Tag Archive | Global ETFs

Position Sizing: Key to Maximizing Returns

In a time when market volatility and equity preservation is of utmost importance, determining the correct number of shares to buy, or “position sizing”, is key to maximizing returns and minimizing risk.

The common investor generally doesn’t spend much time thinking about how many shares to buy or how significant of a position to take.  Instead, most investors use a common methodology of trading the same number of shares each time, which usually translates to a specific dollar amount.  Other, more sophisticated investors, opt to allocate a certain percentage of their portfolio value to a specific position. Following this train of thought, a new position in a portfolio of $100,000 would transcribe either a $10,000, or 10%, investment or a usual position of 50 shares.

Although these methods may work for some, using the volatility of a specific portfolio is likely to be the most effective decision tool.  Measuring a portfolio’s overall volatility enables an investor to decide on what percentage of that portfolio he is willing to risk losing on the new position.  This methodology is better explained through the following example. Read More…

Four ETFs To Play Canada’s Natural Resources

As global demand for natural resources remains insatiable, Canada’s vast supply of these natural resources makes it highly appealing to investors.

The democratically governed nation, just north of our border, boasts the world’s second largest oil reserve, trailing none other than Saudi Arabia, has a vast supply of natural gas and generates a decent amount of nuclear energy, enabling the nation to be a net exporter of energy.  Furthermore, Canada is the world’s largest producer of zinc and uranium, as well as a positive producer of gold, nickel, aluminum and lead, all commodities that fast-growing nations in Asia and Latin America are thirsty for.    In fact, according to a recent Barron’s article, Export Development Canada, a government agency that provides credit to Canadian exporters, forecasts 57% growth in Canadian exports to Asian-Pacific countries and lesser-but-strong growth to other emerging markets in 2011. Read More…

Two Latin American ETFs For 2011

As the developed world continues to struggle out of the Great Recession, emerging markets performed relatively well in 2010 and are expected to sustain this growth and performance in the coming year.  China continues to draw headlines and steal most of the attention; however, in the coming year, Latin America may be the place to look and for good reason.

Inflationary threats and real estate bubbles have taken front and center stage in China, resulting in the nation increasing its benchmark interest rates for the second time in three months and increasing banking reserve ratios to reduce risk, which could hinder future economic growth.  A different song is being sung in Latin America as inflation is expected to remain subdued, which is expected to lower pressure on central banks to change interest rates which will likely further limit the possibilities of tighter monetary policies. Read More…

Be Cautious of ETFs Boosted By Japan’s GDP Revision

Japan witnessed its fourth consecutive quarter of economic growth enabling it to retain its position as the world’s second largest economy after beating GDP expectations impacting the iShares MSCI Japan Index (EWJ), the iShares MSCI Japan Small Cap Index Fund (SCP) and the Vanguard Pacific Stock ETF (VPL).

The Japanese economy expanded by 4.5 percent in the third quarter of the year, exceeding analyst expectations by 0.6 percent and eating away at the nation’s massive deflationary gap.  Furthermore, this expansion has led to Japan’s Minister of Economic and Fiscal Policy to peg an estimated annual growth for the year at around 2.6 percent. Read More…

Two ETFs For European Exposure

Despite ongoing concerns of sovereign debt issues in Europe and an extension of loose monetary policies by the European Central Bank, an opportunity may exist in Sweden and the exchange traded funds (ETFs) that track the nation.   

Over the years, Sweden has been amongst the top innovative nations around the world, is known for high worker productivity, has an abundance of skilled labor, has a favorable corporate tax structure and is known for its first rate infrastructure.   Furthermore,  the European nation has been attracting foreign investors and corporations, illustrated by China’s largest networking and telecom equipment company, Huawei’s, decision to set up a new research and development facility to focus on microwave and radio frequency development in the nation.  Read More…

ETF Based On Islam To Shut Doors

On October 19, 2010, Javelin Exchange Traded Shares will officially close the door on the Dow Jones Islamic Market International Index Fund (JVS). 

JVS first began trading in July 2009 and came to market to offer investors a way to gain access to companies that abided by Islamic law.  The strategy excluded businesses that were involved in the alcohol and tobacco industries, gambling, pornography, unconventional financial services and those that produced pork-related food products.  Some of JVS’ holdings include metals and mining giant BHP Billiton (BHP), pharmaceutical giants Novartis (NVS) and GlaxoSmithKline (GSK) as well as energy giant BP (BP).  Read More…

African ETFs- A Diamond In The Rough

As the world seeks natural resources and economic growth, Africa’s economy may continue to witness expansion enabling the Market Vectors Africa Index (AFK) and the SPDR S&P Emerging Middle East & Africa ETF (GAF) to reap the benefits.

According to a report by McKinsey & Company during the eight year period from 2000 to 2008, the world’s second largest and second most populous continent witnessed a compound economic growth rate of 4.9 percent.  Although this growth is not as great as that witnessed by emerging Asia, it superseded that of Latin America and Emerging Europe.  Furthermore, even the poorest region of Africa witnessed GDP growth of 4.8 percent between 2004 and 2008.  Lastly, the report indicates that even though the overall global economy shrank by 2 percent in 2008, Africa actually grew by 2 percent during the same period.  Read More…

7 Reasons To Consider Indonesian ETFs

As high unemployment rates, slow growth and the fear of inflation continue to take their toll on developed nations like the US, Indonesia could offer investor’s an answer to their prayers.

The Asian nation, which consists of various islands and is the fourth most populous country in the world, is a member of both the G-20 and OPEC, but doesn’t export any oil, instead uses it to fuel its own economy.  The fact that Indonesia is self-sufficient in crude oil makes it relatively immune to global price volatility driven by supply and demand imbalances of crude, which could force the cost of energy to spiral out of control and potentially hinder overall economic output.  In addition to a vast supply of black gold, the South Asian nation is also rich in other natural resources which have enabled the nation to reap the benefits of tangible development such as increased food production and is likely to continue to do so. Read More…

Four Plays On Europe’s Nuclear Option

As somewhat of a last resort to save the Euro and prevent another catastrophic economic event, the European Union, the International Monetary Fund (IMF) and other major Central Banks have implemented a $1 trillion emergency package.

This package consists of 440 billion Euros in guarantees from euro area states, 60 billion Euros in a European stabilization fund which can be drawn upon to provide aid to euro zone states, 250 billion Euros from the IMF, bond purchases and currency swap programs by the U.S. Federal Reserve and other Central Banks.  The plan has already gone into action; with all euro zone banks purchasing sovereign bonds in the open market, in particularly the PIIGS nations (Portugal, Italy, Ireland, Greece, and Spain).

The reaction to this measure was relatively drastic, as global markets soared.  The Dow Jones Industrial Average gained more than 400 points; the Euro gained nearly 3 percent in intraday trading; risk premiums on peripheral euro zone sovereign bonds plummeted; the price of insuring euro zone sovereign bonds against default declined and investors sold safe-haven debt and increased their appetite for risk, illustrated by a decline in German bund futures.  Read More…

ETFs For Currency Debasement

By Kevin Grewal

As developing nations around the world have turned to government funded stimulus packages to ignite their economies, a nation’s debt and currency debasement should be of much concern. 

Most recently, a study indicated that the U.S. national debt has ballooned nearly 12 fold over the last 30 years.  Additionally, over this same time span the ratio of debt to GDP has gone from nearly one-third to 85%.  During this time of exploded debt, GDP has only expanded 5.3 times, indicating that debt is growing at twice as fast as the U.S. economy.  Similar trends have been seen in Europe, in particularly Greece, Spain and Portugal.

Some concerns of this exponential growth in debt include hyperinflation, as a result of printing more currency, a decline in the value of a nation’s currency, better known as currency debasement, and increased costs of borrowing, which make it difficult to chip away at deficits.

Some experts suggest that this trend in the developing world, in particularly the United States, is likely to continue as nations have become accustomed to borrowing extraordinary amounts of money and printing extra currency to stay afloat.  If this is the case, than inflation will be inevitable and currency values will diminish. 

Some possible ways to protect against currency debasement and increases in inflation include the following: Read More…

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