Latest news, trends and ideas for investing with exchange traded funds | ETF Commentary

Palladium futures hit a two-year high, partially driven by demand for a new ETF according to the Wall Street Journal.

In the article Platinum Group Climbs Higher, the WSJ reports that the growing popularity of the ETFS Physical Palladium Shares (PALL) has pulled metal volumes out of actively traded markets.  As a result, industrial buyers are bidding prices higher to meet increasing demand from the automotive sector.

PALL’s palladium holdings has grown by 30,000 ounces just since Friday according to the report.

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In his recent Smart Money article, “120 New ETFS Debut So Far in 2008“, Rob Wherry takes a look at four categories of ETF funds that have debuted in the first half of 2008.

According to Lipper, approximately 120 new ETFs and ETNs hit the market during the first six months of 2008. The new offerings spanned a wide range of investing strategies including commodities, currencies, and emerging markets. There are also many more funds currently in the SEC registration process.

The industry also experienced liquidations as funds sponsored by Claymore, XTF, Adelante, and MacroShares closed their doors.

Wherry also discusses actively managed funds in the article. He has found that many financial advisors are taking a “wait-and-see attitude” towards actively managed funds. According to Wherry, not many advisors have poured money into [actively managed] funds.

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Agriculture produced the hottest stocks in 2007 and leading companies such as Potash and Mosaic have held on to their gains so far in 2008.

Investors interested in agriculture ETFs have several options to choose from. Our favorite ticker symbol in the group is associated with Van Eck Global’s Market Vectors Agribusiness ETF (MOO). With over $1 billion under management, MOO tracks the total return performance of the DAXglobal® Agribusiness Index. The Index provides targeted exposure to 40 companies worldwide that are engaged in the agriculture business. The top 5 constituents as of Feburary 7 were Mosaic (NYSE: PBO), Potash (NYSE: POC), Monsanto (NYSE: MON), Archer-Daniels-Midland (NYSE: ADM) and Deere (NYSE: DCO).

The Powershares DB Agriculture Fund (DBA) takes a different approach using a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities – corn, wheat, soy beans and sugar (the Deutsche Bank Liquid Commodity Index – Optimum Yield Agriculture Excess Return™ Index.)

You can also go to the London Stock Exchange and check out ETF Securities’ Agriculture ETF (LSE: AIGA.L) which is designed to track the DJ-AIG Agriculture Sub-Index. AIGA tracks a commodity index rather than a portfolio of equities and is able to short. However, there’s no getting away from the dollar which is AIGA’s base currency.

Learn more at the sponsors’ websites:

• Market Vectors Agriculture ETF
• Powershares DB Agriculture Fund
• ETFS Agriculture DJ-AIGCI^SM

We are also preparing a special report on Investing in Agriculture with ETFs. To receive the report, please subscribe to our e-mail list.

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Earlier this month, Van Eck Global announced the listing of the Market Vectors-Coal ETF (KOL) on the NYSE Arca.

KOL is the first ETF that enables U.S. investors to gain exposure to a broad spectrum of companies involved in the transport, equipment manufacturing, and production of coal.

The ETF will seek to replicate the Stowe Coal Index (Ticker: COAL), a basket of the securities of coal companies worldwide listed on global exchanges.

For more information, visit Van Eck’s website.

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Morningstar’s Jeffrey Ptak published his list of 2007’s worst new ETFs. The list includes:

Emerging Markets

• SPDR S&P China (GXC)
• First Trust ISE Chindia (FNI)

Real Estate

• Adelante Shares Real Estate
• iShares FTSE NAREIT Funds (RTL)

Commodities

• Claymore Clear Global Timber (CUT)

Ptak cites timing and declines since the launch of the ETFs as qualifiers.

Do you agree with his picks?

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