Exchange-traded notes are like the forgotten stepchildren of the ETF industry: unloved and overlooked. Investors (particularly taxable investors) are missing out.

According to the National Stock Exchange, U.S. ETNs had $6.9 billion in assets at the end of September. ETFs were literally 100 times more prevalent, with $697 billion in assets. That included $62 billion just in long commodity ETFs.

That’s just crazy. And it highlights investors’ irrational fear of the ETN product structure.

I remember when ETNs first came to market in 2006: Investors couldn’t get enough of them. Barclays Capital launched the iPath Dow Jones-UBS Commodity Index ETN (NYSEArca: DJP) and it quickly gathered assets.

The reason was simple: ETNs offered two huge advantages over commodity ETFs.

First, they promised perfect tracking. If you bought an ETN, you would receive the full return of the benchmark, minus the fund’s expenses. Period. That’s handy, since commodity ETFs have been more prone to tracking error

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Of course they're more volatile. But can emerging markets sector ETFs offer diversification tools to cut overlap and limit overall portfolio risks?

 

Bob Holderith is chief executive of Emerging Global Advisors. Richard Kang is chief investment officer for the New York-based company, which recently launched the first exchange-traded funds focused on specific sectors in emerging markets. (See related story here.)

EGA is expected to launch soon a third ETF that will act as a composite of the 10 underlying sectors in the Dow Jones emerging markets indexing series it’s using for current and upcoming funds.

The company says that nine more are in the works focusing on emerging markets sectors. Those will join the May launches of the EGS Emerging Markets Energy Fund (NYSE Arca: EEO) and the  EGS Emerging Markets Metals & Mining Fund (NYSE Arca: EMT).

IndexUniverse.com’s Murray Coleman caught up with Holderith and Kang late Thursday to

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Of course they're more volatile than rival iShares and SPDRs. But international sector ETFs focused on developing markets can help diversify portfolios, say firm's managers.

 

Bob Holderith is chief executive of Emerging Global Advisors. Richard Kang is chief investment officer for the New York-based company, which recently launched the first exchange-traded funds focused on specific sectors in emerging markets. (See related story here.)

EGA is expected to launch soon a third ETF that will act as a composite of the 10 underlying sectors in the Dow Jones emerging markets indexing series it’s using for current and upcoming funds.

The company says that nine more are in the works focusing on emerging markets sectors. Those will join the May launches of the EGS Emerging Markets Energy Fund (NYSE Arca: EEO) and the  EGS Emerging Markets Metals & Mining Fund (NYSE Arca: EMT).

IndexUniverse.com’s Murray Coleman caught up with Holderith and Kang

...

Of course they're more volatile. But can emerging markets sector ETFs reduce exposure overlaps and limit overall portfolio risks?

 

Bob Holderith is chief executive of Emerging Global Advisors. Richard Kang is chief investment officer for the New York-based company, which recently launched the first exchange-traded funds focused on specific sectors in emerging markets. (See related story here.)

EGA is expected to launch soon a third ETF that will act as a composite of the 10 underlying sectors in the Dow Jones emerging markets indexing series it’s using for current and upcoming funds.

The company says that nine more are in the works focusing on emerging markets sectors. Those will join the May launches of the EGS Emerging Markets Energy Fund (NYSE Arca: EEO) and the EGS Emerging Markets Metals & Mining Fund (NYSE Arca: EMT).

IndexUniverse.com’s Murray Coleman caught up with Holderith and Kang late Thursday to discuss the future

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The Case For Commodities

Over at Barrons.com, Derek van Eck of the New York asset manager Van Eck Associates, is interviewed about commodities. He's particularly bullish on copper and agriculture, to name just two.

You can read the story here.

 

Impact Of Dividend Cuts On ETFs

This interesting column by Motley Fool's Todd Wenning looks at the scope of impact of dividend cuts by corporate America and the resulting fallout for ETFs that focus on dividends as part of their strategies. WisdomTree is a major player in this piece. 

You can read the story here.

 

Buy-Write Funds Explored

The Wall Street Journal's Brett Arends has an interesting column out about buy-write strategies and using covered calls in today's market. It explores the performance of the CBOE BuyWrite Monthly index and the iPath CBOE S&P 500 BuyWrite Index ETN (NYSE: BWV), among others.

You can read the story here.

 

 

 

 

 

Credit Suisse ETNs latest tied to Elements platform to delist from the NYSE.  

 

Credit Suisse Securities, the issuer of four Elements-branded exchange-traded notes, confirmed on Friday that it was pulling three of those funds off the New York Stock Exchange. 

Set to end trading on the NYSE by April 3 are:

The Elements MLCX Gold Index ETN (NYSE: GOE) The Elements MLCX Livestock Index ETN (NYSE: LSO) The Elements MLCX Precious Metals Plus Index (NYSE: PMY)

A Credit Suisse spokeswoman said a release had been posted on its Web site. An earlier check by IndexUniverse.com didn't locate the news, which was anticipated due to unusual trading activity recently in many of its shares.

But late in the week, the same representative called IU.com back to say that a statement had indeed shown up on the site. It was dated March 10. 

In the release, Credit Suisse credited "insufficient" trading volumes for the

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The much-anticipated VIX-tracking ETNs start trading on the NYSE Arca on Friday. 

 

 

The much-anticipated exchange-traded notes that are designed to track the CBOE Volatility Index, or the VIX, officially launched on Friday.

The new ETNs are the first of their kind on the market. They are the: iPath S&P VIX Short-Term Futures ETN (NYSE Arca: VXX) and the iPath S&P 500 VIX Mid-Term Futures ETN (NYSE Arca: VXZ). Both come with an expense ratio of 0.89%.

The opening of trading comes after Barclays recently filed with regulators to come out with the new products. It raised a lot of initial interest, although analysts were quick to point out — as well as the ETN’s index provider, Standard & Poor’s — that VXX and VXZ are going to be different sorts of animals than the actual VIX index. 

A caveat with these ETNs is that the underlying indexes were designed for traders,

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Within just the past month, the field of leading ETF and ETN performers has diversified to include several different sectors. 

The market rebound, whether a joyous celebration of a new year or something that might last awhile, is certainly changing the landscape for stock and bond investors.

As we noted in December, leveraged exchange-traded funds dominated top performers in 2008. (See story here.)

Many of those types of portfolios are still leading the pack today. But in the past month, the field has become a lot more diverse in terms of the top 20 performers. For example, the UltraShort FTSE/Xinhua China 25 ProShare ETF (NYSE: FXP) had gained more than 22% in that period heading into Wednesday, according to Morningstar.

But the top gainer has been the PowerShares DB Crude Oil Double Short ETN (NYSE: DTO).  It was up nearly 34% in 2008.  Other notable leading leveraged performers in the past month include a pair of exchange-traded notes. Those are:

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Within just the past month, the field of leading ETF and ETN performers has diversified to include several different sectors. 

 

The market rebound, whether a short-lived celebration of a new year or something that might last awhile, is certainly changing the landscape for stock and bond investors.

Despite heavy losses in stock markets on Wednesday, some 35 different exchange-traded funds and exchange-traded notes entered the day's session soundly in positive territory. All had better-than-double-digit gains in the past 30 days, leading the way for the market's sharp rally from its November low point.

As we noted in December, leveraged exchange-traded funds dominated top performers in 2008. (See story here.)

Many of those types of portfolios are still leading the pack today. But in the past month, the field has become a lot more diverse in terms of leading gainers, according to Morningstar and fund company data.

For example,

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Last week, NYSE completed its acquisition of the Amex, prompting more consolidation within the industry.

 

The parade of exchange-traded products over to NYSE Arca is continuing this week, with First Trust Portfolios and iPath transferring exchange-traded portfolios to NYSE from the American Stock Exchange.

Since the NYSE announced its acquisition of the Amex, it has been as if July Fourth came early to the ETF world, with many providers moving portfolios to the NYSE Arca platform en masse.

Last week, NYSE completed its acquisition of Amex, and with the closing of the deal, cemented its position as the largest ETF platform: NYSE Arca now hosts 680 of the total 813 industry ETFs, and more than $320 billion in exchange-traded product assets (see story).

In the most recent ETF moves related to the NYSE-Amex deal, Barclays said it will transfer its iPath CBOE S&P 500 BuyWrite Index

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