Michael Krauss had a post on Seeking Alpha saying that ETF fees are largely irrelevant. The context of the comments is that everything else being equal fees do matter but very rarely is everything else equal. I agree.Michael gives a few examples and I can give a different one. On Friday StateStreet launched a bunch of emerging market ETFs including a broad based fund with ticker GMM that is similar to iShares MSCI Emerging Market Fund (EEM) with one huge difference. EEM has 15% weighted to South Korea and GMM appears to be zero weight.
EEM has an OER of 75 basis points while GMM's OER is 60 basis points. Given the very disparate country composition how often is the difference maker like to be the 15 basis points? Probably never. If you want broad based emerging market exposure and want South Korea to be a part of it there is not question that EEM is the better choice. If you wanted broad based exposure without South Korea but still bought EEM because it was cheaper you'd cutting off your nose...
One follow up to the naked short selling discussion from Friday. I put this in the comments on Saturday but wanted to repeat here. I can see where reading about this would make anyone nervous but this strikes me as being very similar to CEOs having to certify earnings reports from 2002 and the options expensing issue of the last couple of years. With both of those there was way more bark than bite and I expect this will be no different (I first wrote about thinking options expensing would be of minimal importance in December 2004). This is not to deny it exists but it is to question the impact it will have on stocks beyond a handful of names.
IndexUniverse has an article about a company called IndexIQ that plans to create “hedge fund replicators” that would be portfolios of ETFs meant to replicate hedge fund strategies (one too many babies, baby). These would be in mutual funds or separate accounts. If these ever come to be it could be kind of interesting to look under the hood and see what they are doing.
Barron's had an article about Starbucks (longtime client and personal holding) that was generally positive. The article concluded with something vague about Coca Cola or Pepsi buying Starbucks.
A few weeks ago I posted about Dow Chemical (another holding) being an acquisition target. I noted that to my way of thinking 30% today was not as good as a few hundred percent over time. This is another example. I don't think KO or PEP can grow anywhere near as much SBUX will.
If SBUX does get bought out maybe I'll look at Carribou Coffee (CBOU)?
"For all the headlines about Goldman Sachs Partners raising billion-dollar hedge funds in a matter of hours..."
This quote is from this week's Mutual Fund column in Barrons, I really got a kick out of it.
This picture is from the town of Sigtuna about an hour north of Stockholm.
4 comments:
Naked short selling, back-dated options, self-serving (or fraudulent) loan underwriting, etc are just more of the kind of back-room business that creates public doubt concerning market integrity and quality: The key issue is probably not a matter of scale, at least on an infraction-by-infraction basis, but more a matter of reaching a critical mass of public opinion that results in a collective disinclination to invest.
IMHO we've reached a point where these types of issues need to be treated as market failures requiring appropriately robust policy response(s). FWIW
That aside, this posting (http://tinyurl.com/ypz8ks) at Mark Thoma's blog is as good an overview of the current macroeconomic scene as any I have found. Not surprisingly the key question remains unanswered -- how will all of this unwind -- but at least the underlying elements of the problem seem to be more clear; and clarity invites opportunity, yes?
clarity to a point i suppose but it seems like most big bad things never get resolved, we just stop thinking about them and move on to the next "scary" thing.
I bought CBOU at the initial offering and have grown to hate the company. The management continues to stiff the shareholders and I am down over three thousand so far. Every time the stock begins to move up it is knocked back down by sellers. They also have not been able to show a profit which is worrysome.
Jon
Jon, apologies, I was speaking tongue in cheek, I know zero about the stock. I got a mocha at one once and we buy their granola bars at Walmart, that's all I know.
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