FSB Is Worried About ETFs—Should You Be Concerned Too?

Ulli Leveraged ETFs Contact

FSB stands for “Financial Stability Board.” It represents the world’s main regulators and central banks.

Let’s listen in to “Financial Stability Board Warns on Exchange Traded Funds:”

Exchange traded funds pose a serious risk of causing a new financial crisis and should be put under the spotlight so that the signs of a market crash are spotted early, according to the Financial Stability Board.

…

In particular, the FSB said it was worried that ETFs could exacerbate the impact of a future crisis as many funds are not fully-backed by the asset they are invested in.

“The expectation of on-demand liquidity may create the conditions for acute redemptions pressures on certain types of ETFs in situations of market stress, which could in turn affect the liquidity of the large asset managers and banks active in this market,” said the FSB.

Lord Turner, chairman of the Financial Services Authority, is among the senior regulators to have warned of the risks presented to the financial system by ETFs, in particular those that offer leverage.

ETFs have become popular among retail investors in recent years as they offer a cheaper way for the public to get exposure to assets they would normally find it difficult to invest in such as physical commodities such as gold and oil.

Jonathan Compton, founder of Bedlam Asset Management, has warned repeatedly of the dangers of ETFs and said a crisis in the market was a question of “when not if”.

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ETF/No Load Fund Tracker updated through 4/14/2011

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

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THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:

https://theetfbully.com/2011/04/weekly-statsheet-for-the-etfno-load-fund-tracker%E2%80%94updated-through-4142011/

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Market Commentary

Friday, April 15, 2011

MAJOR MARKET ETFs: SLOPPY AND CHOPPY

The past five trading days turned into a repeat of the prior week, as the major market ETFs continued to meander aimlessly but moved higher today in the face of several headwinds.

Some of them came in form of higher inflation readings here in the U.S. joined by China and Europe. Other disappointments were B of A’s earnings, higher oil prices, a downgrade of Ireland’s debt, worries that Greece will default and surging gold prices.

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Weekly StatSheet For The ETF/No Load Fund Tracker—Updated Through 4/14/2011

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through  Thursday, April 14, 2011

If you are not familiar with some of the terminology used, please see the Glossary of Terms.

1. DOMESTIC EQUITY MUTUAL FUNDS/ETFs: BUY— since 6/3/2009

As announced via a blog post, on 6/2/2009, the TTI triggered a buy signal with an effective date of 6/3/2009. We will use the 7% trailing stop loss of our positions as an exit point or the crossing of the trend line to the downside, whichever occurs first.

As of today, our Trend Tracking Index (TTI—green line in above chart) has broken above its long term trend line (red) by +4.00%.

The link below shows the top 100 domestic funds (out of 674) and the sorting order is by M-Index ranking. Prices in all linked tables are updated through 4/14/2011, unless otherwise noted. Price data not yet available at publication is indicated with 00.00% or -100.00%.

During this Buy signal, you can use the tables in the links below to make your selections:

http://www.successful-investment.com/SSTables/DomFundsTop100_041411.pdf

Spreadsheet version: http://www.successful-investment.com/SSTables/DomFundsTop100_041411.xls

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High Volume ETFs On The Cutline—Updated Through 4/13/2011

Ulli ETFs on the Cutline Contact

Here’s a slightly different version of the original “ETFs On The Cutline” report. It includes only High Volume (HV) ETFs, which I define 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.

Short ETFs are not yet included but will be in the future. Take a look at the table:

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Correction

Ulli Model ETF Portfolios Contact

In the previous post, featuring the 5 Model ETF portfolios, the starting date was given as 12/31/2011. That obviously was supposed to be 12/31/2010.

My mistake. Sorry.

Ulli…

5 ETF Model Portfolios You Can Use

Ulli Model ETF Portfolios Contact

Let me just shatter one myth that seems to come up regularly in correspondence with readers. It is the erroneous assumption that an ideal ETF model portfolio exists that is perfect in its composition and will withstand the vagaries of the market place.

It does not exist!

Portfolio composition is a function of risk tolerance and time frame, along with its objective of growing assets, generating income, or a combination of both. Nothing more and nothing less.

In this new blog series, I am introducing 5 ETF portfolio options, some of which are being widely used in the advisor community. Of course, there are as many portfolio choices as there are advisors, so my 5 listings represent a small sampling of what’s out there.

Again, there is no right or wrong, or better or worse, when it comes to portfolios; the only thing that matters is what’s appropriate for your particular circumstances.

Let’s take a look at the first one:

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