ETF Exchange Traded Funds
What Is An Exchange Traded Fund?
An exchange-traded fund or ETF is an investment vehicle traded on stock exchanges, much like stocks or bonds. An ETF holds assets such as stocks, bonds, or futures. Institutional investors can redeem large blocks of shares of the ETF (known as "creation units") for a "basket" of the underlying assets or, alternately, exchange the underlying assets for creation units. This creation and redemption of shares enables institutions to engage in arbitrage and causes the value of the ETF to approximate the net asset value of the underlying assets. Most ETFs track an index, such as the Dow Jones Industrial Average or the S&P 500.
An ETF is Like a Mutual Fund and a Closed End Fund
An ETF combines the valuation feature of a mutual fund or unit investment trust, which can be purchased or redeemed at the end of each trading day for its net asset value, with the tradability feature of a closed-end fund, which trades throughout the trading day at prices that may be substantially more or less than its net asset value. Closed-end funds are not considered to be exchange-traded funds, even though they are funds and are traded on an exchange. ETFs have been available in the US since 1993 and in Europe since 1999. ETFs traditionally have been index funds, but in 2008 the U.S. Securities and Exchange Commission began to authorize the creation of actively-managed ETFs.
February 28, 2014 - Commodity ETF Investors Are Riding a Sugar High by Zacks Investment Research
While many traders have been focused in on the energy commodity world to start 2014, there have been several high flyers in the soft commodity space too. And as natural gas has started to fall back to earth, some commodities, such as sugar, have continued their ascent and have reached fresh highs.
In fact, top sugar exchange-traded products are now up more than 17% in the past four weeks alone, though returns for the past three months are still at just a 2% gain. In other words, the sugar surge has been pretty recent, but it has been astounding too.
Reasons for Sugar’s Jump
The top reason for sugar’s incredible run is the extreme weather taking place in Brazil. The country’s top sugarcane growing region is experiencing a severe drought and this is curtailing sugar production.
According to the Wall Street Journal, the drought could reduce the 2014 harvest by at least 36 million metric tons, putting this year’s production on par with last year. And though global supplies are still edging out demand, global consumption is likely to grow at about 2.3% this year.
Thanks to this smaller buffer between total supplies and demand, many traders have been on edge, especially as there is some uncertainty as to when the drought will actually end. Plus, it doesn’t help that India could also see a lower output, though undoubtedly the focus has been on Brazil as of late.
That is because the South American nation is actually the biggest producer and exporter of the sweet commodity, so when wild weather hits the country, it can have a drastic impact on sugar prices. In fact, Brazil easily outproduces the number two country, India, while it thoroughly dominates the top exporter list too.
Given this dominance, a shaky weather situation in Brazil can really drive prices in the sugar market. And that is why prices for sugar have risen from under 15 cents a pound to their current level above 17.5 cents a pound in about a month, with some looking for more gains in the weeks ahead too.
How to Play
If you believe this situation can continue, there are currently a few sugar options in the exchange-traded product market. These aren’t really that popular, but do offer direct exposure to the return of sugar futures.
Any of the following three could thus be very interesting selections for those who believe that sugar can continue to run, plus it doesn’t hurt that all three have ‘Buy’ Zacks ETF Ranks too. And should the recent drought continue and if more supplies are impacted, these products could definitely continue their run as we get into March:
iPath Dow Jones UBS Sugar ETN (SGG)
This is the most popular option in the sugar ETN market, tracking the Dow Jones UBS Sugar Index. The product charges investors 75 basis points a year in fees, and focuses on front month futures for exposure.
This focus on front month contracts has been wise as the issues of contango have not hurt this product at all as of late. After all, the note has added about 17.5% in the past month, easily crushing the 3.6% return put up by the S&P 500 in the same time frame.
Teucrium Sugar ETF (CANE)
This is the only sugar ETF on the market, and it tracks a benchmark of several sugar futures. The product includes the second-to-expire Sugar no. 11 futures (35%), third-to-expire sugar no. 11 futures (30%), and sugar no. 11 futures expiring in the March following the expiration month of the third-to-expire contract (35%).
This approach seeks to reduce the impact of backwardation and contango, though it is a bit pricey at 1.62% in expenses. Still, the fund has been a solid performer as of late, putting up a 14.9% gain in the past one month time frame.
iPath Pure Beta Sugar ETN (SGAR)
This ETN also looks to reduce contango issues while staying invested in the sugar market. This is done by following the Barclays Capital Sugar Pure Beta Index, charging investors 75 basis points a year in fees for the exposure.
This approach looks to select the contract that best tracks the front year average price so that the negative impact of contango is mitigated. This approach has served SGAR well, as the ETN has added 15% in just the past month alone, while it has easily outperformed its counterparts over the past six months.
Click the Links Below to Review ETF Exchange Traded Fund Trade Alert Software and Advisory Services
Portfolio Prophet Exchange Traded Funds Trade Alert Software
The Portfolio Prophet is our premium trade alert software for quickly & easily adding Exchange Traded Funds (ETFs) to your trading portfolio. The Portfolio Prophet alerts you whenever a new trade is setting up; then, it follows the trade to completion, so you'll know exactly when to change your stop orders which "lock in" profit. You can even customize it based on your risk tolerance - aggressive, moderate, or conservative.
Industry Sector ETF Investment Advisory
Free email newsletter. John Nyaradi is Publisher of Wall Street Sector Selector: Professional ETF Trading, an online publication specializing in news, analysis and information regarding exchange traded funds. John's writes a weekly column for Investor's Alley, a widely read internet site, and his investment articles have appeared in many online publications including Dow Jones Market Watch, Trading Markets, Money Show, Yahoo Finance, Investors Insight, Fidelity, SeekingAlpha, ETF Daily News, iStock Analyst and many others.
ETF, Exchange Traded Funds Research, ETF Investing
ETF Screener with Lowest Price-to-Fair Value, Most Heavily Traded, and YTD Top Performers. ETF Tools with ETF Performance Table, ETF Analyst Picks, ETF Valuation Quickrank, Cost Analyzer ETF, and ETF Analyst Reports. ETF Discussion Boards and Free ETF Newsletter.
Industry Sector Timing Signals Investment Newsletter
The strategy behind the Sector Timing Report is a process of continuous upgrading your investment holdings to maximize portfolio returns. Our upgrading strategy works because as economic and market conditions change, new sector leaders rise to the top of our proprietary sector scoring system. We buy these top ranked sectors and hold them for as long as they outperform their sector peers. When a holding starts to drop in rankings we sell it and move on the the next hot sectors in the market. Rebalancing our holdings monthly keeps us in the latest leadership sectors at all times.
ETF Advisory by Wall Street Cheat Sheet
At last, a trading system that buys the right ETFs at the right time, time after time! By combining the power of Exchange Traded Funds with professional sector rotation, you can ride the bull instead of getting trampled by the herd, reduce your risk and consistently profit by following the "big money" into the most profitable sectors in the world.
Feel the Power of TD Ameritrade and Trade Free for 60 Days
Committed to providing one of the highest levels of service since 1975. For over 35 years we’ve prided ourselves on providing our clients with industry leading customer service and resources.
Three Reasons to Choose TD Ameritrade for ETF Trading
1. Over 100+ Commission-free ETFs - We offer a curated selection of commission-free ETFs selected by Morningstar Associates.
2. ETF Knowledge Center - Leverage the ETF Knowledge Center and arm yourself with greater information and education on ETFs. Explore video tutorials, articles, and announcements on a range of topics, from ETF basics to in-depth subjects like accessing commodities, risks associated with leveraging, and measuring ETF liquidity.
3. Powerful Trading Platforms - Trade Architect® and thinkorswim® help you to seize opportunities with real-time ETF quotes, market insight and streaming news to give you new trading ideas.
Stock Option Forex Futures Training Seminars Webinars Workshops
Click Here For The Complete 2014 Schedule
Professional investors traders teaching successful low-risk high-reward
trade strategies. Power profit secrets for stocks, options, forex, futures
investing trading success. Or avail of Home Study Courses and or
Trading Softwares available to improve your investment returns.