ETF Industry Overview:
§ 802 = # of US ETFs as of 11/30/2009 § 30= # of US ETF managers; § 100 = number of ETF liquidated since 2007 § $739 billion = total ETF industry assets (a record) § 9.8% = number of fixed-income ETFs (79/802) § $100b = asset value of fixed-income ETFs (100/739 = 13.5%) 2009 Hot Investment: Bond (Fixed Income) ETFs § $32 billion: 2009 net inflows to taxable-bond ETFs; most of any ETF asset class § AGG: iShares Barclays Aggregate Bond Fund § BND: Vanguard Total Bond Market ETF Other 2009 popular ETF categories: § Inflation-protected Treasuries § gold § Other commodities (oil, grain, livestock, etc…) § Corporate bonds § Emerging markets using Vanguard’s VWO and iShares’ EEM § Bearish funds (leveraged and inverse ETFs) ProShares and Direxion The Benefits of ETFs benefits relative to Mutual Funds: § transparency § liquidity § low costs § tax efficiency ETF Management Landscape by assets: 1. BlackRock (Barclays Global Investors) 2. State Street 3. Vanguard ($90 billion in ETF assets) Investment Thesis: Since higher inflation is ancipated, higher interest rates are anticipated which means that bond prices will fall. A common approach to profiting from falling bond prices is to invest in short bond funds such as TBT. The Bottom Line: Investing in a short bond ETF (TBT) might be a profitable contrarian strategy. § TBF [20+ year treasury]; $49.83; Mkt cap 209M; Ave Vol = 169k § PST [Ultrashort 7-10 year treasury] $52.33; Mkt cap 347M; Ave Vol = 122k § TBT [Ultrashort 20+ year treasury]; $48.61; Mkt cap 4.5B; Ave Vol = 4.79M Source(s): WSJ, Vanguard, Morgan Stanley, State Street, Google.com, Yahoo.com, Proshares.com
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March 2019
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