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

When it comes to liquidity, not all ETFs are created equal.

So says the WSJ’s Eleanor Laise in the article Liquidity Problems Can Be Costly for ETF Investors.  Laise writes that high yield bond, commodity, and specialty ETFs can be especially problematic when it comes to the difference between buying and selling prices or the bid-ask spread.

One example is the Claymore U.S. Capital Markets Bond ETF (UBD) which had an average bid-ask spread of $2.56 in December 2009.  Other examples highlighted by the article include the iShares S&P GSCI Commodity Indexed Trust (GSG) and the PowerShares DB US Dollar Index Bullish Fund (UUP).

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Strong demand for an ETF that provides investors with bullish exposure to the dollar caused the fund to hit its authorized share limit according to the WSJ’s Matt Phillips.

The PowerShares DB U.S. Dollar Index Bullish Fund (UUP) became popular after the dollar slide reversed course earlier this month and investors scrambled for products that provide bullish exposure to the dollar.

The fund’s manager has filed for approval to create up to 240 million additional shares.

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Forbes columnist Jim Lowell takes a look at the investment implications of a strong China and a weak dollar in his column Riding China’s Wake.

Lowell recommends taking a position in the commodities that feed China’s growth machine through the PowerShares DB Commodity Index (DBC). DBC tracks an index that is rules-based and composed of futures contracts on six of the most heavily-traded and important physical commodities in the world – crude oil, heating oil, gold, aluminum, corn and wheat.

Lowell actually recommends a bullish stance on the dollar based on the view that Bernanke will do whatever it takes to ensure that the dollar retains its status as the world’s reserve currency. If you agree with him, consider the PowerShares Dollar Bull (UUP), an ETF that holds futures contracts designed to replicate the performance of being long the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.

Another currency play noted by Lowell is the PowerShares DB G10 Currency Harvest Fund (DBV) , a fund that owns currencies with higher interest rates which tend to rise in value relative to those with lower interest rates.

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In the article ETF Advisers: One Day Is Not A Trend, Investors Business Daily’s Trang Ho talks to technical analysts and money managers to get their views on where the market goes from here.

The consensus seems to be that as long as we have volatility that generates 10% swings in a day, we’re still in a bear market. One manager has been betting against the NASDAQ since the beginning of the year with the ProShares UltraShort QQQ (QID) an ETF that doubles the inverse returns of the Nasdaq 100 index.

The same manager sees upside potential in the dollar, which is playable via PowerShares DB U.S. Dollar Index Bullish (UUP).

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