Tap the Potential of Southeast Asia Published 8/18/2010 7:45 AM EDT Starting today, Vietnam's central bank will be devaluing the country's currency, the dong, by 2.1% against the dollar. These measures -- the announcement of which came yesterday -- are being taken in order to reduce the country's trade deficit, which was twice as large in the first seven months of this year vs. the same period in 2009. This is not the first recent occasion in which the Vietnamese government has decided to devalue the currency, and it seems unlikely the adjustment will have any lasting positive effect on Market Vectors Vietnam ETF ( VNM). Sudden currency shifts generally cause market uncertainty. Furthermore, the last time the dong was devalued in February, VNM rose 0.5% for the month, but the period was a volatile one. Many are hoping that Vietnam can replicate China's export-led growth spurt, but right now I don't like the prospects for VNM. Especially given the ETF's 5% loss so far this year, there are much better ETF plays for Southeast Asia at the moment. Markets in Malaysia, for instance, are near two-and-a-half-year highs on earnings optimism, which has helped iShares MSCI Malaysia ( EWM) to breach its highs for the year in August and to continue to march higher. > > Bull or Bear? Vote in Our Poll Year to date, the best-performing Southeast Asia ETF is Market Vectors Indonesia ETF ( IDX), though it has languished and begun to trend downward. Meanwhile, the second-best year-to-date performer -- iShares Thailand Investable Market Index ( THD) -- is moving steadily higher. Markets in Thailand are currently continuing a growth spurt that had been temporarily interrupted earlier this year by demonstrations in capital city Bangkok. Thus, for aggressive investors seeking a fund capable of harnessing the powerful growth in the Southeast Asia region, I would go with THD or EWM rather than VNM. For less aggressive investors, I also like iShares MSCI Singapore ( EWS). At the time of publication, Dion Money Management had no positions in the stocks mentioned.
Scheduled for ExecutionPublished 8/17/2010 2:53 PM EDT Four more ETFs are slated for execution. Claymore is preparing to close the Claymore/Zacks Dividend Rotation ( IRO), Claymore/Zacks Country Rotation ( CRO), Claymore/Beacon Global Exchanges, Brokers & Asset Managers Index ( EXB) and the Claymore/Robb Report Global Luxury Index ( ROB) on Sept. 10. These funds deserve a special nod since at least one of them seemed like a neat idea. ROB was an ETF I always secretly rooted for, even though the indexing was, well, unconventional. Whether or not you agree with the Robb Report's ratings, an ETF that one could use to target luxury retail was crafty. I hope someone else picks up the idea and executes at a lower price point. Dividend ETFs are plentiful, and I'm partial to the one that I own -- the iShares Dow Jones Select Dividend Index ( DVY). Claymore's two options tried to put a different spin on things but just couldn't muster the investor interest to make them viable. This should put things in perspective: DVY has nearly $4.2 billion in assets; IRO has just $12.5 million in assets. From an investor standpoint, I think that the whole rotation thing turned people off. Here's a tip for picking an ETF that will be popular: People like funds in which they know what to expect. Methodologies that change over time (read this as: lifecycle ETFs) or aren't clear (how about those double-down housing funds?) usually don't have longevity. Even if the rotating was done in an extremely predictable way, I still think people would lean toward a mutual fund on that type of strategy. So that this doesn't just turn into another
- ETFs with original or innovative ideas don't always make it (even if you're secretly rooting for them). They need a fan base.
- If you happen to own one of the four ETFs that Claymore plans to kill, the funds will stop trading on Sept. 10. You're free to sell (or buy) them until then. (A word of caution: If people start unloading, these could trade at deep discounts.) If you don't sell your fund by Sept. 10, your assets will be in lockdown. (I'm now reading that there's exemptions for certain broker/dealer transactions, but it's safe to say that most of us aren't in that category). Anyone left as of Sept. 17, will receive a cash distribution into their brokerage account representing the value of their shares as of that date, which will also include any capital gains and dividends. Not so bad unless the value of the fund drops like a rock between the Sept. 10 and Sept. 17.
ETFs for Preferred Investors8/18/2010 12:45 PM EDT The Wall Street Journal reported today that General Motors will include preferred stock as part of its upcoming initial public offering -- a reflection of the passion for yield we've seen lately. I discussed in yesterday's