An interesting article on the global Economy

I am posting the following link to seeking alpha
http://seekingalpha.com/article/261001-2-resources-related-etfs-signal-caution-for-the-global-economy

A New Study on Hedge Fund Performance

Sometimes in this blog I will provide links to articles from other blogs that I thought looked fairly compelling.  This piece was written by Gary Kaminsky who is a frequent guest on CNBC and was previewed on the oxtones blog.  http://oxstones.com/kaminskys-call-hedge-funds-do-worse-than-market/

The iShares MSCI New Zealand Market Investable Index Fund

                     The iShares MSCI New Zealand Market Investable Index Fund

In this note I want to review a relatively new ETF the iShares MSCI New Zealand Market Investable Index Fund (ENZL).   This is a small ETF with just over $80 million dollars in investable assets.  The largest holdings are Fletcher Building Ltd (21.86%) which is a conglomerate that has five divisions namely building products, distribution, infrastructure, laminates and panels and steel that does business not only domestically but across throughout Asia, the Middle East and Europe.  Telecom Corp of New Zealand (16.29%) which is New Zealands largest telecommunications company. 

In terms of sector distribution the largest are Materials (24.77%), Telecommunications (16.29%), Consumer Discretionary (12.91%),  Financials (12.30%), Utilities (11.52%), and Industrials (11.03%).   Its nearest neighbor the iShares MSCI Australia Index Fund (EWA) has the following sector breakdown Financials (42.20%), Materials (29.09%), Consumer Staples (9.21%), Energy (6.59%), Industrials (4.22%).  Note that the financial sector is a much smaller component of (ENZL) while Materials and Industrials are well represented in (ENZL).  Since March 1996 (EWA) has increased 329%.  So far since its inception six months ago (ENZL) has increased 16.4%.  It remains to be seen whether (ENZL) will be popular with institutions who may want to use this as an indirect way to get exposure to the Pacific region but does not have a large exposure to the financial sector.    

 Disclaimer:  This is not a recommendation to buy or sell securities. Etftrendanalyzer is not a registered investment advisor and hence we do not recommend any securities or other investments.   Our readers should not rely on the accuracy or completeness of the information contained herein and should not be rely upon it in  making any investment decisions

Examining VIX ETF Performance During A Sell-Off | ETF Database

I would like to share the article below which examines the performance of the volatility ETF's vs the actual spot VIX. This is a very good article
which illustrates why great care must be taken when using these products

Examining VIX ETF Performance During A Sell-Off ETF Database

A High Octane ETF

One ETF that exploded today is a relatively new product introduced last year namely the TVIX VelocityShares Daily 2x VIX Short Term ETN.  The ETNs are issued by Credit Suisse AG via its Nassau Branch and is an  unsecured obligation of Credit Suisse.  It does not pay interest and there is no guarantee of return of principal.   The return performance is linked to (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index (less the investor fee which is subtracted daily (1.65%/365) ) .    This product allows the end user to express a view on the direction of volatility.  Today TVIX has increased by 8.64% to 50.45  so this is an extremely high octane product and is up substantially from its most recent low of 33.56 but still way off the highs at 112.35 in mid december 2010.  No doubt the explosion in volatility is due to the recent tsunami and nuclear crisis in Japan which could be classified as a black swan event.   Once again today the Nuclear and Uranium ETF (NLR) is down almost 4.5% and the iShares MSCI Japan Index (EWJ) is down over 0.45%.  Recall from yesterdays note that during the last earthquake in Kobe in January 1995 that the Nikkei fell almost 30% through the first half of 2005.

Disclaimer:  This is not a recommendation to buy or sell securities. Etftrendanalyzer is not a registered investment advisor and hence we do not recommend any securities or other investments.   Our readers should not rely on the accuracy or completeness of the information contained herein and should not be rely upon it in  making any investment decisions

The immediate impact of the Japanese Earthquake

The immediate impact of the tsunami and prospect of nuclear meltdown being felt in the Japan ETFs iShares MSCI Japan Index (EWJ) is that it has traded down over 10% as of this writing.  EWJ is the largest Japan based ETF (6.18Billion Net Assets) whose largest components include industrials, consumer cyclicals, materials and technology.  The last time that EWJ has traded below this level was in the first quarter of 2009 at the height of the financial crisis, where it was almost 30% lower than it was now. 

Note that while this is a sudden sharp shock to Japans industrial base it is not clear as to what impact this will have to Japans GDP as it is unclear what direction the ongoing nuclear crisis is going.  

Note that the EWJ 10 strike puts maturing in Jan 20 2011 puts have almost doubled in value in two days.  There have also been large buyers of the 9 strike puts maturing in Jan 20 2011 both have seen a sharp spikes in volume.   For an investor looking to go long Japan at a lower price selling puts is a way of minimizing downside risk since the investor only loses when the ETF value goes below (9-premium collected by put seller).  Note that during the 1995 Kobe earthquake the Nikkei dropped 25% over a five and a half month period and then recovered by the end of 1995.

 

 Unsurprisingly the much less liquid Van Eck Market Vectors Nuclear and Uraniam ETF (NLR) down over 13.5%,  has taken the biggest hit as governments around the world re-evaluate their nuclear programs going forward.  No doubt some governments will look to upgrade their existing facilities noting the size of the earthquake in Japan, however as always occurs in a crisis of this nature this will put the building of new nuclear plants on hold for several years in many countries. 

Disclaimer:  This is not a recommendation to buy or sell securities. Etftrendanalyzer is not a registered investment advisor and hence we do not recommend any securities or other investments.   Our readers should not rely on the accuracy or completeness of the information contained herein and should not be rely upon it in  making any investment decisions

Update On the Oil Model

I thought given events in the middle east that this would be a prudent time to review our long term OIL model.   Note that the models I have developed here look for extreme moves and attempt to identify the inception of long term trends.  Therefor they are long term models ie you can be long for a long time or out of the market for a long time.   They in a sense ride the wave of the trend.   Note that the model exited the market near the prior peak in April 2008 and stayed out until April 2009 and is currently still long.   The result of this is that the model itself missed the downturn that occurred from the prior peak and re-entered the market once more as a new uptrend was being established that uptrend continues.  The idea of these models is to outperform the underlying ETF