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:


Germany Surges

Published 1/12/2011 11:16 a.m. EST

Eurozone fears (particularly regarding Portugal) have certainly colored recent U.S. trading sessions, so positive news from the eurozone today is helping to build confidence in the global marketplace. One of the standout statistics that should give investors confidence is the incredible rate of economic growth in Germany, which saw its biggest increase in decades during 2010.

Given an extra boost for exports, German GDP jumped 3.6%. With unemployment dropping and both business and consumer confidence rising, Germany is Europe's bright spot in troubled times.

ETF investors looking to target Germany in the wake of this data should consider the widely traded iShares MSCI Germany Index ( EWG). As of 10:30 a.m. EST today, more than 350,000 shares of EWG had already changed hands, helping the fund to jump more than 2%.

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Although it's tempting to chase EWG today in light of all the headlines, longer-term ETF investors should look to benefit from constant fluctuation of eurozone worries. When another eurozone country creates fear about the euro in the weeks ahead -- it seems like there will always be one eurozone country or another causing concern -- it may be possible to buy EWG on a dip and hold the fund until the next round of German economic data helps to push the equities of this consistently strong eurozone country higher.

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


Vanguard Scuttles Plan for Muni ETFs

Published 1/13/2011 3:16 p.m.

Before I could even get a chance to write about the new municipal bond ETFs -- "Good Idea, Bad Time" would have been the title -- Vanguard decided to can its plans.

Citing a "high level of volatility," Vanguard withdrew its filing to release a line of tax-exempt bond ETFs in the midst of terrible market for munis. In a brief SEC filing today, Vanguard withdrew its registration for a trio of new funds (the initial filing for the funds was made back in June): one short-term, one intermediate-term and one long-term muni ETF.

To be honest, it is refreshing to see an issuer react to a changing marketplace and not just throw ideas at the wall to see what sticks. Trouble has been brewing for other muni bond ETFs -- such as the iShares S&P National AMT-Free Municipal Bond ETF ( MUB) and the SPDR Nuveen Barclays Capital Municipal Bond ETF ( TFI) -- so it is probably just as well that Vanguard stays out of this corner of the ETF marketplace. MUB and TFI have had trouble tracking their underlying indices in both the short and long term.

Yesterday I wrote a post about BlackRock's ( BLK) effort to cut fees for its international funds, which have gotten plenty of competition from Vanguard's lower-cost models.

In the race to launch new products and corner segments of the market, ETF issuers often look before they leap. As the ETF industry matures, however, let's hope that there will be more "lessons learned" and fewer flops.

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


A Shining Year for Two Innovative ETFs

Published 1/11/2011 12:14 p.m. EST

It's hard to believe that the ETFS Physical Palladium Shares ETF ( PALL) and the ETFS Physical Platinum Shares ( PPLT), which have more than $1.6 billion in combined total assets, have only just passed the one-year mark. Launched on Jan. 8, 2010 -- by an issuer that was still barely known among U.S. investors -- PALL and PPLT are perfect examples of how good ideas and great timing can alter the ETF landscape.

PALL and PPLT were not only the first U.S.-listed, physically backed platinum and palladium ETFs. They were the first physically backed U.S. ETFs to track anything other than gold or silver. While ETF Securities, the global ETF issuer behind this precious-metal pair, gave a nod to the enormous SPDR Gold Shares ( GLD) ETF and increasingly large iShares Silver ETF ( SLV) with their first U.S. fund launches in 2009 (the ETFS Physical Silver Shares ETF ( SIVR) and the ETFS Physical Swiss Gold Shares ETF ( SGOL) were launched in July 2009 and September 2009, respectively), PALL and PPLT were original and innovative, and they quickly developed a following.

When I awarded PPLT an " ETF Oscar" last March, the fund had already amassed more than $400 million in assets, as existing precious-metals investors diversified their portfolios and new investors, worried about currency and purchasing protection, looked to the fund as a new way to access this expensive metal. PALL, while certainly innovative, had not yet gotten as much attention as its platinum partner.

As of yesterday's close, however, new data show an interesting shift. Total assets in PPLT and PALL are $770 million and $842 million respectively. Total shares outstanding -- an even better indication of investor demand -- for PPLT and PALL were 4.45 million and 11.25 million. To me, this shift shows a willingness on the part of investors to move beyond physically backed investments that are more often considered "precious".

Both PALL and PPLT had a stellar first year, but 2011 could be even brighter. Global auto sales have been on the rebound, and both platinum and palladium are used in the production of catalytic converters. Beyond the industrial applications of their underlying commodities, however, PALL and PPLT will continue to be attractive to investors who are looking to diversify away from equities and currencies in an uncertain economy.

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

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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