Can USCF's new fund tackle the natural gas contango?

United States Commodity Funds' new ETF, the U.S. 12-Month Natural Gas Fund (NYSEArca: UNL), began trading yesterday, offering investors another easy access point to the natural gas market. But let's hope it sees smoother sailing than its controversial cousin, the U.S. Natural Gas Fund (NYSEArca: UNG).

Not only have regulators vociferously blamed UNG for distorting the commodity markets earlier this year, the fund has also performed dismally to date, dropping a whopping 61.24 percent since the beginning of the year. And it's not because investors have lost their taste for the fund: Last month, UNG still saw brisk inflows of $308 million, even as its net assets dropped $263 million.

Record-low natural gas prices have played their part in slashing UNG's returns, of course, but the big anvil weighing the fund down is the market's nasty

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IndexIQ’s new IQ Arb Merger Arbitrage ETF just started trading, but I’m not sure I buy it.

The new ETF (NYSEArca: MNA) launched today, as Cinthia covered in the news. She does a good job laying out the core objective: Buy the stocks of companies that will be gobbled up, and short out a bit of broad market exposure, thus capturing only a theoretical premium of the merger companies.

There’s nothing inherently flawed in the idea here, and I have no doubt that the IndexIQ guys will deliver on the letter of the prospectus. I’m just unconvinced this is a strategy that needs an ETF.

Like most niche ETFs, MNA tracks an essentially self-referential index: the IQ Arb Merger Arbitrage Index. This index is a quantitatively based stock-picking index, which selects stocks based on a public methodology available here.

The idea behind the methodology is to perform the function of a

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ProShares’ newfound tax efficiency is surprising and welcome. Will the other leveraged funds follow suit?

In case you missed it, ProShares announced today that it will pay zero capital gains on its complete family of ETFs in 2009. That’s shocking, given the huge cap-gains payouts by inverse ETFs in 2008. I would have thought, given the huge run in the market this year, that leveraged funds would have accumulated large distributions.

In fact, I had a half-written blog warning investors to sell out of leveraged ETFs ahead of the 2009 distribution announcements. I was worried that investors would get stuck with large distributions yet again, and didn’t want to see that happen. It was lucky timing that the ProShares announcement jumped ahead of me publishing that blog.

The question now is, will other leveraged and inverse ETF providers like Rydex and Direxion Shares follow suit?

On one level, I think the answer

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With the launch of Pimco's actively managed short-maturity fixed-income fund, is the U.S. finally ready for money market ETFs? Lara Crigger & Dave Nadig dissect the new fund, and what it means for investors.

 

Deutsche Boerse and SIX Swiss Exchange have announced that they are buying out Dow Jones’ one-third stake in Stoxx for a consideration of 206.1 million euros, or $306 million.

Stoxx was set up as a joint venture between Deutsche Boerse, Dow Jones and SIX Swiss Exchange in 1998 in anticipation of the introduction of the euro and the creation of the eurozone. Stoxx is Europe's leading index provider in the ETF market and Europe's No. 1 (world No. 2) provider in the derivatives market, according to the company’s Web site. A number of U.S.-listed ETFs are tied to the company’s indexes as well.

Following the transaction’s completion, which is due to take place early next year, Deutsche Boerse will have a controlling stake in Stoxx of 50 percent plus one share and will fully consolidate it for accounting purposes.

In addition, SIX and Deutsche Boerse will set up a new entity

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ETF short interest provides some great insights into what the market really thinks.

I’m going to ignore Matt’s twitter-length rebuttal of my last post, and instead point to an excellent set of data that just appeared in my inbox. State Street Global Advisors publishes (as many firms do) a monthly report on the ETF industry. What grabbed me this time was the short-interest report.

It should come as no surprise that ETFs are heavily shorted. After all, one of the great things about ETFs is that phrase “exchange-traded.” It means you can fold, twist and mutilate an ETF just like you can any other stock, and that means that if you can find it to borrow, you can short it. And since many ETFs are phenomenally liquid, they can be pretty easy to locate for shorting.

Overall, short interest in ETFs as reported on Oct. 15 was 11.84 percent. This is substantially

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So far this week has been slow in regards to commodity etf funds. Gold continues to shine while silver refuses to make a move higher. Crude oil has a nice bull flag and we are waiting for a breakout and setup while natural gas continues to see selling pressure. ETF Trading Tip: Waiting for these [...]

IndexUniverse.com Editor Matt Hougan joins Bob Pisani and Tom Lydon to discuss how ETF investors should approach the commodity and currency markets.

 

IndexUniverse.com Editor Matt Hougan joins Bob Pisani and Tom Lydon to discuss how ETF investors should approach the commodity and currency markets.

 

 

$100 billion in assets by December 2010? In a best-case scenario for Schwab, they’ll be closer to $10 billion.

More realistic would be something like $5 billion. But let’s put the over/under at $10 billion by 12/31/2009 and put something interesting on the line, shall we?

Seriously. One-hundred billion would make Schwab the third-largest ETF provider in the world at current levels, surging past ProShares, PowerShares and Vanguard and nipping at the heels of State Street Global Investors. Having a built-in distribution system is a good thing, but it isn’t THAT much of a good thing.

And I’ll say this: They better get busy if they’re even going to reach $10 billion. We’re one week into the project and they’re sitting on a combined $17 million spread among four products.

Obviously, one week is not a legitimate test. My point is that Schwab moving into ETFs isn’t like flipping a switch. The bigger impact

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Fresh from the Inside Commodities conference, IndexUniverse.com editors cover the high spots, from Nouriel Roubini's doom & gloom to the surprising rays of light.