Ulli... The ETF Bully

High Volume ETFs On The Cutline – Updated Through 5/4/2011

Ulli Thursday, 5 May 2011, 5:30 AM ETFs on the Cutline Contact

Here’s the latest update of the High Volume only ETFs, which are hovering slightly below and above their cutline (trend line). High Volume (HV) ETFs are defined as those with an average daily volume of $10 million or higher.

These ETFs are generated from my selected list of 90 that I use in my advisor practice. It cuts out the “noise,” which simply means it eliminates those ETFs that I would never buy because of their volume limitations.

With the markets being in correction mode over the past 2 trading days, there were some surprise moves to the downside and the upside. The more volatile BRF sold off sharply and dropped from a +16 position to -2, ending up below its long term trend line. ILF followed closely but remained at +1, which represents the first ETF above the line.

On the positive side, there was one ETF, which bucked the sell off and actually climbed up the food chain from +2 to +7. For new money, this is the only buy on this week’s list.

Precious Metal ETFs: Higher Or Lower Prices Ahead?

Ulli Wednesday, 4 May 2011, 12:21 PM Gold ETFs Contact

That is the question, especially after silver got hammered pretty hard over the past few trading days. The simple answer is that it depends on who you ask.

For some thoughts, let’s listen in to the WSJ’s “Steep Drop Tarnishes Bog Bets On Silver” (subscription required):

Silver prices plunged, suffering their worst one-day drop in dollar terms in three decades, as investors fretted that rising trading costs could cripple a market exhibiting signs of froth.

Silver’s fall of $3.50, or 7.6%, and a 1% drop in gold prices Tuesday came as some major investors have been selling. George Soros’s big hedge fund, a firm operated by high-profile investor John Burbank and some other leading firms have been selling gold and silver, according to people close to the matter, after furiously accumulating precious metals for much of the past two years.

Their selling suggested the sharp, nine-month run-up for precious metals could be entering more dangerous territory.

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6 ETF Model Portfolios You Can Use – Updated through 5/3/2011

Ulli Wednesday, 4 May 2011, 5:36 AM Model ETF Portfolios Contact

As announced last Sunday, I have added the Ivy ETF Portfolio in this line up. It’s indentified as Portfolio #6.

All portfolios held pretty steady during the past 5 trading days, but came off their highs made last Friday, the last day of April. The S&P 500 gained 0.74% for this period.

With a little bit of weakness having set in during the first two trading days of May, especially in the metals, it remains to be seen if this current resistance continues. As far as the 6 portfolios are concerned, your main criteria should be your own risk tolerance when making a decision as to which might be suitable for you.

Let’s review the first one (click on any table to enlarge):

How TIPs Inflate Their Yields

Ulli Tuesday, 3 May 2011, 12:09 PM TIPS Contact

You think that some of the yields to be had when buying TIPs these days are simply mouthwatering and hard to resist given the current zero interest rate environment.

Before you jump in with both feet, consider this WSJ report (subscription required) titled “How Inflation-Protected Funds Get To Inflate Their Yields:”

How would you like to triple the yield on your bonds?

Most of us can only dream. But look at the eye-popping variation in yields among funds that focus on Treasury inflation-protected securities, or TIPS, the U.S. obligations that rise in value as the consumer-price index goes up.

Among the 173 TIPS mutual funds tracked by Morningstar, the reported “SEC yields” as of March 31 ranged from minus-0.77% to 5.58%, with 12 funds yielding at least 5%. Four of the seven exchange-traded funds that specialize in TIPS displayed yields greater than 5%, with Pimco 15+ Year U.S. TIPS Index leading the pack at 6.07%.

Yet no TIPS yield more than 1.75%. How could anyone but an alchemist generate 5% or more out of 1.75% or less?

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Mutual Funds On The Cutline – Updated as of 5/2/2011

Ulli Tuesday, 3 May 2011, 5:45 AM Mutual Funds On The Cutline Contact

With just about all equity funds being in the stratosphere, and above their respective trend lines, most changes occurred this week with bond and conservative allocation funds.

As per the Fed, a zero interest rate policy is being maintained, and some of the bond funds are confirming this trend by heading higher and, in some cases, having crossed their trend line (cutline) to the upside.

Despite fear of higher rates, this cutline report confirms the tendency towards lower one; at least for the time being:

PADGX is now firmly entrenched above the cutline at a position of +8 from last week’s +5.

A larger move was made by BTFTX, which moved from -4 to +7. The Vanguard Total Bond Index (VBMFX), of which we own the ETF equivalent (BND), has climbed from -8 to a -2 position and has come within striking distance of breaking through to the upside again.

Take a look: