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.

Here are three of his blogs from the past week.

What Ever Happened to Gold?

Published 7/14/2010 10:37 a.m. EDT

Just a few weeks ago, I was talking about the gargantuan SPDR Gold Shares ETF ( GLD) on nearly a daily basis. Trying to address the many questions I received about gold -- from both readers and money-management clients -- I wrote frequent posts with such titles as " Is Gold Buying Overdone?" and " A Short Term Play on Gold," in addition to a two-part series on " Is Your Gold ETF Safe?"

As fears surrounding sovereign debt in Europe and a double-dip recession in the U.S. put pressure on equity markets, investors rushed into physically-backed gold ETFs such as GLD and iShares Comex Gold ( IAU). GLD gained $4 billion in net assets during May and more than $2 billion during June. While the uncertainty in the market made me think gold would be popular, the interest in gold ETFs was far beyond my expectations.

And then suddenly, the flood of questions stopped. Investors began to feel more comfortable about Europe's debt and currency. Ahead of earnings, investors began to feel bullish about equities, and now they're totally focused elsewhere.

To be honest, I'm not surprised. That's why mixed in with my blogs about the recent gold rush, you'll find an entirely different set of posts. " Use Gold, Don't Chase It," " The Curious Case of Commodities Rex" " Stop Chasing the Market" and " Stand By Your Gold ETF" all boil down to one important message: Buy gold for the right reason.

When it comes to the immensely popular physically-backed funds like GLD and IAU, these funds are best used as part of a well-diversified portfolio. Since they are taxed as collectibles, GLD and IAU aren't the kind of funds you want to use to chase gold prices by quickly entering and exiting trades. Equity-based gold ETFs like the popular Market Vectors Gold Miners ETF ( GDX) lend themselves better to short-term trading.

Physical gold ETFs like GLD are a solid investment for a long-term portfolio, whether they are in the news or not. The best time to begin a long-term investment in gold, in fact, is when everyone else is concerned with other parts of the market. Don't wait until the next gold rush to diversify your portfolio with this precious metal..

Singapore ETF Stays Strong

Published 7/14/2010 7:40 a.m. EDT

Singapore reported today that its economy expanded more quickly than expected in the second quarter, and investors can gain exposure to the city-state's markets with iShares MSCI Singapore Index ( EWS).

As in the first quarter, strong manufacturing data helped the economy to its impressive expansion of 26% on a seasonally adjusted and annualized basis in the three months to June 30.

Compared to the year-ago quarter, the growth was 19.3% in the second quarter, even higher than the 16.9% year-over-year growth in the first quarter.

Around the time when Singapore was reporting its impressive growth for the first quarter back in mid-May, I highlighted EWS as one of the bright spots among a risky international ETF investment environment.

Since that time, the fund has advanced by about 10%, while the S&P 500 has only increased by 2%.

Back in May, the Singapore government estimated that full-year GDP growth would be between 7% and 9%, but with the second-quarter economic data, this estimate has been revised upward to between 13% and 15%.

Although growth in the second half of the year is not expected to be as impressive as in the first half due to lower expected demand from the U.S. and Europe, I believe that markets will still react favorably to the near-doubling in estimated economic activity that will continue to occur throughout this year.

The currency situation between the U.S. dollar and the Singapore dollar also is remaining fairly consistent, meaning that investors in EWS will not risk getting harmed by drastic currency fluctuations.

Singapore's government has also been responsible in managing its spending and debt, meaning that investors can bet on EWS and the economic success of Singapore without worrying about markets reeling there from domestic austerity or contagion concerns.

A Safer Way to Invest in Private Equity

Published 7/15/2010 11:09 a.m. EDT

After the 2008 financial crisis derailed plans, shares of KKR ( KKR), the parent of Kohlberg Kravis Roberts, the private-equity firm, began trading on the New York Stock Exchange today. KKR first filed to list shares in 2007 but shifted to other alternatives as the stock market plunged. This highly-anticipated IPO is yet another sign of how far the equity market has recovered in just a couple years.

You don't have to buy shares of KKR or rival Blackstone ( BX), however, to gain exposure to the private-equity market. The PowerShares Listed Private Equity ETF ( PSP), launched in 2006, tracks 62 publicly listed private-equity companies (including business development companies and other financial institutions or vehicles) whose principal business is to invest in and lend capital to privately held companies. Top PSP holdings include KKR Financial Holdings ( KFN) and KKR, along with Leucadia National ( LUK), Blackstone, Ares Capital ( ARCC), Apollo Investment ( AINV) and Fortress Investment Group ( FIG).

Since shareholders of KKR & Co. (Guernsey) swapped shares for holdings in the new U.S.-listed stock, PSP shareholders have exposure to the new offering.

KKR's IPO isn't the only story putting private equity in the spotlight. Hugh Hefner, founder of Playboy Enterprises ( PLA), announced his bid to take PLA private earlier this week. FriendFinder Networks, owner of rival Penthouse, quickly made its own offer.

It's understandable that investors would still be nervous about private-equity firms when Blackstone is currently trading at one-third of its original IPO price. While PSP isn't for everyone, this well-balanced ETF offers exposure to the recovering private-equity market while mitigating security-specific risk. Year to date, PSP is still trading in slightly positive territory.

I believe that KKR's IPO is a good sign for the private-equity market and that private-equity firms will continue to strengthen as the broad market stages a slow, steady recovery. PSP is a good way to get involved without putting all your eggs in one basket.

-- Written by Don Dion in Williamstown, Mass.

A special note from Don: Put simply, I want to help you profit from ETFs. You don't have to be an expert trader -- there are potential profits for investors at every level. And I think there's no better way to jump into the world of ETFs than through my brand-new service, TheStreet ETF Action by Don Dion. Membership is limited, so click here to get in on the action!

At the time of publication, Dion Money Management was long IAU.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

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