Chartwell Global ETF Report

According to data from Emerging Portfolio Fund Research (EPFR) equity fund and ETF investors pulled back from emerging markets. The Singapore and Japan markets and ETFs that track them such as (EWS) and (EWJ) swam against the current posting net inflows. Among the casualties was the 17-week winning streak by Asia ex-Japan Equity Funds and ETFs, which posted net outflows of $38.5 million, and China Country Funds and China ETFs (FXI) 16-week, $3.37 billion run.

Chinese equity markets, which had posted a series of record highs that peaked around January 15-16, corrected sharply as domestic investors took profits after Government officials indicated they will make fresh efforts to restrain the role of fixed investment in the country's 10% plus GDP growth. Among the few country-specific fund groups that posted inflows.

Singapore again stood out: after taking in the equivalent of 5.83% of their assets last week, these funds added another 2.21% this week. On the other hand, Global Equity Funds and ETFs absorbed another $1.08 billion in new money, taking year-to-date inflows over the $3 billion level, and both West Europe Equity Funds and Japan Equity Funds and ETFs also posted net inflows for the week. In the case of the Japan Funds it was their best week since mid-August and the first time since early May that this fund group has posted two consecutive weeks of net inflows.

Labels: Asia, China, Exchange Traded Funds, Japan, Singapore

The Malaysian ETF (EWM) has been building solid momentum during the past three months earning top ranking by fund manager surveys. (EWM) is up 26.5% during the past three months and is up 6.5% already in 2007. It is the best performing country-specific iShare ETF in both time frames.

Behind this performance is the quiet but solid progress on economic reforms. The Malaysian Government is opening up previously protected financial services and banking sector to foreign investment. The national flagship auto producer Proton is close to being sold to a international automaker and Malaysian Airlines is being restructured and forced to compete with private carrier Air Asia.

Over all of last year the Malaysian benchmark index was up 20% so you can see the fourth quarter catch up was impressive. Malaysian economic numbers are moving in the right direction as well fueling investor optimism.

Labels: Asia, Exchange Traded Funds, Malaysia

The Chartwell Global Dividend/Income ETF portfolio is for investors needingto generate retirement income and fixed income alone will probably not getthe job done. Investors need the prospect for capital appreciation plus somedownside protection from high dividend lower volatility stocks.

Here is a brief overview of some of the ETFs in the portfolio at the start of 2007.

The PowerShares International Dividend Achievers ETF basket (PID) contains 60 international ADRs (American Depository Receipts) that trade on U.S. exchanges. All of these companies have increased their annual dividend for five or more consecutive fiscal years. The portfolio is rebalanced quarterly and reconstituted annually. About 55% of the companies in this ETF are classified as large-cap value, 16% mid-cap value and 13% small cap value.

Another interesting new ETF from Powershares is the Financial Preferred Equity ETF (PGF). This is the first ETF to provide investors access to preferred shares within the tax efficient ETF structure. The preferred marketplace is over $200 billion and again it is a way to enjoy potential ofcapital appreciation with dividend income. All dividends from this ETF are expected to be qualified dividend income.

Another option is the recently introduced First Trust Morningstar Dividend Leaders ETF (FDL). This is a portfolio of the top 100 highest yielding U.S. stocks screened for consistent records of dividend payments as well as the ability to sustain future payments. Individual company weightings in the ETF are capped at 10% and stocks weighing more than 5% each cannot exceed 50% of the total portfolio.

Then of course there is a wide choice of ETF options from the fast-growing family of WisdomTree ETFs which weight all holdings in their ETFs based on dividends.

Labels: ETF Portfolios, Exchange Traded Funds

As an article in the Economist points out, Britain has plenty of successful, dynamic immigrants from India who provide a good link to the country they left behind. India's elite speaks impeccable English and likes to spend summers in London and of course play cricket.

And just this week steel Tycoon Lakshmi Mittal who, appropriately for Britain's richest man is named after the Hindu god of wealth, made a healthy contribution to the Labour Party by giving it £2m ($3.9m). Given these historical and cultural ties, you would think that trade and investment flows between the two countries and perhaps between companies in the India ETF (INP) and the UK ETF (EWU) would be natural.

It is not he case, even in the wake of UK secretary for trade and industry Alistair Darling's trip to India this week with over 100 British businessmen in tow. British exports to India trail China, America, Germany and even France (ouch!).

Just 0.5% of the UK's foreign direct investment has gone to India in the past few years. Part of the problem is that the strengths of the Brits are in services, particularly financial services, and many of these markets in India are now pretty much sealed off.

Labels: India, United Kingdom

The China ETF (FXI) performance over the past year reflects the overall Chinese markets. As Guy De Jonquieres points out today in his article in the Financial Times, the 120% rise in its index in 2006 was preceded by a 70% slump over three years.

The combined market value of the Chinese and Hong Kong markets is now $2 trillion which is more than China's GDP. The article points out that the current China fever overlooks many weaknesses in the 1,400 listed Chinese companies - with half of the outstanding shares in companies owned or controlled by the state. Amazingly, one-third of the shares outstanding are accounted for by China's seven state-controlled banks. Weak accounting and disclosure also make it difficult to determine value.

In 2006, the China ETF fell 8% prompting Chartwell ETF Advisor to remove the ETF from its Asian Opportunity ETF portfolio. The momentum in China may carry this ETF to new heights as the 2008 Olympics continue to feed a super investment cycle but investors should be under no illusion that the China ETF is a speculative play.

Labels: China, Exchange Traded Funds

The Thai stock market and ETFs that track it is perhaps the cheapest market in the world but it and the Thai ETF closed-end fund could get even cheaper (TF) as political bungling and uncertainty has shattered investor confidence.

Still today it is up nearly 6% through noon EST.

After weeks of heavy selling, foreign investors have begun buying Thai stocks in recent days according to a WSJ article by James Hookway. Yesterday, they were net buyers of 1.19 billion baht ($33.2 million) of Thai stocks, helping support the main index at 651.47 points after it fell 4.43 points, or 0.7%. The logic: The situation in Thailand may have grown so bad that the only way is up.

Since the first trading day after Thailand unveiled its new capital controls, stock prices have lost 11%. Thai stocks are certainly looking attractive compared with those on other exchanges in the region. Thomson Financial says that based on closing prices for Tuesday and the most recent earnings reports, the P/E for Thailand's overall market is 5.9 times. That compares with 14.7 times for Singapore, 17.8 for Malaysia and 18.1 for Indonesia.

Thai interest rates were lowered 0.25% yesterday in an effort to bolster economic growth and slow the appreciation of the Thai Baht which has impacted Thai exports. Citigroup warned investors in a client note last week that the nervous mood could bring the SET Index down to a near-term low of 550 points -- 16% below the current level.

Labels: Asia, China, Exchange Traded Funds, Thai

State Street Global Advisors (SSGA) is making a overdue but smart strategic move toward a unified brand designed to bring clarity to investors and further distinguish its ETFs.

Labels: Exchange Traded Funds