The last two weeks have been strong ones for the Exchange Traded Funds in our ETF Energy Trader portfolio.
Now that we’ve turned the page from May to June, let’s take a look at the five open positions in our portfolio – which is up 6.03% in just two weeks’ time – as well as our ever-growing list of Energy ETFs For You to Watch.
So let’s get started…
Jefferies TR/J CRB Wildcatters (WCAT) – up 9.1%
When I recommended you enter this position, I called it “a perfect investment in the oil industry that prevents you from any backlash against outsized profits from “Big Oil.””
The truth of the matter is that this remains a perfect investment for the New Energy Revolution.
This fund gives you upside exposure to the smaller – and sometimes little-known – companies whose entire existence depends on their ability to find oil & gas deposits in places where it was thought not to exist.
Should this fund continue to climb higher – a rate of nearly 10% every two weeks is likely not sustainable – we may take some of our profits off the table at some point and then buy on a pullback.
Keep your eyes open for an alert in the next 1-2 weeks should this opportunity present itself.
PowerShares Global Clean Energy Portfolio (PBD) – up 0.9%
The clean energy story, as you know, is enormous – but it’s also one that has been slow to develop.
The slow development of this trend may continue – perhaps for as long as the rest of 2011 – but that doesn’t change the fundamental story: the world’s demand for clean energy will continue to increase.
That means we’ll need to be patient with this fund – though it’s still very much a long-term buy and I’m convinced it will return to its previous $30 level – and continue to search for short-term clean energy ETFs that can bring quick profit potential.
Guggenheim Canadian Energy Income ETF (ENY) – up 5.4%
This fund is an investment in Canadian Royalty Trusts and oil-sands producers…and it climbed from the $14.50 level last August all the way to $24 in March.
We were able to buy on a dip earlier this month – at $20.93 – and we’ll continue to do that in order to continue loading up on this outstanding oil play when it pulls back below $20 again.
This fund combines the income and insurance that comes with a Canadian oil play while allowing us to take advantage of the continued supply/demand story that drives oil prices higher.
IQ Global Oil Small-Cap ETF (IOIL) – up 4.95%
This brand-new ETF – launched in early May – has been mostly sideways in its infancy, but it provides us with great exposure to small-cap oil companies.
Small-caps are often ignored by analysts at large institutional firms…and that provides great opportunity.
But who wants to invest using the needle-in-a-haystack approach?
Should even just a few of the small-caps in this ETF begin to take off, they’ll deliver profits to you of 25% or more – without the risk associated with investing in individual companies.
Nothing has changed in the first few weeks of this fund’s existence to make it any less compelling to energy investors like us.
Market Vectors Coal ETF (KOL) – up 5.14%
This fund -- Market Vectors Coal ETF – is perfectly positioned to benefit from the continued heavy demand for coal across the world.
A look at the long-term chart will show that this fund once traded as high as $57.60, but it took a nasty fall in 2008 – all the way to $11 – as coal prices tumbled.
That’s not a concern today as the fund nears the $50 level once again.
China’s demand for coal alone is enough to keep pushing prices higher…and this fund will provide us with steady profits as that trend continues.
ETF Energy Trader Watch List
SPDR S&P Oil & Gas Equipment & Services (XES) – closed Tuesday at $41.98
This fund was added to our Watch List one week ago – on May 24 – when it was trading at $39.
We were looking for a pullback to the $37 level to take a position, but instead the fund has climbed to $41.98 in the last week.
Given the fact that demand for oil will continue for the foreseeable future…the energy service companies – which this fund represents – will be in big demand.
Buying XES – even at today’s price – is a sound investment. But we’ll continue to wait for that pullback before officially adding this fund to our portfolio.
We’ve just seen a short, one-week gain of 7.5% -- and there will be more opportunities ahead for us to grab short-term profits of 20% or more in the weeks ahead.
SPDR Utilities Select Sector Fund (XLU) – closed Tuesday at $33.87
I’m adding this fund to our watch list today, as we now head into the beginning of summer…and I expect the U.S. stock market to begin its inevitable pullback in the weeks ahead.
Utilities have traditionally been a great play in the face of a declining market – and in this case, there’s a strong fundamental case to be made for utility stocks to continue climbing higher in the next six weeks.
Let’s take advantage of XLU – a widely popular ETF provides us with attractive yields of 3.8% and great upside potential should utility stocks continue climbing.
I’m adding this fund to the Watch List today as it’s trading near its 3-month high of $34.20. But depending on what happens in the stock market before this week ends, I may issue a Buy signal at any price…so please stay tuned.
Tuesday, May 31, 2011
Tuesday, May 24, 2011
ETF Energy Trader Alert – May 24, 2011
Monday’s sell-off – in both stocks and commodities – was fueled by growing concerns over Europe’s debt problems.
This, naturally, had a negative impact on the funds in our ETF Energy Trader portfolio, but the impact was minimal.
Monday’s action, though, was a clear – though modest – example of the type of short-term pullback that can create a buying opportunity for those ETF Energy Trader members paying close attention.
Here’s what I mean.
The action in the markets on Monday had nothing to do with the fundamentals we’ve based our investment decisions on.
The European debt crisis will not fundamentally change the supply-and-demand story for oil and energy in emerging markets…and it won’t have any impact at all on the global demand for new energy sources.
Sure enough, earlier this morning oil futures began to rise again – because the overall energy story is impossible to ignore.
In fact, Goldman Sachs said in a news release this morning essentially the same thing we’ve been telling you:
“The bank said the recent pullback in oil markets, which have lost around $15 a barrel compared with the highs seen in April and on May 2, provided a "good entry point for long positions in crude oil." – Wall Street Journal, May 24, 2011
But Goldman Sachs wasn’t the only one repeating our message this morning:
"Investors are realizing that at the end of the day, there's more demand for commodities than there is supply. That means the long-term trend is higher," said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York. "When there's a short-term selloff, we would take it as an entry point." – Reuters, May 24, 2011
The lesson here is simple: market volatility created by European debt issues – and other concerns – will cause pullbacks in the oil and energy sector from time to time.
But we should welcome these pullbacks…because they present us with great buying opportunities.
And to that end – I’d like to add a fund to our Watch List this morning:
SPDR S&P Oil & Gas Equipment & Services (XES) is exactly what it sounds like: an exchange-traded fund that tracks the oil & gas services sector. Specifically, its aim is to track the performance of the S&P Oil & Gas Equipment & Services Select Industry Index.
We all know that the demand for oil will continue for the foreseeable future – and that means the energy service companies will be in big demand.
XES is a great play on this angle – and with a diversified portfolio of 25 stocks, coupled with a reasonable P/E ratio of 20, this fund presents the best opportunity for us to take advantage of the oil & gas services story.
Let’s keep an eye on XES – which has traded as high as $44 within the last month. It’s currently priced at just over $39 – and a pullback to the $37 level would give us an opportunity for a nice short-term profit play.
This, naturally, had a negative impact on the funds in our ETF Energy Trader portfolio, but the impact was minimal.
Monday’s action, though, was a clear – though modest – example of the type of short-term pullback that can create a buying opportunity for those ETF Energy Trader members paying close attention.
Here’s what I mean.
The action in the markets on Monday had nothing to do with the fundamentals we’ve based our investment decisions on.
The European debt crisis will not fundamentally change the supply-and-demand story for oil and energy in emerging markets…and it won’t have any impact at all on the global demand for new energy sources.
Sure enough, earlier this morning oil futures began to rise again – because the overall energy story is impossible to ignore.
In fact, Goldman Sachs said in a news release this morning essentially the same thing we’ve been telling you:
“The bank said the recent pullback in oil markets, which have lost around $15 a barrel compared with the highs seen in April and on May 2, provided a "good entry point for long positions in crude oil." – Wall Street Journal, May 24, 2011
But Goldman Sachs wasn’t the only one repeating our message this morning:
"Investors are realizing that at the end of the day, there's more demand for commodities than there is supply. That means the long-term trend is higher," said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York. "When there's a short-term selloff, we would take it as an entry point." – Reuters, May 24, 2011
The lesson here is simple: market volatility created by European debt issues – and other concerns – will cause pullbacks in the oil and energy sector from time to time.
But we should welcome these pullbacks…because they present us with great buying opportunities.
And to that end – I’d like to add a fund to our Watch List this morning:
SPDR S&P Oil & Gas Equipment & Services (XES) is exactly what it sounds like: an exchange-traded fund that tracks the oil & gas services sector. Specifically, its aim is to track the performance of the S&P Oil & Gas Equipment & Services Select Industry Index.
We all know that the demand for oil will continue for the foreseeable future – and that means the energy service companies will be in big demand.
XES is a great play on this angle – and with a diversified portfolio of 25 stocks, coupled with a reasonable P/E ratio of 20, this fund presents the best opportunity for us to take advantage of the oil & gas services story.
Let’s keep an eye on XES – which has traded as high as $44 within the last month. It’s currently priced at just over $39 – and a pullback to the $37 level would give us an opportunity for a nice short-term profit play.
Tuesday, May 17, 2011
5 Blockbuster Energy ETF Trades You Must Enter Immediately
5 Blockbuster Energy ETF Trades You Must Enter Immediately
-- updated May 17, 2011
Trade #1: Jefferies TR/J CRB Wildcatters (WCAT) – closed 5/17 at $48.66
The recent pullback in oil prices to just under $100 a barrel has created a great, short-term buying opportunity in oil-related ETFs.
Of course, there has also been plenty of backlash – from Congress and in the mainstream media – directed at “Big Oil”.
So this ETF – the Jefferies TR/J CRB Wildcatters ETF (WCAT) – is a perfect investment in the oil industry that prevents you from any backlash against outsized profits from “Big Oil.”
This ETF is dedicated to investing in companies in the “wildcatter” sector. These are the firms – mostly smaller in size – that specialize in finding oil & gas deposits in places where it was thought not to exist.
This investment is a perfect example of the power of ETFs. To invest in individual wildcatter companies would be incredibly speculative. You’d expose yourself to plenty of risk – not to mention volatility – if you were to use the “needle-in-a-haystack” approach.
By investing in WCAT – and in particular, at this price – you get to enjoy the potential rewards of a continued strong oil market without the backlash (politically & otherwise) against Big Oil’s high profits.
Trade #2: PowerShares Global Clean Energy Portfolio (PBD) – closed 5/17 at $14.43
Clean energy will no doubt remain in the news for many years to come…but between now and the November 2012 election, there will be enormous emphasis on this area in the U.S.
This fund gives you the upside of green energy profits without forcing you to “bet” on any single technology. The fund invests in nearly 100 companies, with concentration in utilities, industrials and IT firms.
Before the market collapse of 2008, this fund was trading above the $30 level – and after bottoming out at $9 in November of that year, it has slowly climbed back above the $14 level.
The continued emphasis on green energy means that this sector should remain in a growth mode for several years – and PBD is the Exchange Traded Fund best positioned to help you take advantage of that growth.
Trade #3: Guggenheim Canadian Energy Income ETF (ENY) – closed 5/17 at $20.93
Remember – in spite of the recent pullback in the energy sector, the fundamentals remain overwhelmingly strong.
Each selloff – like the one we saw during the first week in May – presents an opportunity for savvy energy investors to jump in and take advantage of bargains.
The Guggenheim Canadian Energy Income ETF (ENY) presents a tremendous opportunity to profit from higher oil prices while at the same time limiting your risk in the event that U.S. producers take a step backward.
The fund tracks the Sustainable Canadian Energy Income Index, which selects companies from a universe of 25 Canadian royalty trusts and 20 oil-sands resource producers.
And thanks to the fund’s unique tactical allocation model shifts its weights between the royalty trusts and the oil-sands producers depending on current crude oil prices…and this allows investors to grab dividends during rough times while still looking for growth when oil is soaring.
The fund pays out a current yield of around 3% -- and it has returned 14.9% YTD. In addition to the fund’s unique “weighting” strategy, the fact that the fund’s focus is on Canadian investments provides investors with further insurance in the event of difficulties for U.S.-based companies.
Trade #4: IQ Global Oil Small-Cap ETF (IOIL) – closed 5/17 at $18.80
As a quick glance at the chart will tell you…this is a brand-new ETF.
Launched in early May, the IQ Global Oil Small Cap ETF is a small-cap oil ETF…which means you get the chance to take advantage of a fast-growing – but often overlooked – corner of the global energy market.
By investing in small caps – via this new ETF – you give yourself the benefits associated with those smaller companies that are often ignored by analysts at large institutional firms. And when some of these small-caps take off…they have the potential to send a fund soaring!
In addition, because this is a global small-cap play, you’re not just getting the benefit of overlooked companies…you’re also giving yourself the power of the growth that’s associated with emerging markets.
In short, this ETF gives us everything we’re looking for as investors cashing in on the New Energy Revolution: explosive profit potential – before the Big Boys join the party – from emerging markets.
Trade #5: Market Vectors Coal ETF (KOL) – closed 5/17 at $46.69
International coal prices have been soaring – up more than 30% over the last year – and that’s due to strong demand in places like China and India, where there are huge coal shortages.
While it’s true that a lot of coal-fired plants are being retired in the U.S., the reality is that coal is an extremely cheap source of fuel for the rest of the world – and globally, coal usage is up dramatically.
China’s government is warning of widespread power shortages as we head into summer, and that means their demand for coal will continue to soar. China is the world's largest consumer, gobbling up nearly half of the world's coal consumption…and coal accounts for more than 70% of the nation’s energy.
This fund -- Market Vectors Coal ETF – is perfectly positioned to benefit from the continued heavy demand for coal across the world. It’s up nearly 60% over the last twelve months…and it’s poised to run much, much higher in the months ahead.
-- updated May 17, 2011
Trade #1: Jefferies TR/J CRB Wildcatters (WCAT) – closed 5/17 at $48.66
The recent pullback in oil prices to just under $100 a barrel has created a great, short-term buying opportunity in oil-related ETFs.
Of course, there has also been plenty of backlash – from Congress and in the mainstream media – directed at “Big Oil”.
So this ETF – the Jefferies TR/J CRB Wildcatters ETF (WCAT) – is a perfect investment in the oil industry that prevents you from any backlash against outsized profits from “Big Oil.”
This ETF is dedicated to investing in companies in the “wildcatter” sector. These are the firms – mostly smaller in size – that specialize in finding oil & gas deposits in places where it was thought not to exist.
This investment is a perfect example of the power of ETFs. To invest in individual wildcatter companies would be incredibly speculative. You’d expose yourself to plenty of risk – not to mention volatility – if you were to use the “needle-in-a-haystack” approach.
By investing in WCAT – and in particular, at this price – you get to enjoy the potential rewards of a continued strong oil market without the backlash (politically & otherwise) against Big Oil’s high profits.
Trade #2: PowerShares Global Clean Energy Portfolio (PBD) – closed 5/17 at $14.43
Clean energy will no doubt remain in the news for many years to come…but between now and the November 2012 election, there will be enormous emphasis on this area in the U.S.
This fund gives you the upside of green energy profits without forcing you to “bet” on any single technology. The fund invests in nearly 100 companies, with concentration in utilities, industrials and IT firms.
Before the market collapse of 2008, this fund was trading above the $30 level – and after bottoming out at $9 in November of that year, it has slowly climbed back above the $14 level.
The continued emphasis on green energy means that this sector should remain in a growth mode for several years – and PBD is the Exchange Traded Fund best positioned to help you take advantage of that growth.
Trade #3: Guggenheim Canadian Energy Income ETF (ENY) – closed 5/17 at $20.93
Remember – in spite of the recent pullback in the energy sector, the fundamentals remain overwhelmingly strong.
Each selloff – like the one we saw during the first week in May – presents an opportunity for savvy energy investors to jump in and take advantage of bargains.
The Guggenheim Canadian Energy Income ETF (ENY) presents a tremendous opportunity to profit from higher oil prices while at the same time limiting your risk in the event that U.S. producers take a step backward.
The fund tracks the Sustainable Canadian Energy Income Index, which selects companies from a universe of 25 Canadian royalty trusts and 20 oil-sands resource producers.
And thanks to the fund’s unique tactical allocation model shifts its weights between the royalty trusts and the oil-sands producers depending on current crude oil prices…and this allows investors to grab dividends during rough times while still looking for growth when oil is soaring.
The fund pays out a current yield of around 3% -- and it has returned 14.9% YTD. In addition to the fund’s unique “weighting” strategy, the fact that the fund’s focus is on Canadian investments provides investors with further insurance in the event of difficulties for U.S.-based companies.
Trade #4: IQ Global Oil Small-Cap ETF (IOIL) – closed 5/17 at $18.80
As a quick glance at the chart will tell you…this is a brand-new ETF.
Launched in early May, the IQ Global Oil Small Cap ETF is a small-cap oil ETF…which means you get the chance to take advantage of a fast-growing – but often overlooked – corner of the global energy market.
By investing in small caps – via this new ETF – you give yourself the benefits associated with those smaller companies that are often ignored by analysts at large institutional firms. And when some of these small-caps take off…they have the potential to send a fund soaring!
In addition, because this is a global small-cap play, you’re not just getting the benefit of overlooked companies…you’re also giving yourself the power of the growth that’s associated with emerging markets.
In short, this ETF gives us everything we’re looking for as investors cashing in on the New Energy Revolution: explosive profit potential – before the Big Boys join the party – from emerging markets.
Trade #5: Market Vectors Coal ETF (KOL) – closed 5/17 at $46.69
International coal prices have been soaring – up more than 30% over the last year – and that’s due to strong demand in places like China and India, where there are huge coal shortages.
While it’s true that a lot of coal-fired plants are being retired in the U.S., the reality is that coal is an extremely cheap source of fuel for the rest of the world – and globally, coal usage is up dramatically.
China’s government is warning of widespread power shortages as we head into summer, and that means their demand for coal will continue to soar. China is the world's largest consumer, gobbling up nearly half of the world's coal consumption…and coal accounts for more than 70% of the nation’s energy.
This fund -- Market Vectors Coal ETF – is perfectly positioned to benefit from the continued heavy demand for coal across the world. It’s up nearly 60% over the last twelve months…and it’s poised to run much, much higher in the months ahead.
Inside the World of Energy ETFs
Inside the World of Energy ETFs
Table of Contents:
I. History of Exchange Traded Funds
II. The Advantages of ETFs
III. Why ETFs are the Perfect Vehicle for Energy Investors
Part One – History of Exchange Traded Funds
According to the history books, Exchange Traded Funds (or ETFs) got their start back in 1993, with the first fund being launched by State Street Global Advisors.
That fund – known as SPDR, or “Spider” – was designed to track the performance of the S&P 500 index…and to this day (ticker symbol SPY), it’s still the largest ETF in the United States.
As you might expect, ETFs were – in the beginning – a powerful tool reserved almost exclusively for institutional investors.
But, thanks to the popularity of index tracking, ETFs were soon being used by individual investors and quickly other companies – such as PowerShares, Barclays Global Investors and ProShares – began marketing ETFs to individual investors.
Within a short period of time, investors had the ability to invest in stock indexes all over the globe.
Within less than 10 years – by 2002 – there were nearly 250 ETFs available all over the globe…representing nearly $100 billion in assets under management.
And then things began to take off at an astounding rate.
In the decade that’s followed, the growth in ETFs has allowed individual investors to not only invest in a particular index…but also in specific market niches.
The growth by the end of 2010 has been astounding – with nearly $1 trillion under management in ETFs.
And according to several independent sources, ETFs combined to account for 29% of equity trading volume in 2010. That’s an astounding $18.2 trillion worth of trading!
At this very moment, 145 ETFs have $1 billion or more worth of assets – and no fewer than 500 ETFs have topped the $100 million mark.
As of the end of 2010, the three largest ETFs in the world were:
1. SPDR S&P 500 (SPY) -- $89.9 billion
2. SPDR Gold (GLD) -- $58.1 billion
3. iShares MSCI Emerging Markets Index (EEM) -- $47.5 billion.
Part Two – The Advantages of ETFs
No question about it…exchange-traded funds are among the most powerful investment vehicles ever invented.
When compared with mutual funds – or even traditional stock investing – ETFs come out on top in every way imaginable.
Let’s take a look three primary advantages…
* ETF Advantage #1 – Flexiblity – If you think the market – or a particular sector – is heading higher…an ETF can help you take advantage. If you feel certain this will happen…a leveraged ETF will help you “double down” on your hunch.
But what if you’re convinced a particular sector is headed for a nosedive? ETFs allow you to short the market as well.
Do you want to take advantage of the potential growth in India? You can buy an ETF designed to track that growth.
The flexibility in terms of choices is truly remarkable.
But ETFs also provide another kind of flexiblility in that you can buy and sell them during the course of the trading day just like a “regular” stock. With mutual funds, your money is “locked in” and you can only cash out at the end of a particular day…but with ETFs, it’s possible for you to get in and out with the same speed stock investors enjoy.
* ETF Advantage #2 – Complete Transparency – We’ve all read the stories about so-called “gold” mutual funds that only invest in a small percentage of gold stocks. The truth is, mutual funds are set up in a way that allows fund managers to deceive investors.
That’s not the case with ETFs – you know at all times where the fund’s assets are invested…and you never have to worry about a scandal where a fund manager cheats the little guy. ETFs have no managers…and there is no risk of not knowing – with complete certainty – where your money is invested.
* ETF Advantage #3 – They’re Less Expensive than Mutual Funds – Most people don’t realize it – or maybe they don’t care – but mutual funds can be very expensive. The average actively-managed fund charged around 1% in expenses in 2010…but with ETFs you pay roughly one-third of that amount! Some index-based ETFs charge fees as low as one-tenth of one percent. Try finding a mutual fund that cheap!
Part Three – Why ETFs are the Perfect Vehicle for Energy Investors
There’s no question about it…
Soaring demand for new energy sources – and the explosive growth in emerging markets – has created a once-in-a-lifetime opportunity for individual investors like you to make money.
But it’s important to realize that the old “needle-in-a-haystack” approach to energy investing is NOT the best way to build wealth.
You remember those days, don’t you? When you’d hear about an exploration company that had a good story…you’d plunk down some of your hard-earned cash…and you’d hope they struck oil.
Every once in a while – at a cocktail party, most likely – you might hear a story from someone who made a killing from an oil strike.
Of course, it was much more common to hear stories about investments that lost money.
But those days are over.
Thanks to the power of Exchange Traded Funds, you can harness the power of energy investing and make “speculator-sized profits” without visiting a single drilling site.
Let me show you how the ease and flexibility of ETFs allows you to take advantage of the opportunities we’ll see as part of the New Energy Revolution:
Own the World’s Greatest Energy Companies with Energy ETFs
Thanks to the specificity of the newly-launched ETFs, it’s possible to make a safe, easy investment on a particular sector of the energy market.
If, for example, it becomes clear that oil service companies are about to pop, it’s possible for you to “gobble up” nearly all of the oil service companies in a particular region with one simple transaction. All without the high risk involved with choosing a single stock…or the added cost that would be involved with buying a dozen or more stocks and paying multiple transaction fees.
Buy and Sell Commodity Futures With Ease
Interested in profiting from a rise in a particular commodity…but you don’t want exposure to individual companies? Or maybe you’re not interested in trading options or futures?
Rest easy…a commodity-based energy ETF allows you to take full advantage of a rise in a specific commodity without the hassle of opening a new account or learning any complicated new trading rules. Commodity-based ETFs allow you to essentially “wager” on the price of a commodity – up or down – with great ease.
Diversification is Simple with Energy ETFs
Every smart investor understands the value of diversification. It’s always important that your risk is spread among multiple sectors or markets.
So an energy-based ETF can offer you great diversification options. If you’re heavy in tech stocks, you can balance your portfolio by selecting an alternative energy fund or perhaps a natural gas ETF.
Instead of attempting to diversify by investing in specific companies – or even buying gold – you can instead make a simple, safer investment in an energy ETF to balance your portfolio with ease.
Take Advantage of Specific, Fast-Moving Opportunities
As I mentioned before, the “old way” of investing in energy was to try and strike it rich with risky exploration plays.
Those days are now behind us.
Thanks to the number of targeted energy ETFs available to you today, it’s possible for you to collect profits from a particular “niche” of the energy market without investing in individual companies…without examining balance sheets…and without understanding a geological survey.
Instead, if our research shows us that Canadian oil presents an opportunity…we’ll move quickly into an ETF designed specifically to track the Canadian oil market.
Energy investors still trying to get rich in 2011 by investing in individual companies are like confused drivers trying to reach a new destination without a GPS device or cell phone. Eventually, one of them might get to his destination…but it will be a long, painful process – with much more failure than success.
Why would you want to put yourself through such a torturous process?
Your smartest move is to stay plugged in to the up-to-the-minute recommendations being made by the ETF Energy Trader service. As each recommendation is made, I encourage you to do your own due diligence – and make sure the trade is right for you – before investing.
Table of Contents:
I. History of Exchange Traded Funds
II. The Advantages of ETFs
III. Why ETFs are the Perfect Vehicle for Energy Investors
Part One – History of Exchange Traded Funds
According to the history books, Exchange Traded Funds (or ETFs) got their start back in 1993, with the first fund being launched by State Street Global Advisors.
That fund – known as SPDR, or “Spider” – was designed to track the performance of the S&P 500 index…and to this day (ticker symbol SPY), it’s still the largest ETF in the United States.
As you might expect, ETFs were – in the beginning – a powerful tool reserved almost exclusively for institutional investors.
But, thanks to the popularity of index tracking, ETFs were soon being used by individual investors and quickly other companies – such as PowerShares, Barclays Global Investors and ProShares – began marketing ETFs to individual investors.
Within a short period of time, investors had the ability to invest in stock indexes all over the globe.
Within less than 10 years – by 2002 – there were nearly 250 ETFs available all over the globe…representing nearly $100 billion in assets under management.
And then things began to take off at an astounding rate.
In the decade that’s followed, the growth in ETFs has allowed individual investors to not only invest in a particular index…but also in specific market niches.
The growth by the end of 2010 has been astounding – with nearly $1 trillion under management in ETFs.
And according to several independent sources, ETFs combined to account for 29% of equity trading volume in 2010. That’s an astounding $18.2 trillion worth of trading!
At this very moment, 145 ETFs have $1 billion or more worth of assets – and no fewer than 500 ETFs have topped the $100 million mark.
As of the end of 2010, the three largest ETFs in the world were:
1. SPDR S&P 500 (SPY) -- $89.9 billion
2. SPDR Gold (GLD) -- $58.1 billion
3. iShares MSCI Emerging Markets Index (EEM) -- $47.5 billion.
Part Two – The Advantages of ETFs
No question about it…exchange-traded funds are among the most powerful investment vehicles ever invented.
When compared with mutual funds – or even traditional stock investing – ETFs come out on top in every way imaginable.
Let’s take a look three primary advantages…
* ETF Advantage #1 – Flexiblity – If you think the market – or a particular sector – is heading higher…an ETF can help you take advantage. If you feel certain this will happen…a leveraged ETF will help you “double down” on your hunch.
But what if you’re convinced a particular sector is headed for a nosedive? ETFs allow you to short the market as well.
Do you want to take advantage of the potential growth in India? You can buy an ETF designed to track that growth.
The flexibility in terms of choices is truly remarkable.
But ETFs also provide another kind of flexiblility in that you can buy and sell them during the course of the trading day just like a “regular” stock. With mutual funds, your money is “locked in” and you can only cash out at the end of a particular day…but with ETFs, it’s possible for you to get in and out with the same speed stock investors enjoy.
* ETF Advantage #2 – Complete Transparency – We’ve all read the stories about so-called “gold” mutual funds that only invest in a small percentage of gold stocks. The truth is, mutual funds are set up in a way that allows fund managers to deceive investors.
That’s not the case with ETFs – you know at all times where the fund’s assets are invested…and you never have to worry about a scandal where a fund manager cheats the little guy. ETFs have no managers…and there is no risk of not knowing – with complete certainty – where your money is invested.
* ETF Advantage #3 – They’re Less Expensive than Mutual Funds – Most people don’t realize it – or maybe they don’t care – but mutual funds can be very expensive. The average actively-managed fund charged around 1% in expenses in 2010…but with ETFs you pay roughly one-third of that amount! Some index-based ETFs charge fees as low as one-tenth of one percent. Try finding a mutual fund that cheap!
Part Three – Why ETFs are the Perfect Vehicle for Energy Investors
There’s no question about it…
Soaring demand for new energy sources – and the explosive growth in emerging markets – has created a once-in-a-lifetime opportunity for individual investors like you to make money.
But it’s important to realize that the old “needle-in-a-haystack” approach to energy investing is NOT the best way to build wealth.
You remember those days, don’t you? When you’d hear about an exploration company that had a good story…you’d plunk down some of your hard-earned cash…and you’d hope they struck oil.
Every once in a while – at a cocktail party, most likely – you might hear a story from someone who made a killing from an oil strike.
Of course, it was much more common to hear stories about investments that lost money.
But those days are over.
Thanks to the power of Exchange Traded Funds, you can harness the power of energy investing and make “speculator-sized profits” without visiting a single drilling site.
Let me show you how the ease and flexibility of ETFs allows you to take advantage of the opportunities we’ll see as part of the New Energy Revolution:
Own the World’s Greatest Energy Companies with Energy ETFs
Thanks to the specificity of the newly-launched ETFs, it’s possible to make a safe, easy investment on a particular sector of the energy market.
If, for example, it becomes clear that oil service companies are about to pop, it’s possible for you to “gobble up” nearly all of the oil service companies in a particular region with one simple transaction. All without the high risk involved with choosing a single stock…or the added cost that would be involved with buying a dozen or more stocks and paying multiple transaction fees.
Buy and Sell Commodity Futures With Ease
Interested in profiting from a rise in a particular commodity…but you don’t want exposure to individual companies? Or maybe you’re not interested in trading options or futures?
Rest easy…a commodity-based energy ETF allows you to take full advantage of a rise in a specific commodity without the hassle of opening a new account or learning any complicated new trading rules. Commodity-based ETFs allow you to essentially “wager” on the price of a commodity – up or down – with great ease.
Diversification is Simple with Energy ETFs
Every smart investor understands the value of diversification. It’s always important that your risk is spread among multiple sectors or markets.
So an energy-based ETF can offer you great diversification options. If you’re heavy in tech stocks, you can balance your portfolio by selecting an alternative energy fund or perhaps a natural gas ETF.
Instead of attempting to diversify by investing in specific companies – or even buying gold – you can instead make a simple, safer investment in an energy ETF to balance your portfolio with ease.
Take Advantage of Specific, Fast-Moving Opportunities
As I mentioned before, the “old way” of investing in energy was to try and strike it rich with risky exploration plays.
Those days are now behind us.
Thanks to the number of targeted energy ETFs available to you today, it’s possible for you to collect profits from a particular “niche” of the energy market without investing in individual companies…without examining balance sheets…and without understanding a geological survey.
Instead, if our research shows us that Canadian oil presents an opportunity…we’ll move quickly into an ETF designed specifically to track the Canadian oil market.
Energy investors still trying to get rich in 2011 by investing in individual companies are like confused drivers trying to reach a new destination without a GPS device or cell phone. Eventually, one of them might get to his destination…but it will be a long, painful process – with much more failure than success.
Why would you want to put yourself through such a torturous process?
Your smartest move is to stay plugged in to the up-to-the-minute recommendations being made by the ETF Energy Trader service. As each recommendation is made, I encourage you to do your own due diligence – and make sure the trade is right for you – before investing.
Monday, May 2, 2011
Energy ETF Directory -- Comprehensive Listing
The Energy ETF Directory: A Comprehensive List of Energy-Related ETFs Followed by ETF Energy Trader
With more than 1,500 ETFs being actively traded on U.S. exchanges…it’s easy to feel overwhelmed with choices.
The number of ETFs dedicated to following energy-specific investments is also rapidly growing…with new offerings being announced on a daily basis.
What follows is a list of Exchange Traded Funds that are actively monitored by the editorial and research staff of ETF Energy Trader.
Of course, you can always find our most up-to-date recommendations on our members-only web site, including an archive of trading alerts and our complete portfolio.
-- list updated 5/17/11
Energy Select Sector Spdr Fund (XLE)
Ishares Dow Jones U.S. Energy Sector Index Fund (IYE)
Ishares S&P Global Energy Sector Index Fund (IXC)
Vanguard Energy Index Fund - ETF Shares (VDE)
Ishares S&P North American Natural Resources Sector Index Fund (IGE)
First Trust ISE-Revere Natural Gas (FCG)
PowerShares WilderHill Clean Energy (PBW)
PowerShares Dynamic Oil & Gas Services (PXJ)
iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund (IEO)
Guggenheim Global Solar Energy ETF (TAN)
Market Vectors Coal ETF (KOL)
iShares Dow Jones U.S. Oil Equipment & Services (IEZ)
SPDR S&P Oil & Gas Exploration & Production ETF (XOP)
Guggenheim Canadian Energy Income ETF (ENY)
Rydex S&P Equal Weight Energy ETF (RYE)
First Trust Wind Energy ETF (FAN)
Market Vectors Global Alternative Energy ETF (GEX)
United States Natural Gas Fund (UNG) Top 100
United States Oil Fund (USO) Top 100
Dow Jones-AIG Natural Gas Total Return ETN (GAZ)
FactorShares 2X Oil Bull/S&P 500 Bear ETF (FOL) NEW!
Goldman Sachs Crude Oil Total Return ETN (OIL)
PowerShares DB Crude Oil Double Short ETN (DTO)
PowerShares DB Crude Oil Long ETN (OLO)
PowerShares DB Crude Oil Short ETN (SZO)
PowerShares DB Oil Fund (DBO)
ProShares Ultra DJ-AIG Crude Oil ETF (UCO)
ProShares UltraShort DJ-AIG Crude Oil ETF (SCO)
Teucrium Natural Gas Fund (NAGS) NEW!
Teucrium WTI Crude Oil Fund (CRUD) NEW!
United States 12 Month Natural Gas Fund (UNL)
United States 12 Month Oil Fund (USL)
United States Brent Oil Fund (BNO)
United States Gasoline Fund (UGA)
United States Heating Oil Fund (UHN)
United States Short Oil Fund (DNO)
Claymore Natural Gas Commodity ETF (GAS-TSX)
Horizons BetaPro NYMEX Crude Oil Bear Plus ETF (HOD-TSX)
Horizons BetaPro NYMEX Crude Oil Bull Plus ETF (HOU-TSX)
Horizons BetaPro NYMEX Crude Oil Inverse ETF (HIO-TSX)
Horizons BetaPro NYMEX Natural Gas Bear Plus ETF (HND-TSX)
Horizons BetaPro NYMEX Natural Gas Bull Plus ETF (HNU-TSX)
Horizons BetaPro NYMEX Natural Gas Inverse ETF (HIN-TSX)
NYMEX Long Crude Oil/Short Natural Gas Spread ETF (HON-TSX)
NYMEX Long Natural Gas/Short Crude Oil Spread ETF (HNO-TSX)
Winter-Term NYMEX Crude Oil ETF (HUC-TSX)
Winter-Term NYMEX Natural Gas ETF (HUN-TSX)
ETFS Brent 1mth Sterling ETF (OLBP-LSE)
ETFS Brent 1yr ETF (OSB1-LSE)
ETFS Brent 2yr ETF (OSB2-LSE)
ETFS Brent 3yr ETF (OSB3-LSE)
ETFS Brent Oil ETF (OILB-LSE)
ETFS Crude Oil ETF (CRUD-LSE)
ETFS Forward Crude Oil ETC ETF (FCRU-LSE)
ETFS Forward Heating Oil ETF (HEAF-LSE)
ETFS Forward Natural Gas ETF (NGAF-LSE)
ETFS Forward Petroleum ETF (FPET-LSE)
ETFS Gasoline ETF (UGAS-LSE)
ETFS Heating Oil ETF (HEAT-LSE)
ETFS Leveraged Crude Oil ETF (LOIL-LSE)
ETFS Leveraged Gasoline ETF (LGAS-LSE)
ETFS Leveraged Heating Oil ETF (LHEA-LSE)
ETFS Leveraged Natural Gas ETF (LNGA-LSE)
ETFS Leveraged Petroleum ETF (LPET-LSE)
ETFS Natural Gas ETF (NGAS-LSE)
ETFS Natural Gas Sterling ETF (NGSP-LSE)
ETFS Petroleum ETF (AIGO-LSE)
ETFS Short Crude Oil ETF (SOIL-LSE)
ETFS Short Gasoline ETF (SGAS-LSE)
ETFS Short Heating Oil ETF (SHEA-LSE)
ETFS Short Natural Gas ETF (SNGA-LSE)
ETFS Short Petroleum ETF (SPET-LSE)
ETFS WTI 1yr ETF (OSW1-LSE)
ETFS WTI 2mth Sterling ETF (OLWP-LSE)
ETFS WTI 2yr ETF (OSW2-LSE)
ETFS WTI 3yr ETF (OSW3-LSE)
ETFS WTI Oil ETF (OILW-LSE)
With more than 1,500 ETFs being actively traded on U.S. exchanges…it’s easy to feel overwhelmed with choices.
The number of ETFs dedicated to following energy-specific investments is also rapidly growing…with new offerings being announced on a daily basis.
What follows is a list of Exchange Traded Funds that are actively monitored by the editorial and research staff of ETF Energy Trader.
Of course, you can always find our most up-to-date recommendations on our members-only web site, including an archive of trading alerts and our complete portfolio.
-- list updated 5/17/11
Energy Select Sector Spdr Fund (XLE)
Ishares Dow Jones U.S. Energy Sector Index Fund (IYE)
Ishares S&P Global Energy Sector Index Fund (IXC)
Vanguard Energy Index Fund - ETF Shares (VDE)
Ishares S&P North American Natural Resources Sector Index Fund (IGE)
First Trust ISE-Revere Natural Gas (FCG)
PowerShares WilderHill Clean Energy (PBW)
PowerShares Dynamic Oil & Gas Services (PXJ)
iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund (IEO)
Guggenheim Global Solar Energy ETF (TAN)
Market Vectors Coal ETF (KOL)
iShares Dow Jones U.S. Oil Equipment & Services (IEZ)
SPDR S&P Oil & Gas Exploration & Production ETF (XOP)
Guggenheim Canadian Energy Income ETF (ENY)
Rydex S&P Equal Weight Energy ETF (RYE)
First Trust Wind Energy ETF (FAN)
Market Vectors Global Alternative Energy ETF (GEX)
United States Natural Gas Fund (UNG) Top 100
United States Oil Fund (USO) Top 100
Dow Jones-AIG Natural Gas Total Return ETN (GAZ)
FactorShares 2X Oil Bull/S&P 500 Bear ETF (FOL) NEW!
Goldman Sachs Crude Oil Total Return ETN (OIL)
PowerShares DB Crude Oil Double Short ETN (DTO)
PowerShares DB Crude Oil Long ETN (OLO)
PowerShares DB Crude Oil Short ETN (SZO)
PowerShares DB Oil Fund (DBO)
ProShares Ultra DJ-AIG Crude Oil ETF (UCO)
ProShares UltraShort DJ-AIG Crude Oil ETF (SCO)
Teucrium Natural Gas Fund (NAGS) NEW!
Teucrium WTI Crude Oil Fund (CRUD) NEW!
United States 12 Month Natural Gas Fund (UNL)
United States 12 Month Oil Fund (USL)
United States Brent Oil Fund (BNO)
United States Gasoline Fund (UGA)
United States Heating Oil Fund (UHN)
United States Short Oil Fund (DNO)
Claymore Natural Gas Commodity ETF (GAS-TSX)
Horizons BetaPro NYMEX Crude Oil Bear Plus ETF (HOD-TSX)
Horizons BetaPro NYMEX Crude Oil Bull Plus ETF (HOU-TSX)
Horizons BetaPro NYMEX Crude Oil Inverse ETF (HIO-TSX)
Horizons BetaPro NYMEX Natural Gas Bear Plus ETF (HND-TSX)
Horizons BetaPro NYMEX Natural Gas Bull Plus ETF (HNU-TSX)
Horizons BetaPro NYMEX Natural Gas Inverse ETF (HIN-TSX)
NYMEX Long Crude Oil/Short Natural Gas Spread ETF (HON-TSX)
NYMEX Long Natural Gas/Short Crude Oil Spread ETF (HNO-TSX)
Winter-Term NYMEX Crude Oil ETF (HUC-TSX)
Winter-Term NYMEX Natural Gas ETF (HUN-TSX)
ETFS Brent 1mth Sterling ETF (OLBP-LSE)
ETFS Brent 1yr ETF (OSB1-LSE)
ETFS Brent 2yr ETF (OSB2-LSE)
ETFS Brent 3yr ETF (OSB3-LSE)
ETFS Brent Oil ETF (OILB-LSE)
ETFS Crude Oil ETF (CRUD-LSE)
ETFS Forward Crude Oil ETC ETF (FCRU-LSE)
ETFS Forward Heating Oil ETF (HEAF-LSE)
ETFS Forward Natural Gas ETF (NGAF-LSE)
ETFS Forward Petroleum ETF (FPET-LSE)
ETFS Gasoline ETF (UGAS-LSE)
ETFS Heating Oil ETF (HEAT-LSE)
ETFS Leveraged Crude Oil ETF (LOIL-LSE)
ETFS Leveraged Gasoline ETF (LGAS-LSE)
ETFS Leveraged Heating Oil ETF (LHEA-LSE)
ETFS Leveraged Natural Gas ETF (LNGA-LSE)
ETFS Leveraged Petroleum ETF (LPET-LSE)
ETFS Natural Gas ETF (NGAS-LSE)
ETFS Natural Gas Sterling ETF (NGSP-LSE)
ETFS Petroleum ETF (AIGO-LSE)
ETFS Short Crude Oil ETF (SOIL-LSE)
ETFS Short Gasoline ETF (SGAS-LSE)
ETFS Short Heating Oil ETF (SHEA-LSE)
ETFS Short Natural Gas ETF (SNGA-LSE)
ETFS Short Petroleum ETF (SPET-LSE)
ETFS WTI 1yr ETF (OSW1-LSE)
ETFS WTI 2mth Sterling ETF (OLWP-LSE)
ETFS WTI 2yr ETF (OSW2-LSE)
ETFS WTI 3yr ETF (OSW3-LSE)
ETFS WTI Oil ETF (OILW-LSE)
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