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

The market is embracing a short maturity ETF as exchange traded funds bid to compete with money market mutual funds.

John Spence writes that the Pimco Enhanced Short Maturity Strategy Fund (MINT) has added more than $800 million in assets in a little more than a year.  The fund invests in government bonds, mortgages and corporate debt, typically with a duration of under 0ne year.

Spence points out one important difference between an ETF and a money-market fund — MINT and other ETFs have a floating net asset value, so investors can see a loss of principal.

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Buy-Write funds underperformed the broader market rally in 2009.

According to the WSJ article Buy-Write Managers Feel a Chill, the PowerShares S&P 500 BuyWrite ETF (PBP) fell 30% in 2008 compared to the 37% decline for the S&P 500 Index. However, the fund trailed the benchmark index by two percentage points in 2009′s market recovery.

Buy-Write funds reduce risk by writing call options against stock positions. In down markets, losses are mitigated. However, in up markets, upside appreciation is capped.

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