The market took ETF investors on a roller-coaster ride last week, with major indexes seesawing wildly between ebullience (Tuesday's huge rally, sparked by the Fed's latest plan to ease the credit crisis) and gloom ( Bear Stearns
' free-fall on Friday).
After the dust had settled, the Dow finished the week with a modest 58-point gain from last Friday's close. That story more or less held for the S&P, Russell 2000, and Nasdaq. Foreign indexes were off slightly for the week.
As for ETFs, it can be summed up thusly: Tech, consumer-related, and large-growth ETFs got cheaper from a valuation standpoint; financials rallied but eventually rolled over (thanks to Bear and Carlyle Capital's demise), leaving valuations essentially unchanged; and the oil patch got a little richer, pushing the typical natural resources ETF toward fair value.
Financials, consumer-discretionary, and homebuilder ETFs look cheapest to us, on average, while the typical natural resources, precious metals, and real estate ETF is trading right around what we think it's worth. That is, no sharp turnabouts in valuation trends--what had been cheap remained so.
To survey valuation trends across more than 300 ETFs for yourself, check out our new Valuation Quickrank
New ETF Analyst Reports
As you might have heard, we recently launched our new-and-improved ETF Analyst Reports
on Morningstar.com. Those reports are available to Premium Members. If you're not a Premium Member yet, check out our recent piece, "Our Take on One of 2007's Hottest Emerging-Markets ETFs
," in which you'll find a sample ETF Analyst Report. To see more ETF analyses, take a free, 14-day Premium Membership trial
We continued to bring ETFs under coverage last week. Friday, for instance, my colleague Emiko Kurotsu published a report on iShares S&P Global 100
, an ETF which, as the name would suggest, targets a pretty select group of firms that do business the world over. Generally speaking, we've been finding values galore among blue-chip multinational firms. Does this ETF buck the trend? Emiko takes a closer look in her analysis
of the fund.
Last Monday, Emiko examined "green" energy ETF PowerShares WilderHill Clean Energy
. The fund owns a clutch of solar-power and alternative-energy names. That's certainty a hot area right now. But given the relatively nascent state of that industry, does the portfolio hold up under closer scrutiny? Emiko addresses that question in her report
Emiko turned her gaze to a few sector funds on Friday-- Vanguard Industrials ETF
and Ultra Financials ProShares
. It wouldn't be a Vanguard fund if it wasn't low-cost and, sure enough, Vanguard Industrials ETF is the most inexpensive fund of its kind. But how tempting is the fund from a valuation standpoint, especially when viewed against the specter of a looming economic slowdown? Emiko drills down into the portfolio and describes what she finds in this write-up
Emiko also takes a hard look at the ProShares offering, which provides exposure to some of the usual suspects in the financials sector, but with a twist: It aims to deliver twice the index's daily return. Given the turbulence in that space, this is not an offering for the faint of heart. But Emiko finds plenty to like in the portfolio, high volatility notwithstanding, as she explains further in her analysis
New ETF Analyst Notes
In addition to new reports, we also put out several "ETF Analyst Notes" last week. On Friday, for instance, we published a note
describing what, if any, impact Bear Stearns' dramatic meltdown would have on financials ETFs, including a few that we cover, such as iShares Dow Jones U.S. Financials Services
and Financials Select Sector SPDRs
We also put out a note
to address some changes that our homebuilder analyst, Eric Landry, made to the business-risk ratings he'd placed on a number of the builders he covers. Eric's move, which he made in response to recent turbulence in the market for agency bonds backed by Fannie Mae
and Freddie Mac
, has a potential impact on several of the homebuilder ETFs that we cover, including iShares Dow Jones U.S. Home Construction
and SPDR S&P Homebuilders
. It raises the question of whether we've put an ample margin of safety around our estimates of those portfolios' fair value, a question that we address in our note
Finally, we published a note
on Wednesday addressing Texas Instruments
' subdued revenue forecast, which the semiconductor maker issued earlier this week. Several semiconductor ETFs, such as Semiconductor HOLDRs
and iShares S&P GSTI Semiconductor
, hold big stakes in Texas Instruments. The upshot of the chipmaker's tepid outlook for those funds? We answer that question in our note
It was a relatively quiet week on our ETF-related blog, "Basis Pointing
Our lone posting, "More Thoughts on Actively Managed ETFs
," provides some food for thought on some of the more vexing questions that actively managed ETFs have raised thus far. We expect the first actively managed ETF, Bear Stearns Current Yield YYY, to begin trading on Tuesday, March 18, 2008, with others to follow soon thereafter. So, it's a timely look at the actively managed ETF structure, how it's likely to take shape, and what issues investors and ETF product developers will likely grapple with in the future.
It was also a very quiet week on the new-listing front. Not a single ETF or ETN launched this week, with the most recent listing being PowerShares India , which began trading on March 5.
As such, we remain stuck at 30 new fund launches thus far in 2008, with commodity (9), currency (5), and fixed-income (2 muni, 2 taxable) ETFs being most common.
Continuing with this week's theme, there was nary a new ETF registration this week, the first time in recent memory that we've gone a week without a provider at least filing
for a new ETF.
Want to know how some of the most popular ETFs have fared? This performance summary
should whet your appetite.
If it's the leaders and laggards that interest you, then give our "best/worst performers
" list a look.
Finally, looking beyond ETFs to the benchmarks and industries themselves, you can find a wealth of performance data on Morningstar.com, including performance stats by indexes
, and industries
. Also, be sure to check out our Quicktake reports for the Dow
, Russell 2000
, and Nasdaq Composite