Chartwell Global ETF Report

What housing slump? The Dow Jones US Construction ETF (ITB) was up 4.74% today and the SPDR Homebuilders ETF (XHB) was up 3.63%. No doubt the Fed decision to hold the benchmark interest rate steady helped. The stronger than expected GDP numbers for the fourth quarter of 2006 ignited a 2.84% rise in the Dow Jones Transportation ETF (IYT) which is a good proxy for U.S. and global economic activity. Fed Ex, UPS and Union Pacific account for 28% of this ETF basket.

The Latin America ETF (ILF) staged a nice rally increasing 1.89% while Hong Kong (EWH) and China (FXI) ETFs took it on the chin down 1.56% and 2.42% respectively.

Japan ETFs were down as it was reported that Japanese consumer spending was down 1.9% in December year on year. A more confident Japanese consumer and investor is crucial to the Japan bull market story. U.S. corporate profit reports are for the most part exceeding expectations with Google revenue surging 67%. Beijing and the Vatican continue to escalate battle for control of Roman Catholic Church in China.

The Van Eck family of ETFs is launching the first Russia ETF called Market Vectors Russia. It will track the Deutsche Borse Russia Index, a modified market cap weighted index of globally available Russian equities. It is nice for investors to have this choice but I view Russia as primarily an energy play with Russia going the wrong way regarding political and market reforms.

In addition, the new Market Vectors-Global Alternative Energy ETF will track the Ardour Global Alternative Energy Index, a 30-component index of global companies involved in the production of alternative fuels. Compared to other alternative energy ETFs, the Van Eck fund will have more global exposure with one-third of current components headquartered outside the U.S.

With energy prices firming up it was no surprise that many energy ETFs jumped yesterday. The Claymore Macroshares Oil Up ETF (UCR) was up 4.93% and the Rydex S&P Equal Weight Energy ETF (RYE) was up 2.74%. The Mexico ETF (EWW) was up 1.39% and the China ETF (FXI) was up just over 3%.

Cambridge-based Emerging Portfolio Fund Research (EPFR) reported that after investors pulled back sharply from China, the story has jumped right back as the month draws to a close. Investors committed $665.9 million to China Country, Greater China and Hong Kong Equity Funds and ETFs during the week ending January 25. That represented 69% of the new money absorbed by Asia ex-Japan Equity Funds and ETFs and more than half of the $1.17 billion of net inflows received by all emerging markets equity funds during the week.

There is a growing concern about the Japanese yen which is trading at a four-year low against the US dollar and the topic will likely be discussed at the next week's G-7 meeting. Investors have been borrowing in low interest currencies like the yen and Swiss Franc and investing in high yield currencies like the Australian dollar. A stronger yen would help boost returns for investors in Japan ETFs.

It was a green Monday for ETFs with three environmental friendly ETFs leading ETF returns. The Market Vectors Environmental Services ETF (EVX) was up 1.95%, the Powershares Cleantech ETF (PZD) up 1.8% and the Powershares Clean Energy (PBW) up 1.69%. Last week's big winner, US Oil ETF (USO) lost 2.83%, the Brazil ETF (EWZ) was down 2.23%, the China ETF (FXI) was down 1.8% and a collection of commodity tracking ETFs was down about 2%. The Singapore ETF (EWS) gained 1.24% and small caps did well with the Russell 2000 ETF (IWM) up 0.87% while accounting for the day's third largest ETF volume.

Saudi Arabia's benchmark was down 52% in 2006 representing the worst performance in the world. But with prices at more reasonable levels, some smart deep pockets are moving in and the timing for someone to launch a Saudi ETF could not be better. The Financial Times reported that Prince Alwaleed, whose fortune is estimated at $20 billion by Forbes, has poured over a billion dollars this month alone into the Saudi market. Keep in mind that the market rocketed over 700% during the five year period prior to February 2006.

Today State Street Global Advisors (SSGA) will begin trading the SPDR FTSE/Macquarie Global Infrastructure 100 ETF (GII) which will track an index of developed and emerging country stocks involved in infrastructure industries like pipelines, transportation services, electricity and telecommunications.

There soon could be another International real estate ETF to complement the SPDR DJ Wilshire International Real Estate (RWX) ETF launched last December. The U.S Standard & Poor's has rolled out this week the S&P Global Property 40 index which includes up to 40 leading, publicly traded global real estate companies that lie in three regions - Europe, Asia-Pacific and the Americas. The companies must have a total market cap above $1 billion and a three-month average daily value traded above the liquidity threshold of $3 million. There are 39 companies now listed on the index

The First Trust family of ETFs announced two new ETFs. The Nasdaq 100 Ex-Tech ETF (QQXT) tracks the NASDAQ index minus technology companies and the NASDAQ Clean Edge U.S. Liquid ETF (QCLN) holds a basket of clean energy companies.

Last Friday, the best performing ETFs were the United States Oil ETF (USO) up 2.23%, the Powershares Semiconductors ETF (PSI) up 2.1%, Powershares Clean Energy ETF (PBW) up 2.08% and the South Africa ETF (EZA) up 1.74%. The SPDR Homebuilder ETF was down 1.66% and the Powershares Small Cap ETF (PJM) was down 1.16% while some country-specific ETFs were hit hard. Taiwan (EWT) was down 2%, Austria (EWO) down 1.6%, Switzerland (EWL) down 1.72% and China (FXI) down 2.5%.