January 11, 2012

ETF Fund Popularity May Have Peaked

There was an interesting article in the Financial Times about Exchange Traded Funds (ETFs) today. The essence of the article was that ETFs as an Asset class have started to lose their popularity with investors. The article alluded to this fact with the title, "Investors Appetite for New US ETFs Wanes." ETFs allow investors to trade a basket of securities such as the Dow Jones Industrial Average, Precious Metals, or other industry groups or market sectors on an Exchange with low maintenance fees - learn more about ETFs by visiting my What Are ETFs page. According to the article, the US ETF Industry ended the 2011 year with more than 1 Trillion dollars under management. This compares to 540 Billion at the beginning of the 2009 year. There are several possible reasons for the decline over the past couple years including over saturation of the ETF Market. For example, there are several ETF products issued by different iszuers that are designed to track the same or similar benchmarks. Last year alone, 302 new ETF funds were launched in the US bringing the total number of active ETFs trading to 1,369 funds compared to a total of 389 at the start of 2007.

October 7, 2011

Before the Euro there was ECU

The European Currency Unit was the currency unit used in the European Union before the emergence of the European Euro that replaced it.

September 21, 2011

Investing in Currency ETFs

Investing in a Currency ETF gives Investors exposure to the Currency being tracked by the ETF.

September 7, 2011

Russian and German Natural Gas Deal

Natural Gas coming from Russia is now being transported to Germany under the Baltic Sea through the Nord Stream pipeline. A formal ceremony celebrating the success of this deal, will happen sometime in the fall of 2012. The Pipeline had been under construction for for sometime and was finally completed in August 2011. The New York time reported in an article published today, that was titled, Natural Gas Starts Flowing from Russia to Germany, that the Pipeline is 760 miles long and is one of the costliest pieces of underwater infrastructure through all of Europe. Shipping the Natural Gas via an on land Pipeline in Ukraine would be

considered more cost effective than the expenses to build the Under water pipeline which was estimated to have cost 12.4 billion dollars. Locking in high natural gas prices with long-term contracts, German consumers will ultimately face higher utility bills as a result. Disputes between Ukraine and Gazprom, a Russian Utility Company, have led to Russia looking for alternative ways to ship its Natural Gas to Europe. The Underwater Pipeline was said by Russian Prime Minister Vladimir Putin, to provide more energy security for both Russia and Germany, since it was less likely a political dispute between nations would lead to a disruption of supplies as was the case at times between Ukraine and Russia in recent years.

Gaining Exposure to Natural Gas

Natural Gas in Europe has been rising in demand over the past several years. The Prices of this commodity could increase in the future as more people and factories turn to it as a fuel source. More and more vehicles are also showing up on the roads which are natural-gas powered. To gain exposure to Natural Gas without opening a Futures Account, Investors should consider an Investment Product known as an Exchange Traded Fund (ETF). These investment securities track an underlying index or commodity, and the ETF Shares trade on an Exchange just like the Shares of a company. Investors can purchase these shares through a traditional brokerage account such as Scottrade or Etrade Financial. To learn more about the ETF for Natural Gas, I linked to a page on my website Investing for Beginners where more detail is provided, including live updating charts for the ETF itself.

August 24, 2011

Investing in Precious Metal ETFs

Precious Metal ETFs (Exchange Traded Funds) allow investors to gain exposure to the various Precious Metals on the Market. The most popular are Gold ETFs which investors use to profit from either a rise or decline in Gold Prices. The reason I mention that it is possible to profit from a falling Gold Price, is because there is a Gold ETF which is known as an "inverse" ETF. What this basically means is that the Shares of this security - which trades on the New York Stock Exchange - is specifically designed to rise in value when The Gold Spot Price is falling. There is a similar product for Silver that allows investors to profit from a decline in Silver Prices. Of course there are also Silver ETFs which Rise in Value as Silver Prices Rise. Both the Precious Metals, have ETFs associated with them that are considered "Ultra."

This is a reference to basically mean that the stated objective of these particular ETFs is to double the daily return of the metal being tracked. In other words, for the Gold Ultra ETF, when Gold prices rise 3 percent in a single day, the ETF shares will rise by about 6 percent - these type of ETFs are known as Leveraged ETFs. If Gold Prices fall however, the decline in the Value of the Ultra Shares, could fall, but by twice the percentage amount. Because of this, Investing in these Shares can be quite profitable, but come with the added risk of potentially larger losses.

Platinum and Palladium ETFs

The other two popular Precious Metals with ETFs designed to track their price and performance, are Platinum and Palladium. Both of these metals can seem expensive to the average investor if purchasing them on the Open Spot Market. The Platinum ETF however, tracks the Platinum Market Price and trades at about one tenth of the price. For example, if Platinum is trading on the Spot Market at $1,800 per troy ounce, than the ETF that tracks it, will be trading at about $180 per share. This makes it convenient and affordable for investors wanting to gain exposure to the Platinum market, without actually having to buy any of the metal itself! There is also an ETF for Palladium.

This ETF also tracks Palladium Prices but costs about one tenth the price of Palladium being sold on the open market. Today, the Price of Palladium is at $741 per troy ounce, and the ETF shares that track it, are trading at $74.25. To learn more about the ETFs mentioned above including viewing live charts for each one, follow any of the links above. To learn more about Precious Metal ETFs in General, visit the www.investing-for-beginner.org Website which covers Exchange Traded Funds in more detail. Discover the other Market Segments beyond just Precious Metals that ETFs have been created to track. From Market sectors, ETFs for Oil, to the various industry groups, the creation of ETFs now provide investors an opportunity to gain exposure to the different segments of the World Economy.