The United States Oil Fund LP ETF

Gone are the days when investors looking to make a play on the rising oil prices did so through equities of energy companies that enjoyed profitability at every crude oil price spike. With the rise of the ETF industry, investors have changed the way while approaching commodity investing specially in the oil and natural gas segment. Knowing how you can invest in oil should be a part of your game plan whether it’s time to buy natural gas and oil or not.

One of the popular exchange-traded commodity product available to U.S. investor offering exposure to crude oil is the United States Oil Fund (USO). The US Oil Fund (USO) seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. The fund invests in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges. The fund also invests in other oil interests such as cash-settled options on oil futures contracts, forward contracts for oil, and OTC transactions that are based on the price of oil.

The USO was created as a proxy to track the price of oil. When the fund was first created, its price was exactly 1-1 that of the current future’s month oil price. USO is essentially a rolling ETF, which means in essence that every 30 days or so, the ETF has to “roll” into the forward contracts of oil before the ones it is holding expires. Rolling the current month’s contracts into the next month’s contracts, especially lately, creates what is called contango when the future price is higher than the current price. Since the United States Oil fund relies on the use of derivative contracts rather than physical assets experts fear that it just might get entangled in the vagaries of the crude oil markets such as price contango. Some of the losses are however mitigated because the USO earns interest on the money it collects from investors, and because it only needs 10% of those funds to actually secure the futures contracts because of leverage.

On the positive side, whenever the future contract costs less than the previous month’s contract, and thus the fund actually earns a higher rate of return than the fund it is tracking.


Top Ten Holdings - USO
as of 06/30/2010
Company YTD Return % of Assets
Future Contract On Wti Crude Future Jul10 -- 24.41%
Future Contract On Wti Crude Future Jul10 -- 19.48%
Fidelity Instl MM Fds Government I -- 16.50%
FIGXX -- 9.60%
GSGXX -- 4.40%
Future Contract On F/C Ws Crude Future July10 -- 3.25%

USO Total expense ratio: 0.96%

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SLV - iShares Silver Trust: An Insight

While most investors are well aware of gold’s unprecedented march fewer are familiar with the yellow metal’s often overlooked cousin, silver. However many big investors consider the metal to be a sound investment due to robust industrial demand, its traditional role as a store of value, and its current ratio compared to gold. In any case, silver ETFs are an efficient way to invest in the metal without dealing with expenses of holding a physical amount of silver in your possession.

Silver is a very versatile metal; it’s not only popular in jewelry, but it has a wide range of industrial applications that put it in a prime spot to benefit in the recovery. It’s an excellent conductor of electricity and is popular in water purification, as well. Silver is also fast becoming a critical component of emerging technologies that will undoubtedly be critical to life in the 21st century. Silver plays a crucial role in solar technology, finding its way into 90% of all crystalline silicon photovoltaic cells, as well as silver embedded bandages and water purification devices.

On April 28th, 2006, Barclays launched the first silver exchange-traded fund in the US. named iShares Silver Trust (SLV) traded on the AMEX as SLV, the iShares Silver Trust was eagerly anticipated by silver investors ahead of its birth. When SLV was born in late April 2006, it had 21m ounces of silver stored in trust. But this highly anticipated ETF proved hugely popular and SLV demand growth far exceeded that of silver itself. So SLV’s custodians issued more shares and used this cash to buy more silver to equalize this imbalance. Just two weeks after launch, SLV’s holdings had more than tripled to 65m ounces. SLV is backed by phyiscal holdings of silver, with $5.5 billion in assets, and the fund has an expense ratio of 0.5%. Historically, when gold prices increase, so do silver prices. However, silver has industrial applications, which makes it less volatile than gold. SLV’s trading volume should also offer insights into how its popularity is growing and how silver-price movements affect the psychology of stock traders owning SLV. Not surprisingly, the volume trends in SLV are very similar to GLD’s in its own first couple years.

SLV Valuation
EPS: $-3.07
P/E: -5.7752
Relative Strength: 86
Relative Strength Ranking: 0.0478
Short Volume: 0
Options Available: 266
Exchange: NYAR

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SPDR Gold Shares: World's Second Largest ETF

With economic uncertainty and gradual weakening of the currencies specially the US Dollar, investors have been searching for a safe place for their funds. Uncertainty in the global Oil prices has not helped the investors but gold has continued its long-term advance to record high levels drawing investors to this traditional safe-haven asset.

Owning a gold-focused ETF is a good way to get physical exposure to gold without the hassle of taking physical possession – finding storage, paying for storage and so on.

Experts feel that ongoing economic uncertainty is likely to continue make gold a hot investment, with SPDR Gold Shares (NYSEArca: GLD) among the most popular means of participating. GLD opened up history’s first direct conduit between gold and the vast pools of capital in the stock markets. GLD is the second-largest ETF in the world, with $50 billion in assets, and the world’s sixth-largest owner of physical gold. Each share of GLD is backed by physical gold bullion, which makes it an alternative to actually investing in physical bullions. Several factors have contributed to the spike in assets: concerns over the Euro zone sovereign debt crisis, fears of a double-dip recession, possible inflation worries and a need for a general safe haven for assets. GLD now hoards a record total of 1,316.18 metric tons of gold, a level that rivals most of the world’s central banks.

SPDR Gold Shares offer investors an innovative, relatively cost efficient and secure way to access the gold market. Originally listed on the New York Stock Exchange in November of 2004, and traded on NYSE Arca since December 13, 2007, SPDR Gold Shares has been one of the fastest growing ETFs in the US. SPDR Gold Shares now trade on the Singapore Stock Exchange as well as the Tokyo Stock Exchange and the Stock Exchange of Hong Kong.

Today GLD is the second largest ETF on the planet, behind only SPY which tracks the flagship S&P 500 stock index. With this still-growing ETF already a force to be reckoned with, no investor or speculator in the precious-metals realm can afford to ignore it.

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Overview Of iShares Nasdaq Biotechnology Index Fund

Imagine being able to invest in futuristic companies with enormous potential not only for the next couple of years but also for decades to come. The opportunity to invest in the Biotech Industry is now no longer a difficult proposition due to the emerging ETFS growth in the segment. Biotech ETFS have come as a boon for investors who were confused understanding the confusing scientific and technical jargon that biotech companies usually harbor in their annual reports. If there's any other sector exchange traded fund (ETF) that gets more attention than the nano ETF, it is the biotech ETF.

Because the success of biotech firms often depends on unproven revenue streams, companies in this industry can be extremely risky. As such, many investors have preferred to gain diversified exposure to the sector through ETFs that maintain well-diversified holdings.

The fund we are tracking in this article is the iShares Nasdaq Biotechnology Index Fund (IBB) that is linked to the NASDAQ Biotechnology Index, a benchmark that includes biotechnology and pharmaceutical companies listed on the NASDAQ exchange. Although interest in it, as measured by media postings, has waned recently, it still holds $1.9 billion in assets and it is probably the most diversified of the lot with 176 underlying stocks. Even though this ETF holds some of the riskiest little biotech stocks on the market it is generally the safest investment as the risk is diluted substantially. IBB also accurately mirrors the entire publicly traded biotech industry as the NASDAQ holds almost the entire field of stocks. IBB is also the most liquid biotech ETFS in the market currently.

The investors should also be aware of some limitations of the iShares Nasdaq Biotechnology Index Fund. The fund is not tracking the father of biotech stocks, Genentech, as it currently does not trade on the NASDAQ. Investors could easily invest in Genentech stock separately if desired. Despite its broad base, IBB is relatively top-heavy: the top ten components account for almost half of total holdings while 60 companies have an allocation of 0.25% or less. IBB has an expense ratio of 0.48% and is more actively traded than the other biotech ETFs combined.

IBB Top Ten Holdings

1. Amgen, Inc. (AMGN): 9.12%
2. Teva Pharmaceutical Industries, Ltd. ADR (TEVA): 7.30%
3. Celgene Corporation (CELG): 6.22%
4. Gilead Sciences, Inc. (GILD): 6.19%
5. Vertex Pharmaceuticals (VRTX): 3.70%
6. Dendreon Corporation (DNDN): 3.61%
7. Biogen Idec, Inc. (BIIB): 2.78%
8. Perrigo Company (PRGO): 2.74%
9. Alexion Pharmaceuticals, Inc. (ALXN): 2.57%
10. Genzyme Corporation (GENZ): 2.45%

IBB Market Cap Breakdown

Giant 16.42%
Large 21.46%
Medium 37.08%
Small 16.08%
Micro 8.86%

IBB Expenses & Fees

* Expense Ratio: 0.48%
* Category: Health & Biotech Equities
* Category Range: 0.21% to 0.75%
* Category Average: 0.49%

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The Indxx China Infrastructure Index

If you are an investor or a trader, chances are that you would have discussed China, its economy and its impact on the world at least once every day within your close circle. Like it or hate it but you cannot ignore that fact that Chinese economy has been the fulcrum of most discussions in the recent past. China, which is considered the top most emerging economies of all the Bric nations, has definitely emerged as the most vibrant success stories of the financial domain. With emerging economies comes Infrastructure developments and upgrades and China, which is known to be the manufacturing hub of the planet is no exception. The Chinese government which recently pumped a massive $586 billion stimulus package knows this fact and are investing billions into infrastructure projects to become a dragon economy in the real sense of the world.

A good way to get in on the trend is with Indxx China Infrastructure Index (Ticker: CHXX) that covers the Chinese infrastructure sector. The IndXX China Infrastructure Index is a 30 stock free float adjusted market capitalization index designed to measure the market performance of equities in the Infrastructure sector of China. Infrastructure sector is as companies categorized as a part of 35 sub sectors as per the GICS classification. The sub sectors cover Construction & Engineering, Construction Materials and Utilities. The index consists of common stocks that are listed on Hong Kong Stock Exchange, New York Stock Exchange, NASDAQ and London Stock Exchange.

Index Methodology- To become eligible for inclusion, a company must be a common stock listed on Hong Kong Stock Exchange, New York Stock Exchange, NASDAQ and London Stock Exchange. It should be among the 35 sub sectors identified by the GICS classification and have an average daily cash volume of US$4 million in the month of January and June prior to consideration. The company should have a minimum free float of 10%. The Index is reconstituted annually on June 30th and will begin trading starting October 1st of the same year. The Index is rebalanced for corporate actions. If a constituent is removed from the Index, there will be no replacement.

The Fund seeks to achieve its investment objective by attempting to replicate the portfolio of the Underlying Index through investments in equity securities, including shares traded on local exchanges, American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”). The Underlying Index is a free-float market capitalization weighted stock market index comprised of a representative sample of 30 emerging markets companies that INDXX, LLC determines to be the representative of mid-market capitalization companies domiciled in China.

The China Infrastructure Index charges a net expense ratio of 0.85 percent and has an average market value of $8.3 billion. The top industries it invests in are real estate management and development, metals and mining and construction and engineering.

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Reviewing One Fund: The Fund Of Funds

Imagine being able to maintain a broad-based global stock portfolio of 5000 large medium and small companies in the United States, Europe and Japan as well as other developed and emerging markets covering over 95% of the world’s stock market through a single security for a long term investment growth? Sounds too good to be true but that’s exactly what One Fund (NYSE Ticker: ONEF), a US based investment company is offering to subscribers through an indexed investment approach at the lowest possible cost. U.S. One, Inc. serves as the investment adviser to the Fund while Paul Hrabal, President of U.S. One, Inc. is the Fund’s portfolio manager is managing the Fund since its inception on 11th May 2010. The One Fund ETF could be ideal for an investor considering the highs and lows and seeking a balanced ETF that tracks the world markets, with lesser noticeable gyrations of focused ETFs.

One Fund buys and holds stocks long term through ETFs that track various stock market indices as holdings are weighted based on their contribution to global stock market capitalization, adjusted for fund management’s view of the relative long-term economic prospects, competitive advantage and potential return of each target market. The One Fund offers investors a way to achieve the entirety of their equity exposure through a single security; the ETF’s fact sheet notes that investors can achieve access to more than 5,000 companies in the US and around the world through ONEF.

One Fund began trading on the New York Stock Exchange under ticker symbol ONEF on 11th May 2010. The Fund shares are listed for secondary trading on the NYSE Arca. One Fund’s fact sheet states that its investment approach is based on its three beliefs that 1) stocks outperform, 2) market timing does not work, and 3) stock selection does not work. Sounds like a passive indexed product one would say, but ONEF is an actively managed fund and not a tracking index.

Overview Of One Fund

Ticker Symbol ONEF
Investment Category Global Stock Fund
Investment Objective Long Term Growth
Total Expense Ratio 0.51%
Inception Date 05/11/2010

One Fund Holdings (By Investment As Of 7/8/2010)

Ticker Exchange-Traded Fund Weight

VV VANGUARD LARGE-CAP ETF 49.09%
VEA VANGUARD EUROPE PACIFIC ETF 21.05%
VB VANGUARD SMALL CAP ETF 19.33%
VWO VANGUARD EMERGING MARKETS ETF 5.34%
SCZ ISHARES MSCI EAFE SMALL CAP INDEX 5.20%

U.S. Large Cap Equity

Vanguard Large Cap ETF: The Fund employs a “passive management” or indexing investment approach designed to track the performance of the MSCI® US Prime Market 750 Index, a broadly diversified index predominantly made up of stocks of large U.S. companies. For more information about this Fund, including its prospectus and shareholder reports, go to www.vanguard.com.

U.S. Small Cap Equity

Vanguard Small Cap ETF

International Equity

Vanguard Europe Pacific ETF: The Fund purchases stocks included in the Morgan Stanley Capital International Europe, Australasia, Far East (MSCI® EAFE®) Index, which is made up of common stocks of companies located in countries in Europe, Australia, Asia, and the Far East.


Advantages Of Choosing One Fund ETFs

One Fund owns, through the underlying ETFs, nearly 5,000 companies around the world but it owns these through other ETFs instead of owning those companies directly. One Fund pays nearly 16 basis points in underlying fund fees but benefit on the cost and liquidity front by not having to manage an extremely large basket of stocks, including some in emerging markets and international small cap stocks that are thinly traded.

Main Disadvantages Of One-Fund ETFs

Underlying ETF Risk: The Fund is subject to the same risks as the Underlying ETFs in which it invests.

Costs of Investing in Underlying ETFs: When the Fund invests in Underlying ETFs, in addition to directly bearing the expenses associated with its own operations, it will bear a pro rata portion of the Underlying ETFs’ expenses (including operating costs and management fees). Consequently, an investment in the Fund entails more direct and indirect expenses than a direct investment in the Underlying ETF. An investor who puts money in these products is paying two layers of fees – the first layer goes to the manager of the ETF of ETFs and the second layer goes to meet the expense ratio of the underlying ETFs. Hence, the advisor should weigh these costs against their promise of performance.

Some traders feel its not worth to have an expense ratio of .51% to buy 5 ETFs and you are better off buying them individually while some feel that ETFs of ETFs is a good idea and definitely worth a try. No matter which part of the fence you sit in it would be interesting to watch the market trend of this fund of funds.

Although ETFs initially appealed to cost-conscious investors not known for high turnover in their portfolios, these vehicles have since been embraced by more active investors. ETFs will undoubtedly continue to evolve as new innovative strategies. As with all ETF products, it pays for the advisor or end investor to do some homework and learn what is "inside" their given ETF.

Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus. Please read the prospectus carefully before you invest.

ETFMarket - Exchange Traded Funds Market Review

ETFs are the reality of financial markets and they are more and more favored by savvy investors and traders.

We plan to offer a real easy guide to these markets and offer forecast and potential of the Exchange Traded Funds by sectors and areas.