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Strategies & Market Trends : Aardvark Adventures

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From: ~digs	3/1/2008 9:45:11 PM
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Gasoline, Short-Gold ETFs Finally Hit The Market biz.yahoo.com ETF providers released almost as many new products last week as they did in all of January. Victoria Bay Asset Management launched the first gasoline ETF. United States Gasoline (AMEX:UGA - News) tracks prices at the pump. The firm in 2006 and 2007 also beat competitors in releasing the first crude and natural gas ETFs: United States Oil (AMEX:USO - News) and United States Natural Gas (AMEX:UNG - News). It also plans to release a heating oil ETF. Caution: These funds buy futures contracts -- not the actual product. They may not accurately track the price of the underlying asset due to contango and backwardation. Contango occurs when the price for future delivery of the commodity is higher than the spot price. So traders have to buy the next month's contract at a higher price and sell the current month's at a lower price, thus losing money. Backwardation is the opposite. Gas On The Rise Gasoline prices rose 17 cents in the past two weeks to a national average of $3.10 a gallon, as crude continued to soar above the psychological level of $100 a barrel. U.S. crude oil reached a new all-time high of $102.74 a barrel Thursday. It surpassed the previous inflation-adjusted peak of $102.53 in 1980, according to the International Energy Agency. Also on Tuesday, Van Eck Global rolled out its third bond ETF: Market Vectors-Lehman Bros. AMT-Free Short Municipal Index (AMEX:SMB - News). It offers returns of investment-grade municipal bonds with a maturity of one to six years. Golden Trio On Thursday, Deutsche Bank unveiled a trio of gold ETNs, or exchange traded notes, that offer leveraged and short plays on the Deutsche Bank Liquid Commodity Index-Optimum Yield Gold. DB Gold Double Long (NYSEArca:DGP - News) offers two times the monthly return of the index. DB Gold Short (NYSEArca:DGZ - News) profits from declining gold prices. DB Gold Double Short (NYSEArca:DZZ - News) leverages the short position. Unlike other gold exchange traded products, such as streetTRACKS GoldShares (NYSEArca:GLD.TO - News) and iShares Comex Gold Trust (AMEX:IAU - News), these ETNs do not store gold in a vault. They're unsecured IOUs backed by DB's good faith and credit. All three include returns of a monthly T-bill index. Gold ETFs shot up 46% in the past 12 months, as of Thursday's close. They're up 16% year to date. Market Vectors Gold Miners (AMEX:GDX - News)bounded 39% and 18% over those periods. PowerShares Capital Management received the initial go ahead to release four actively managed ETFs. Two of them will be sub-advised by Invesco Institutional and two will be sub-advised by AER Advisors. PowerShares Active AlphaQ Fund will invest in 50 Nasdaq stocks based on an AER screening model and aim to the beat the NASDAQ 100 Index.

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