"Renewable fuels and clean energy, a sector beaten down hard since last fall, are now primed for a major comeback," says Eric Roseman, editor of The Commodity Trend Alert. Here's his ETF play on the sector.

"With every passing day the price of crude oil rises, the secular trend to alternative energy becomes even more powerful. Consumers, companies and governments are now sick and tired of soaring energy prices.

"The long-term solution is to obviously reduce our dependence on oil and increase our consumption of renewable fuels like wind, solar, and nuclear energy.

"The bull market in alternative energy began in 2005 when a host of companies in this thriving sector went public, supported by government subsidies, especially in Germany and Spain. Interestingly, Germany and Spain have just reduced solar energy subsidies this spring.

"In my view, those subsidy cuts don't matter at this stage. When companies in the solar sector are making money, why should governments continue subsidizing them?

"The leading solar companies are now highly profitable and though competition remains intense amid rising costs for traditional solar panels like photovoltaic cells, new technologies are emerging like thin cells to make production cheaper.

"The industry is maturing, evolving and with everyone tired of expensive gas prices, this theme is just incredibly cheap now compared to richly-priced oil stocks. Solar and nuclear are especially exciting at these bombed-out levels.

"We're now recommending purchase of a great portfolio of diversified world-class companies called the Claymore/MAC Global Solar Energy Index ETF (NYSE: TAN).

"TAN now trades 7% below its IPO price in April - and adjusted for the highs the companies in the fund traded last fall, it's even cheaper!

"I really like the portfolio's diversified composition including big positions in China, Germany, the United States, Spain, and Norway - all leaders in this area. The ETF is inexpensive, charging 0.65% annually and offers good daily liquidity."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

Permalink | Email this | Comments

Read | Permalink | Email this | Comments

Permalink | Email this | Comments

While I think the ETF industry has become saturated with many products that serve little purpose for almost all investors, a new ETF launched today which I believe actually has some value. For U.S. investors looking for a way to protect themselves against global inflation as well as getting some non-U.S. dollar exposure, today's launch of the The SPDR DB International Government Inflation-Protected Bond ETF (AMEX: WIP) is welcome news. While U.S. investors search for ways to diversify out of the greenback, with inflation starting to rear its ugly head abroad, traditional global bonds funds have become less desirable. With inflation in countries like Australia surging, the ability to get an inflation protected bond is great. With rising inflation expectations, local bonds prices in many of these countries will fall. If that happens then those holding global bond funds, may lose money. This new ETF helps out with that problem.

According to Murray Coleman: " The fund follows the Deutsche Bank Global Government ex-U.S. Inflation Linked Bond Capped Index. In the past 12 months, that benchmark has returned 20.9%. About 12% of those gains were currency related and another 5% was associated with inflation adjustments. Another 2% came from coupon interest payments. Less than 1% came from price appreciation."

Clearly the name of the game here is still currency diversification, but 5% returns associated with inflation adjustments is nice to.

If you are looking to further diversify your portfolio, this new ETF may be for you.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 3/19/08.

Read | Permalink | Email this | Comments

Permalink | Email this | Comments

Permalink | Email this | Comments

There's an interesting article over on SeekingAlpha by HardAssetsInvestor. The article focuses on the Exchange Traded Note product, something I've written about previously. The ETN is similar to an ETF in that it's a fund that trades like a stock. Unlike ETFs though, the ETN is not backed by the underlying assets. Rather, it's a zero-coupon note (essentially, a bond) that's backed by its underwriters. So, it throws an added layer of default risk into the whole investment game.

Where things get even more interesting is the tax treatment of the ETN product. Says HardAssetInvestor's Brad Zigler, "No tax consequence befalls the noteholder until the security is liquidated or matures. Taxes during the holding period? Zip. Nada. Bupkis. That beats the heck out of the tax treatment of mutual funds, too, which distribute income and capital gains." Unlike ETFs investing in commodities which are treated with a complicated tax structure on the futures the funds invest in, ETNs don't pass these taxes through to investors.

It's this tax difference that has the big mutual fund industry up in arms. According to the article cited above, "The Investment Company Institute [ICI], an industry trade group, called on Congress and the Internal Revenue Service to step in and mitigate the "unwarranted, unintended and unfair" tax advantage enjoyed by ETNs."

Things are going to get interesting and at the least, investors in commodity ETNs like DJP, RJI or GSP can benefit from the sparring match between ETN firms and the large mutual funds families.

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

Permalink | Email this | Comments

Many financial stocks have been on a tear since the Federal Reserve's surprise 75-basis point inter-meeting rate cut on January 22. For example, the KBW Bank Index -- which has an equivalent exchange-traded fund, the KBW Bank ETF (AMEX: KBE) -- has rallied 16.1%, beating the S&P 500 index by more than 10 percentage points.

Yet not all financial sub-groups have kept pace with the banks. For instance, after performing well in relative terms during the fourth quarter, insurers have stalled, with the KBW Insurance Index -- which has an equivalent exchange-traded fund, the KBW Insurance ETF (AMEX: KIE) -- more-or-less tracking the move in the overall market in recent weeks.

The difference in performance does offer up a potential short-term trading opportunity, however. Based on a quick read of the technical relationship between the bank and insurance indices, the recent pattern indicates that the former may have gotten a bit too far ahead of itself, at least in comparison to the latter.

Moreover, balance sheet and other concerns that have undermined the outlook for lenders are likely to remain more pressing in the near term than those that will impact the broader universe of financial companies. Under the circumstances, the recent dramatic divergence suggests it may be a good time to buy insurers and sell banks.

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle.

Permalink | Email this | Comments

In the midst of all the bad news it's hard to imagine the stock market ending the year higher than it started. However, that is entirely possible and probably much better than a 50/50 bet. If you want to play it safe consider buying into an index fund or exchange traded funds (ETFs) instead of banking on individual stocks.

For broad coverage you cannot beat the Vanguard Total Stock Market or the Total International Stock funds with the lowest fees and longest history in this area. I think it has also been generally accepted investing strategy over the last few decades that in bearish markets there is a run to quality and "guns and butter" stocks. If you were to follow this old adage you would be considering three sectors, healthcare, defense and consumer staples.

Mutual funds and ETFs (with less history) are less volatile and offer greater diversification than most investors could achieve, and at much lower cost. If you dollar cost average over the next few months you should also be able to smooth out some bumps in the current market.

When the political machine goes to work to juice the economy the market has most often responded positively. That does not mean it's smart for the country, but since when is a politicians first thought about the country.

The No. 1 campaign issue by a large margin is, and will remain, the economy. Politicians being what they are, somehow, some way, are going to conjure up a little mystical economic fuel in the next few weeks and months so that during the latter stages of the presidential campaign any of us entering the voting booth are not dwelling on our employment situation and empty wallets from outside our recently foreclosed on home.

If you ask me specifically where the major indices will end up, the answer is that I don't know. Some of my colleagues and many media pundits love to throw out numbers as if they had a link to the almighty. That is an exercise in futility. What is more important to remember is... what are the greatest likelihoods and how can I benefit from them with the least risk? For the average person that is going to be funds and ETFs focused on the broad market or sectors that remain strong in troubled times.

To find potential opportunities and verify my track record, read Chasing Value and Serious Money.

DISCLOSURE: I own shares in Vanguard Mutal Funds & ETFs as well as those of other companies.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

Permalink | Email this | Comments

There is no question that the recent explosion in ETF investing has changed the way we all invest. We all know the statistics, that it pays to buy and hold indices, be a passive investor and profit from "lazy portfolios." My hunch is that with the recent market bloodbath, we may see a move from ETFs back into actively managed accounts.

With most ETFs weighted toward their larger market-cap holdings, when a giant tumbles, look out below. Take the NASDAQ for example. Last year's gains in the index were almost all due to the staggering rise in Google (NASDAQ: GOOG), Research in Motion (NASDAQ: RIMM) and Apple (NASDAQ: AAPL). No stock moves in a straight line up forever. Investors in NASDAQ ETFs have gotten crushed so far in '08, as the high fliers are indeed coming back to earth.

With most ETF portfolios trading back at levels that we saw in the winter of '06, investors have made no money in the last 14 months. Actively managed accounts on the other hand have produced positive results. Like it or not, many investors are fair-weather friends and as soon as they realize that they could have made a lot more money investing in actively managed funds, they will move their money into these type of investments.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position long or short in any stock mentioned as of 1/18/08.

Permalink | Email this | Comments

Permalink | Email this | Comments

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

"My favorite conservative idea for 2008 is an exchange-traded fund, iShares S&P Global Telecommunications Sector (ASE: IXP)," says Carl Delfeld, president of global investment advisory firm Chartwell Partners.

The advisor explains, "iShares S&P Global Telecom is an overweight position in our Chartwell's Global Sector Rotation Portfolio.

"Telecoms are presently out of favor but have great strengths and nice yields. This basket of the larger, more liquid companies has 32% exposure to American companies with the balance in Europe and Asia.

"Telecoms have the hard-line capacity to take advantage of convergence of mobile and landline services. Many of the companies in this ETF basket have dividend yields of 6% or better. Overall, I consider this a good, solid core holding."

Permalink | Email this | Comments

Only a few people really care, but there's a mutual fund battle raging: Are exchange-traded funds superior to traditional mutual funds, or should investors stick with the classics?

According (subscription required) to the Wall Street Journal, a lot of ETFs will be distributing large amounts of capital gains to investors this year -- and they'll have to pay taxes on them. The bull market of the past few years has left a lot of funds, traditional mutual funds as well as ETFs, with capital gains.

But ETFs remain for tax efficient than most traditional mutual funds, in part because most ETFs seek to mimic the performance of indexes, and trade very infrequently. Vanguard appears to be the leader in tax-efficient ETFs, and won't be making any capital gains distributions on any of its ETFs this year.

But there are other costs associated with ETFs that investors need to consider: Because they're traded on exchanges, you have to pay a commission each time you buy or sell shares of an ETF. If you're trading in small dollar amounts, those can eat up a significant chunk of your investment. In addition, the ease with which they can be traded can encourage hyper active trading which tends to lead to poor performance.

But for sheer tax efficiency, ETFs appear to be superior to traditional mutual funds.

Read | Permalink | Email this | Comments

For investors looking for a global way to play the agricultural boom, check out MOO, the Market Vectors Agribusiness ETF (NYSE: MOO). The MOO ETF tracks the DAX Global Agribusiness index (who would have ever thought there even was such a thing).

What is interesting is that this is a truly global index with about 50% exposure to non-U.S. companies. Having raised the exposure to Potash, this is still a well-diversified play, with exposure to chemicals, livestock and other categories. With the fertilizer business exploding and livestock prices moving higher, this is a great ETF for investors looking in these fields.

In addition, for investors who believer in asset-allocation models, this ETF works well, as it is an un-correlated asset.

Permalink | Email this | Comments

A trio of leading advisors are looking outside the US for opportnity in the telecom sector: Nick Vardy sees potential with Telefonica S.A. (NYSE: TEF), David Fried looks south of the border to Telefonos de Mexico (NYSE: TMX) and Dave Dyer recommends the more diversified Emerging Markets Telecommunications Fund (ASE: ETF).

In his Global Bull Market Alert, Nick Vardy explains, "Spanish telecom group Telefonica S.A. is like a corporate conquistador, exploiting its historical links to expand into Latin America. This new Spanish explorer is reaping rich profits for itself and its shareholders.

"Telefonica's global footprint extends across three continents and 23 countries with a total population of 670 million. This conquistador planted its first flag in Latin America 15 years ago and today is the leading telecom in Brazil, Argentina, Chile and Peru.

"For an organization that is already the fifth-biggest telecom company in the world with close to 207 million customers, Telefonica's profits are still expanding at a breathtaking rate.

"Just recently, Telefonica announced that its third-quarter net profit rose 39% year-on-year. Overall, net profit jumped to €4.02 billion from €2.9 billion a year earlier. Also important to us, Telefonica is a stock that has held up remarkably well despite the recent market jitters, recently hitting a record high. We recommend buying the shares at market."

David Fried, in his The Buyback Letter, adds, "The short story on Telefonos de Mexico is that it has a virtual monopoly in Mexico, has a triple play of services and is a generator of massive free cash flow.

"TMX is the leading telecom company in Mexico, with more than 20 million telephone lines in service and more than 1 million Internet access accounts. Telmex, as it is commonly called, controls more than 95% of Mexico's fixed-line telephone market and is a major provider of long-distance services.

"Telmex was privatized in 1990 and is now majority controlled by billionaire magnate Carlos Slim, the world's third richest man or the world's richest, depending on the source you believe. His son Carlos Slim Domit serves as TelMex's co-chairman, while his nephew, Hector Slim Seade acts as the current CEO.

"Telmex provides total telecommunications services -- local and long distance wire service, wireless communications, multimedia network for video, audio and data, network engineering, digital wireless network access and Internet. TMX repurchased about 10.4% of its shares in the last 12 months."

The Dave Dyer Newsletter suggests, "Sometimes you only need one good insight to make money, and one such ideat, I believe, is the inevitable growth of wireless telecom in developing countries. And you can buy all the leading stocks in this sector at once through the Emerging Markets Telecommunications Fund.

"A good communications system is the backbone for economic growth and the cell phone is the status symbol for the new middle class that comes from that economic growth. While 89% of Europeans and 62% of Americans have cell phones, only 14% of people in India, 30% of people in Latin America, and 35% of people in China do.

"We can expect that gap to close quickly. No one is going to lay old technology land lines when it is faster and less expensive to put in cellular networks. Stocks like Vimplecom, China Mobile, Turkcell, and American Movil are booming.

"They are all high-flyers, but by buying them all through this fund, you can lower the risk of loss from the potential sell off in any one area. Also, I gladly defer to people who understand those foreign markets rather than try to research them myself.

"The closed-end fund has been around since 1992 and has net assets of $233 million. The ETF has averaged better than a 30% annual gain over the past 5 years, with a 60% move over the past year. Despite this great performance, it does not seem to be owned by many institutional investors and is not covered by any analysts. Too bad, they are missing out on a good deal. Buy."

Each day, Steven Halpern's TheStockAdvisors.com website features the latest investment commentary and favorite stock picks of the nation's leading financial newsletter advisors.

Permalink | Email this | Comments

Read | Permalink | Email this | Comments

The more questions you have these days about the investment world, and the more concerned you are about economy over the next few years, the more you should have some of your assets in electric utilities. Regardless if our nation makes a push toward nuclear, solar, or wind power or does nothing at all, electric utilities will remain the big players. Year in and year out they have a stable customer base, pay a higher dividend yield and have a much higher level of predictability than almost any other investment class.

Another factor that is likely to contribute to the growth of electric utilities is the push toward electric "plug-in" cars. I have not done any analysis as to how this will affect global warming, the price of gas, the quality of air, or total national energy consumption, but those issues aside, if we change even 25% of the nation's automobiles to all-electric over the next ten years, that is a lot of growth.

Historically, the Dow Jones Utilities Average has beaten the pants off the Dow Jones Industrial Average for total return. There are short periods of time when the Industrials jump past the Utilities, but over the long haul, investors have done much better with what seems like the less attention-grabbing, boring old utilities. Choosing boring stocks remind you of anyone? Yes, "My Pal Warren" has been buying these boring stocks over the last decade (adding to his others in chocolate, underwear, ice cream and insurance) and you can see the results in the five-year chart comparing the two Dow indices.

Given the sorry state of affairs and great economic uncertainties that lie ahead, a good way to proceed is to put all of your local utilities on your watch list since you have some familiarity with them. On a down day, I might start building a position for the long term. I would also combine this view by looking for specific areas of growth.

The three areas I have keyed in on are the Southeastern United States, where population growth is likely to continue to outpace the rest of the nation; China, which will outpace everyone due to its great and growing need for energy fueled by its rapidly expanding economy; and lastly California, the state with the most cars combined with the most demanding (or progressive) regulations.

Here is a short watch-list including the recent P/E and yield:

• The Southeast: Duke Energy (NYSE: DUK) P/E 19.54, Yield 4.53% and Southern Power (NYSE: SO) P/E 17.55, Yield 4.35%
• China: Huaneng Power Intl. ADS (NYSE: HNP) P/E 14.30, Yield 3.49%
• California: PG&E Corp. (NYSE: PCG) P/E 17.15, Yield 3.24%

In addition, you can find Exchange Traded Funds (ETFs) that will allow you to invest in a large group of utilities offering greater diversification. ETFs trade like stocks, although trading is foolish to me. I would just build a position over time and hold it. One such ETF is the Vanguard Utilities ETF (VPU), currently paying a 2.72% yield.

It is clear that we keep inventing new products daily that require electric power and whole new industries as well; the billboard industry is being transformed and data centers are being built throughout the world, factories and even surgical wards are being automated. Wise investors will recognize the importance of electric utilities as a mainstay in any portfolio. These are just few suggestions to consider. If you look, you will find more.

Permalink | Email this | Comments

The Wall Street Journal reports that PowerShares Capital Management LLC (subscription required) has "filed with the Securities and Exchange Commission for three new exchange-traded funds that will hold different combinations of other PowerShares stock and bond ETFs."

Here's why this is good for small investors: ETFs with their low expense ratios are a great product, and diversified portfolios of ETFs allow small investors to put together retirement portfolios easily, without the help of an expensive financial adviser.

But there's a problem: If you have a portfolio of $5,000 and divide it up among ten funds and have to pay a commission of $10 per trade, that works out to a front-load of 2% -- then another 2% when you sell. Unless you have a fairly sizable chunk of money to invest, buying multiple ETFs isn't very cost savvy.

Funds of ETFs will be a practical option for a lot of retail investors and could take market share from two groups that deserve to lose market share: financial advisers and big mutual fund companies.

Read | Permalink | Email this | Comments

Firms have also expanded advertising into personal finance magazines geared to mom-and-pop investors, such as Time Warner Inc.'s Money and Kiplinger's Personal Finance, as well as titles for general, if affluent, readers, such as The New Yorker.

The slick marketing campaigns will no doubt lure in some investors but the question is: Is that good for the investors? I would argue that, in most cases, it probably isn't.

Read | Permalink | Email this | Comments

Gold has shined lately, aided by near-record weakness in the U.S. dollar, strength in commodities like oil and grains, and safe haven buying amid turmoil in credit markets.

Since the low point in mid-August, the yellow metal -- which has an equivalent exchange-traded fund, the streetTRACKS Gold Trust (NYSE: GLD) -- has gained nearly 10% and is fast approaching the highs seen in May 2006.

Interestingly, strength in gold has not quite spilled over into silver -- which has an equivalent exchange-traded fund, the iShares Silver Trust (AMEX: SLV). Silver is up a little more than 9% over the one-month span and remains below its 2006 and February 2007 peaks.

There are any number of reasons why the two metals might not trade in sync, including the fact that silver has more industrial uses than gold and the latter has long been a core portfolio holding of numerous central banks. Regardless, up until last month at least, the two have closely tracked one another.

While it's possible the recent divergence signals a secular change in the relationship, the history over the past three years suggests it could also represent a decent short-term trading opportunity.

For those who are already long gold, it might make sense to switch some of that holding into silver. Selling gold short and going long silver could be another way to play it for those who have the appropriate risk profile and level of sophistication.

Either way, it's worth remembering that there's no such thing as a sure thing.

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle.

Permalink | Email this | Comments