Matt Hougan from IndexUniverse has a Christmas wish list of ETFs posted.
It's a great posting and list and I thought I would add a little color to a couple of the items he mentions.
He notes that among the ETFs that should come in 2008 is one pertaining to EU Carbon Allowances from a company called AirShares.
I don't know much about this and your first reaction might be that this has nothing to do with the stock market which is of course exactly why it might be interesting.
If it is more cost effective to buy carbon credits than operate cleaner then businesses will buy carbon credits. The demand for carbon credits could increase independently from whatever is going on in the stock market.
If this becomes an ETF that owns futures with mostly t-bills you might be buying something for which there is demand, has a low correlation to the stock market and kicks of a little yield. If that is how it actually shakes out, well that might be OK.
Another item on Matt's wish list is the coming SPDR Barclays Global TIPS Fund. I too like the concept but....at the recent Super Bowl of ETFs I moseyed on up to the SSGA booth to ask about foreign fixed income ETFs and none of the three guys there knew anything about global TIPS (like they hadn't even heard of it). It has been filed for months but I take this encounter to mean it ain't coming anytime soon. Hopefully I am wrong.
Matt included the potentially coming 130/30 fund filed by ProShares. The constraints on this particular version of the strategy are not ideal. If I wanted 130/30 at all I would not want to be restricted to the S&P starts ranking system. I would want the people running the fund (if that is what I was using) to go short whatever they felt was a short and overweight whatever they thought was a good overweight. The S&P stars system, like any other similar ranking system has biases. At times the biases will be a disadvantage.
Lastly Matt holds out hope for a VIX product of some sort, as I have mentioned once or twice before also. Similar to a post of mine from a week and a half ago Matt wonders if the answer for this issue is an ETN. Matt goes further to offer that a combo of a VIX ETF/ETN/whatever and a bond ETF could be a better hedge for an equity portfolio than gold. I'll have to think on that one for a bit but I agree big picture-wise that new types products will allow for very sophisticated strategies being executed by do-it-yourself investors who are will to take the time to learn.
On an unrelated note but a follow up to the Toll Road post from yesterday a reader left another name for the list. A Canadian company called SNC-Lavalin which trades in Canada under ticker SNC.TO and in the US under ticker SNCAF. The company website can be clicked through to here.
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12 comments:
I'm still not really sold on a VIX ETF/ETN whatever. I think the tracking error would be ridiculous making it borderline worthless. Naturally, I hope I'd be wrong.
Another two stocks to consider in the infrastructure story. JEC....global engineering.
And, ES...ipo that did not do well when opening but has made a stealth move and I think that this is very good sign for entry now versus so many other positions so extended. ES is part of the nuclear energy story. A risk is more stock dilution. 1percent long on ES; 5%JEC. Biggest disappointment is that GE's vision of being an infrastructure global company has not come to fruition. I've looked at this in detail and it is a multi faceted "story." Maybe one day after everyone throws in the towel.
jasper
jasper,
one think about the "builder" stocks is that they do tend to hop around a lot and have a higher correlation to stocks. the segement I have been writing about usually behaves differently.
Not sure if you have any control over ad content but the "Manage Risk with Iron Condors" ad is misleading. ICs are about the worst from a risk/reward standpoint. Sure, lots of winners, but that one loser eats away a year's worth of gains. I'm done belly-aching for the day :)
roger..you're right...how easy to slip from your slow and steady port vision. If you were managing tax advantaged account would you be construct a port differently, or..if I may offer a choice here...you prefer to try to do one thing well, and sticky to that, no mater what kind of account it is? jasper
jasper i frame that completely differently.
basically taxes are not the first priority. if there is a unique tax constraint for a client, I will find out about that via one of my colleagues who does the planning for that client and will just build around whatever that might be. ideally everyone would get the same portfolio but that is not practical for many reasons such as individual tolerances and certain stocks perhaps going up a lot and so on.
interesting... if the ideal situation would include the same portfolio for everyone then have you considered organizing it as a mutual fund?
This way it can be owned in tax-advantaged accounts, and fans (like me) can allocate a small percentage of their portfolio to the "Roger Mutual Fund"?
ideal, not practical, at all.
sami, we explored an OEF.
quite candidly I live a very low impact life. becoming an "empire builder" conflicts with my desired lifestyle.
this may be difficult for people in the industry to understand but low impact is a big priority.
sami...I agree.
roger...I consider your response quite a personal disclosure about your values in action. And, I can relate. Might say, I get it.
jasper
You posted sncaf as a Canadian infrastructure company. But would you touch it with a P/E of 165.63? Except for the astronomical P/E it looks like a great company.
re:the PE ratio. I would ask is it one of these cash flow companies? Some of these, P/E is not the right measure because of depreciation which is not a dollars lost type of thing but makes the earnings smaller making cash flow the better measure?
I am asking because I have not looked at the company, I merely passed along the fact that it exists.
I guess I am saying I would need more information b4 deciding.
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