This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

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.

Here are three of his blog posts from the past week:


Vietnam ETF Shows a Strange Divergence

Published 5/26/2011 4:46 p.m. EDT

Time differences and trading hours often affect the performance of international equity ETFs, in which the underlying components are traded in markets overseas. But when it comes to the Market Vectors Vietnam ETF (VNM), the dislocation between the ETF's market price and underlying value is cause for concern. Why has VNM skipped the rails? What is so unusual about its current composition?

Yesterday afternoon, I first noticed that VNM was trading at a premium, and I have kept a close eye on the fund since. Today, VNM closed 4.56% higher and had an unusually high average daily trading volume of 410,000 shares. VNM's three-month average daily trading volume is 200,000. More importantly, VNM's underlying value, or NAV, advanced just 2.4%.

> > Bull or Bear? Vote in Our Poll

As I mentioned before, the market price of international ETFs will often drift away from underlying value, but the gap between VNM's market price and the net asset value of its components is highly unusual in a fund with this much liquidity. I began to look for news and then looked at the fund's holdings. Here's the biggest thing that stood out: VNM's sixth-largest holding is listed as "other assets/cash." According to Van Eck's information, "other assets/cash" constituted more than 5% of the fund's portfolio.

All funds have some portion of the portfolio in cash, but VNM's high cash percentage is a red flag. It likely indicates that there have been some unanticipated restrictions in creating new shares of VNM or that a component has been removed unexpectedly. In the financial news, several stories note that Vietnam's bonds have been making significant gains due to speculation.

It looks like speculators are pouring into VNM as well, and that they don't seem to mind paying a premium for access to Vietnamese equities. The influx of funds seems to be big enough that VNM managers have not invested all the new cash yet, so it is sitting in the portfolio marked as cash.

While I don't suggest chasing VNM, it should be an interesting fund to keep an eye on in the days ahead. There certainly seems to be something strange going on with this fund, and the heightened investor interest could be indicative of a larger market trend. I will update readers when I learn more.

At the time of publication, Dion Money Management had no positions in stocks mentioned.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
NLR $48.45 0.19%
VNM $18.54 -0.56%
EWC $25.19 1.80%
URA $7.92 1.10%
SPY $209.44 1.30%

Markets

Chart of I:DJI
DOW 17,642.09 +201.50 1.16%
S&P 500 2,092.21 +24.57 1.19%
NASDAQ 5,089.0990 +49.3230 0.98%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs