Don Dion's Weekly ETF Blog Wrap

NEW YORK (TheStreet) -- Don Dion posts his current insights on the stock, bond, commodity and currency markets in his RealMoney blog, anticipating which ETFs will be in play next. Among his blogs this week were the following, in which he wrote about the attack of dollar bulls on an ETF, the impact of Buffett's big railroad acquisition on the transport sector and how JP Morgan Alerian MLP Index ETN(AMJ Quote) is set to outperform the S&P 500 Index.

Attack of the Dollar Bulls

Posted 11/05/2009 3:33 p.m. EDT

Dollar bulls just broke PowerShares DB U.S. Dollar Bullish (UUP Quote). They have purchased all the available shares and creation is halted until the SEC approves the creation of another 100 million shares, which would more than triple the existing share total. This is due to a multi-month trend that accelerated into October.

You'd think PowerShares DB U.S. Dollar Bearish Fund (UDN Quote) would be the top choice of ETF investors. With $379 million in assets at the end of October, having added $39 million in a month that was marked by heavy inflows into emerging markets and fixed-income ETFs best positioned for protection from higher inflation, one might conclude that ETF investors are bearish on the U.S. dollar.

The headlines would reinforce that thinking, but the data may tell a different story. UUP saw $232 million of inflows last month and assets climbed to $726 million, up from $504 million at the end of September, $354 million at the end of August, and $184 million at the end of July. UDN, meanwhile, has held steady with $300 million plus in assets for the past four months.

As of today, however, PowerShares' Web site reports that UUP has $944 million in assets, a jump of $218 million in less than a week, nearly the total for all of October.

Last year, during October 2008, UUP was much larger than UDN in terms of assets. UUP had $608 million compared to $65 million in UDN, at a time when the U.S. dollar was in the midst of a major rally.

Also at this time last year, UDN had year-to-date net outflows of $4 million, compared to net inflows of $185 million this year. UUP meanwhile, had inflows of $415 million year-to-date through Oct. 31 last year, and $439 million in inflows this year.

There remains a huge difference in trading volume as well, with UDN trading $305 million worth of shares last month, compared to $1,672 million for UUP. Both were up sharply from September, when volume was $193 million for UDN and $957 million in UUP.

Clearly, investors are more interested in the bullish dollar fund this year, even though it hasn't even begun to rally; in fact, it hit its low for the year last month. This ramped-up interest may be due to higher visibility for the ETF as a way to bet on the U.S. dollar.

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