Italy ETF Needs More Growth

By Carl Delfeld of the Chartwell ETF Advisor

Next time you enjoy a fine Italian wine, think of the Italy ETF (EWI) and its improving prospects for growth. Tony Barber of the Financial Times reports that Italy's economy has not completely conquered its long-term problem of declining competitiveness on international markets even though it is expanding at its fastest rate for six years, according to its finance minister, Tommaso Padoa-Schioppa.

He said Italy needed to boost productivity, put more people in jobs, increase the average size of companies and strengthen law and order so as to sustain a growth rate of more than 2 per cent a year.

It might surprise you to learn that the Italy ETF has returned 26% over the past year. About 27% of this ETF basket are companies in banking and finance followed by 16% in oil & gas and 11% in utilities.

Stronger EU and ETF Growth Prospects

European ETFs may benefit from higher than expected economic growth as George Parker of the Financial Times reported that Europe’s economy is heading for another bumper year, with 2.7 per cent growth, according to upgraded forecasts published on Friday by the European Union’s monetary affairs commissioner.

The forecasts were increased amid signs that Germany’s VAT increase on January 1 has failed seriously to dent growth, encouraging signals from the US and new evidence that inflation is under control.

Spain (EWP) and Poland are leading the way among Europe’s big economies, although Germany (EWG) and Italy (EWI) both look set to finish 2007 more strongly than previously expected.

Only France, with growth projected at 2.2 per cent, and the Netherlands, at 2.8 per cent, had their forecasts downgraded.

Netherlands ETF Led By ING

By Carl Delfeld of the Chartwell ETF Advisor

It is easy to tap into in this global corporate vigor through the Netherlands iShare (EWN) that contains a basket of 27 Dutch companies. The global financial services firm ING accounts for 18% of the basket. ING has a dominant position in growing Asian markets such as China, India and Thailand and its direct bank now has 15 million customers worldwide. 50% of its profits come from insurance operations and since European and American markets are rather mature, it’s strategy is to continue to diversify geographically and move into higher growth areas such as retirement services. ING is a low cost provider resulting in an ROE in 2005 of 24% though the relatively high debt load is a concern.  

The next four highest weighted companies in this ETF are all top quality: ABN Amro, Phillips Electronics, Unilever and Aegon. In terms of sectors, diversified financials account for 18% of the basket, food, beverage and tobacco is 13%, banks, 13% and consumer durables 10%.

The Netherlands stock market is undervalued with its AEX index trading at a price earnings ratio of 12 times earnings. And as Lynnley Browning of the New York Times reported over the weekend, the Netherlands has also emerged as a tax haven for high end intellectual property investors.

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Germany ETF Up, Spain ETF Down?

By Carl Delfeld of the Chartwell ETF Advisor

A current Economist article points out that Germany has been the source of much of the recent good news in Europe. For so long a laggard in the euro area, its economy is now growing faster than the regional average. business confidence remains close to a 15-year high. Exports and business investment are doing well. No surprise that during the last 12 months, the German ETF (EWG) is up 31%.  

“The same cocktail of higher wages and sluggish productivity clouds the outlook for one of the fastest-growing European economies: Spain. In the last decade, its economy has expanded by an average of 3.7% a year, nearly twice the rate for the whole euro zone. Spanish demand has been driven by housing and credit booms that are vulnerable to higher interest rates. But high labour costs may in the end prove to be
Spain’s undoing.”

The Spain ETF (EWP) was a top performer in 2006 and is up 44% during the past year but up only 1.72% so far this year. In the same article, Olivier Blanchard, of the Massachusetts Institute of Technology, explains that Spain as a plausible next victim of what he calls “the rotating slumps under the euro”. In Mr. Blanchard’s model, the slump migrates across the currency zone according to shifts in relative wage costs. A long period of above-average wage growth that goes unmatched by productivity gains will eventually leave a country at a significant cost disadvantage.

SPDR DJ Wilshire International Real Estate ETF (RWX)

New International Real Estate ETF has been one of our most viewed posts so here is a little more on SPDR DJ Wilshire International Real Estate ETF (RWX). The Funds Objective according to their fact sheet is to closely match the returns and characteristics of the total return performance of the Dow Jones Wilshire Ex-US Real Estate Securities Index (ticker: DWXRS), an equity index based upon the global (ex-US) real estate market.

Country Weights

Australia 19.97%                     Spain 1.41%    

United Kingdom 19.01%         Switzerland 1.09%    

Japan 17.93%                         Germany 1.03%    

Hong Kong 8.03%                   Italy 0.80%    

Canada 7.02%                        Belgium 0.68%    

France 5.49%                         South Africa 0.54%    

Netherlands 5.34%                 New Zealand 0.53%    

Singapore 5.01%                    Thailand 0.04%    

Austria 4.36%                          Unassigned 0.02%    

Sweden 1.70%

Dutch Treats and Flemish Flavor

In the Dutch golden age during the 17^th century, Dutch trading, science and art dominated the world scene. It still packs a global punch and is often overlooked by investors.

About twice the size of New Jersey with a population of 16.5 million, the Kingdom of the Netherlands is a prosperous and open economy with a bent towards trading with the world. The top multinationals based in the Netherlands accounted for a combined revenue of  $822 billion of revenue in 2005.

It is easy to tap into in this global corporate vigor through the Netherlands iShare (EWN) that contains a basket of 27 Dutch companies. The global financial services firm ING accounts for 18% of the basket. ING has a dominant position in growing Asian markets such as China, India and Thailand and its direct bank now has 15 million customers worldwide. 50% of its profits come from insurance operations and since European and American markets are rather mature, it’s strategy is to continue to diversify geographically and move into higher growth areas such as retirement services. ING is a low cost provider resulting in an ROE in 2005 of 24% though the relatively high debt load is a concern.

The next four highest weighted companies in this ETF are all top quality: ABN Amro, Phillips Electronics, Unilever and Aegon.  In terms of sectors, diversified financials account for 18% of the basket, food, beverage and tobacco is 13%, banks, 13% and consumer durables 10%.

The Netherlands stock market is undervalued with its AEX index trading at a price earnings ratio of 12 times earnings.

Belgium, which broke away from the Netherlands in 1830, also presents investors with solid value. King Albert II reigns over this industrious nation with Dutch –speaking Flemings in the north and French-speaking Walloons in the south. Belgium sits at the crossroads of Europe and is home to both NATO and the European Union. 

The Belgium ETF (EWK) contains 23 companies with the insurance and banking behemoth Fortis leading the way with 23% of the basket. The stock is 14% off its 52 week high and in the first quarter of 2006 its net profits before divestments was up 25%. Financials and banks make up more than 50% the holdings of the Belgium ETF with materials, food and telecom companies adding an additional 22%.

The Belgium stock market is undervalued trading at 1.9 times book with a forward price earnings ratio of 12. It enjoys low interest rates and according to data from EmergingPortfolio.com, global money managers have increased their Belgium weightings in the most recent month.

Add both Netherlands (EWN) and Belgium (EWK) to your global ETF portfolios to balance more aggressive allocations to emerging market countries.   

By Carl Delfeld

Sweden’s Time to Choose

There are many who scoff that politics should have much to do with investing. When selecting ETFs for Chartwell’s portfolios, I look at several factors such as fundamentals of companies in the ETF basket, capital flows, technical factors, macro indicators, currencies and so on. But the direction of market reforms which is what politics is all about sometimes rises to the top. Think of the Reagan led Republican sweep in 1980 and the significant tax cuts and market reforms in Ireland and Australia which preceded their strong economic growth and sustained bull markets. 

Sweden is just such a case with a key election on September 17^th. For 65 of the last 74 years and the last 12 years, the center -left Social Democrats have been in control but the center-right opposition led by Mr. Fredrik Reinfeldt is mounting an effective campaign for change. The issues of deregulation, tax cuts, privatization and job creation are leading his reform agenda.

In January, Ericsson’s CEO Carl-Henric Svenberg announced his support for change and other key Swedish industrialists have followed suit. Sweden’s public sector accounts for 30% of its total workforce (15% in US and EU) and the state oversees 57 businesses with a market value of $70 billion while employing 200,000 people. There was some deregulation of the telecom, auto and banking sectors in the 1990s which led to good growth but this time the impact and stakes could be much higher.

The Kingdom of Sweden, with a population of 9 million and area exceeding that of California, has many attributes which investors should appreciate. King Carl Gustav (no relation) has reigned since 1973 over a well educated citizenry. It is blessed with ample natural resources like iron ore, copper, gold, timber, lead, zinc and hydro power but 70% of its economy is driven by services. Sweden’s per capita GDP is $30,000 and it has a balanced budget surplus, current account surplus, opted out of euro in 2003 and a vigilant central bank (Riksbank) which is targeting an inflation rate of 2%. Sweden’s stockmarket is also reasonably priced at 12.2 times earnings.

We have had the Swedish ETF (EWD) in some portfolios for some time with positive results. This year it is up 14% and over the last 12 months 19%. Ericsson accounts for 21% of the basket with quality companies like Svenska, Sandvik, Volvo and Atlas Copco all top ten holdings that readers might be familiar with. Capital good, technology and banking each contribute about 20% of sector exposure.

Below is a point and figure chart for (EWD) and some commentary provided by Don Smith, President of go2mypv.com.

I also recommend some exposure to the Swedish Krona which I think will marginally outperform the Euro. Rydex has an ETF (FXS) which tracks the Krona.

The ruling Social Democrats led by Prime Minister Goran Persson are fighting back furiously raising fears of radical change and attacking venture capitalists for calling for change at companies like Volvo. Given Mr. Reinfeldt’s assurances of moving smartly and incrementally and his strong and broad support amongst the business community, his party will be victorious.

Don’t wait until the election later this week, act now.   

By Carl Delfeld

Swiss ETF Packs a Punch

When building your global ETF portfolio, do you think of Switzerland as just a quaint staid tourist country with great chocolate and fine watches? Or as another example of “Old Europe” with high taxes and big government which stifles economic growth? Think again. The Swiss ETF is a regular position in some of Chartwell ETF Advisor’s model ETF portfolios. Here’s why.  

For starters, Switzerland is home to four of the largest five firms in Europe in terms of market capitalization: UBS, Nestle, Novartis, and Roche. It also has the highest per capita income in the world. While only 137 miles by 216 miles in size with a population of 7.2 million,
Switzerland packs a punch and is a financial and multinational powerhouse. Let’s take a quick look at the asset side of Switzerland’s balance sheet.

It has a strong currency backed by ample gold reserves, fiscal discipline, trade surplus and very little foreign debt. Outward looking, Switzerland has 40% of its GDP attributed to exports. Switzerland represents the third largest financial center in the world after New York and London. It is also home to world-beating pharmaceutical, engineering and food companies.

When investing in the Switzerland exchange traded fund (ETF), (EWL) you’re investing in quality, strength and stability.

Asia/Europe Lead 2006 Global Returns

In 2006, Asian and European stock markets and the ETFs that track them performed exceptionally well with only Japan ETFs recording lackluster returns. Here is a partial list of global ETFs and their performance numbers during 2006. The China ETF (FXI) was up 84%, the Singapore ETF (EWS) up 46.7%, the Brazil ETF up 45.3%, the Swedish ETF (EWD) up 43.4%, the Malaysia ETF (EWM) up 37%, the Belgium ETF (EWK) up 36.7%, the Germany ETF (EWG) up 36%, the Netherlands ETF (EWN) up 31%, the Hong Kong (EWH) ETF up 30.4% and the Switzerland ETF was up 27.4%. Many global sector ETFs also did well in 2006. The S&P Global Financial ETF (IXG) was up 24.6%, the S&P Global Energy was up 21% and the Global Utilities ETF (JXI) was up 38%.

For more information on the above ETFs as well as basic information about ETFs and a free ETF guidebook, go to the ETF Library