Van Eck has launched the first US traded ETF to focus on the Vietnamese market, adding to its impressive lineup of emerging market single country funds. The Van Eck Market Vectors Vietnam (VNM) tracks a custom index of equities from firms that generate more than 50% of their revenues in Vietnam.

The current 28 holdings place a heavy weighting on energy, materials, and financial names, most of which have small or middling market caps.

The fund is expected to be in high demand as Vietnamese shares have been among the best performing in the world this year. The benchmark VN Index – which is broader than the one VNM tracks – is up 61% this year. Investors will pay a premium for access, however, as the fund carries a .99% expense ratio. By contrast, European investors pay only .85% for the db-x trackers FTSE Vietnam (XFVT).

The Vietnam fund is just the latest of Van Eck’s single country emerging offerings, and follows on the strong success of the Market Vectors Indonesia (IDX) and Market Vectors Brazil Small Cap (BRF)

Commodity ETFs have been criticized from all corners. Investors have pilloried their inability to accurately track the price of their underlying asset. Industry watchdogs have assailed their inadequate disclosure of risks. And regulators have fretted over their ability to unduly manipulate futures markets.

Yet ETFs like the United States Natural Gas Fund (UNG) and the United States Oil Fund (USO) seem to have thus far gotten away high fees, poor disclosure, and disappointing returns, as investors are still buying them in droves. But regulators are less happy, and commodities-futures ETFs may not survive the coming regulatory onslaught.

Bloomberg is reporting today that the Commodity Futures Trading Commission (CFTC) will open hearings into expanding regulation of speculative trading in commodities. Although the hearings concern all speculators, the regulators are primarly concerned with USO and UNG’s ability to move the oil and natural gas markets higher, adding a speculative premium to energy prices. Trading in the UNG was breifly halted as the SEC denied its routine request to issue more shares. Read More »

Investors worried about inflation and high fees poured money into commodities, inflation protected bonds, and cheaper versions of existing funds in June.

The United States Natural Gas Fund (UNG) was the month’s big winner with as investors showered 1.7 billion dollars on the commodity futures fund, despite concerns about its tracking accuracy. iShares’s TIP Bond Fund (TIP) saw the second biggest cash infusion, with the inflation-conscious sinking $942 million into the inflation protected securities fund.

Vanguard’s MSCI Emerging Markets (VWO) was in third place for a decidedly different reason, as institutional money fled en masse from the iShares MSCI Emerging Markets (EEM) to the VWO’s lower expense ratio. Cost conscious investors also rewarded iShares S&P 500 fund (IVV), to the detriment of State Street’s SPY. Read More »

The global financial crisis started in the United States, and the US economy has consequently suffered more than most. Although total output has fallen less than the global average, the rise in America’s unemployment rate has been the steepest in the OECD. It has the world’s largest budget deficit as a percentage of GDP, save the UK. And although US shares didn’t fall as far in 2008, they have hardly risen in 2009 – left in the dust by recovering emerging markets. The economic landscape leaves little for America to celebrate this Independence Day weekend. And considering Thursday’s depressing jobs report, the US economy may remain in the doldrums for a long time to come. Read More »

The United States will finally have a listed ETF whose investment strategy conforms to Islamic law. Such sharia funds are wildly popular elsewhere in the world, and are a rapidly growing niche product for major Western banks and asset mangers.

The JETS Dow Jones Islamic Market International Index Fund (JVS) will track a special version of the Dow Jones International Titans 100 index, which excludes businesses involved in alcohol, finance, gambling, pornography, defense, and anything pig-related. It is best thought of as an ex-US mega cap fund with a strong European focus, and may be of interest to investors who want to avoid banking and insurance stocks.

The fund started trading yesterday on the NYSE Arca and is issued by newcomer Javelin Exchange Traded Shares (JETS).

The only exchange traded fund to focus on community banks started trading this morning on the NASDAQ. The First Trust Nasdaq ABA Community Bank Fund (QABA) from First Trust Advisors focuses on banks with a local focus, using a strict index criteria to exclude larger regional banks and banks that otherwise derive revenue from outside their home markets (eg credit card servicing).

The fund may appeal to investors looking to profit from the problems at larger banks, as smaller players are in a position to lend and gain market share. The index is down 25% so far this year, beating the 35% ytd decline of the SPDR KBW Regional Banking Fund (KBE).

First Trust specializes in such niche products, and is the 14th largest issuer of ETFs in the US.

ETF Securities - the British based ETF issuer known mostly for its extensive array of commodities funds – is finally making the move into equities. The company’s new London-listed funds will offer 2x leveraged exposure to major broad European indicies such as the FTSE 100 , the DAX, and the Euro STOXX 50.

Leveraged funds are new to the UK, but are widely available in the US and Canada, where their daily return structure has caused some controversy. The new funds are part of ETF Securities ambitious plans to expand its product range and increase its listings worldwide – including to the United States, where it will list that market’s first  platinum and palladium funds later this year.

Japanese investors will have a unique ETF option coming in mid-July: a fund that invests only in one conglomerate. The fund will hold each of the 26 separately-listed Japanese companies owned or part-owned by the Mitsubishi Group, including Mitsubishi Motors (TYO:7211), Nippon Oil Corporation (TYO:5001), and Nikon (TYO:7731).

This rare niche product is made possible by Japan’s unique cross-holding corporate structure, known as keiretsu, where large industrial businesses are affiliated through a common equity-holding lender.

The fund will be offered by Mitsubishi UFJ Financial Group.

US Commodity Funds, the same group behind the largest US listed oil ETFs – the USO and USL – will launch a new fund to short crude futures.

Bloomberg reports that the United States Short Oil Fund (DNO) will begin trading in July on the NYSE Arca. It will be the only single leverage short fund offered in the US, competing against Powershares ETNs and ProShares 2x leveraged offerings.

Invesco Powershares may soon bring its lineup of ETFs to the Australian Securities Exchange. Invesco’s Australian division is reported to be considering listing a mix of equity and commodities funds to compete with iShares, Vanguard, and ETF Securities, all of  whom have recently moved into this fast growing market that now boasts over 30 listed funds.

Horizon’s BetaPro, Canada’s largest provider of leveraged ETFs, is venturing into more conventional territory today launching 4 new unleveraged commodity funds. These funds will be the first from BetaPro that don’t use double leverage, and wil track gold, silver, oil, and natural gas.

The two energy funds will use long-dated futures in an attempt to avoid another common ETF pitfall, that of extreme contango on futures markets which can destroy returns in open-ended investment funds.

Both billionare investor Warren Buffet and former Fed Chairman Alan Greenspan issued strong warnings on future inflation this week. In an interview with CNBC, Mr. Buffet dismissed concerns of deflation and instead argued inflation was the greater threat. “We’re flooding the system with dollars.  We’re monitizing debt.  We’re doing all the things that lead to that”, adding that he nonetheless supported the Feds actions saying “There really is no choice. But we could see a lot of inflation.”

Meanwhile in today’s Financial Times, Mr. Greenspan also lays out his case. With a hint of irony, Greenspan warned  ”If political pressures prevent central banks from reining in their inflated balance sheets in a timely manner, statistical analysis suggests the emergence of inflation by 2012; earlier if markets anticipate a prolonged period of elevated money supply.” The former fed chairman is widely seen to have bowed to such pressure himself in 2001 when he lowered interest rates to cushion the blow of the Dot Com bubble’s collapse, the most egregious example of the “Grenespan Put“. Read More »

iShares Canada has floated two new global equity ETFs on the Canadian exchange today. The iShares CDN MSCI World Index Fund (TSE:XWD) will track that broad developed market benchmark. While the iShares CDN MSCI Emerging Markets Index Fund (TSE:XEM) will track that broad emerging markets index, which the EEM tracks in the US.

In the case of XEM, it may be cheaper for Canadian investors to buy Vanguard’s VWO in America, as it carries a much lower expense ratio.

Amidst the performance controversy surrounding the United States Natural Gas Fund (UNG), Index Universe has learned that its provider will launch a version that aims to mitigate the devastating effects of contango. The proposed United States 12-month Natural Gas Fund will buy longer dated futures contracts to lessen the impact of rollover losses incurred when markets are in contango.

US Commodity Funds already offers a 12-month version of its crude oil fund, which has perfomred better than its 1-month version by still has trailed the spot price of crude significantly.

“All those guys on Wall Street or in the city of London driving Maseratis need to learn how to drive a tractor.”

So says legendary investor Jim Rogers, whose friendly advice to the investment banking community reveals his belief that agriculture will be the next great bull market.

For many decades, agriculture has been a declining sector as productivity advances led to falling real prices and low margins for farmers and the firms that supply them. But in 2007-2008, agriculture prices suddenly spiked higher, led by an ethanol fueled near-trebling of corn (maize) from $2.00 a bushel to a peak of $5.50 and a similar supply-driven increase in the price of wheat and rice. Since last summer prices have fallen back down to earth, with corn currently trading around $4.00, but prices for all crops have still barely outpaced inflation over the past 15 years.

The question today is whether this run-up was simply a short-term speculative bubble, or the beginning of a long-term bull market temporarily interrupted by the global financial crisis. There are good reasons to believe that the former is true and that higher agriculture prices are coming, but the reasons may be surprising. Read More »