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ETF Spotlight Newsletter
A sampling of research & data on ETFs from AltaVista Research
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Chart of the week
Fund focus
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Coverage at a glance
No. of ETFs
606

Total Mkt Cap ($bns)

$626.9

Avg. daily value traded ($bns)

$53.2
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September 27, 2010
Greetings!

Below please find the ETF Spotlight newsletter for the week of September 27, containing highlights of the research and data on www.etfresearchcenter.com as well as a recap of the past week's action in the ETF market. 

The focus of this week's edition is U.S. versus International Sector ETFs. We've also got a long list of NEW COVERAGE to share this week, bringing our universe to over 600 equity ETFs. Feel free to share it with others who may be interested. 
 
In this week's issue

technicianU.S. versus International Sector ETFs
  • Chart of the week: U.S. vs. Int'l Sectors
  • Fund Focus: iShares MSCI ACWI ex-US Health Care (AXHE)
  • Revisions, asset flows & short interest
  • Cash flow per share estimates, CF/EPS ratios and P/CF multiples for major ETFs
  • Market monitor - movers & categories
To download the full newsletter click here.
 
Chart of the week
U.S. versus International Sectors

Part of our new coverage line-up is the ten iShares MSCI ACWI ex-US sector funds that provide pure sector exposure outside the U.S. (other Int'l sector funds include both U.S. and non-U.S. firms). So we were interested to see how they compared with their U.S. counterparts to see if we might uncover any pair trade opportunities.

We examined the price-to-cash flow multiples for the Sector SPDR funds and their International, ex-US counterparts (the Technology SPDR is shown against both the Int'l Tech and Int'l Telecom sector funds, since the Tech SPDR combines those two sectors).

All but one International Sector fund are trading at a P/CF discount compared with their U.S. counterparts, in some cases significantly. The exception was the iShares MSCI ACWI ex-US Health Care fund (AXHE), which is the subject of this week's Fund Focus and a possible pairs trade.

Chart: U.S. vs. International Sector Funds
Price-to-cash flow multiples (2010E)

Source: AltaVista Research

To download the full newsletter, click
here.
 
Fund Focus
iShares MSCI ACWI ex-US Health Care (AXHE)Charts1

Like the Health Care SPDR (XLV) in the U.S., this fund is dominated by pharmaceutical firms that have very similar levels of profitability on average over the course of the business cycle. However, whereas for U.S. firms profitability has been trending downward in recent years, it has improved for firms in AXHE. But valuations are perhaps overly optimistic, as this is the only Int'l sector fund with significantly higher multiples and a lower ALTAR Score than its U.S. sector-counterpart. Investors may want to consider a pairs trade (long XLV, short AXHE) that will profit if valuations converge.

To download the full newsletter, click here.
 
NEW COVERAGE
We initiated coverage of 75 new ETFs:

For details on any of the funds below, go to our FUND ANALYSIS TOOL on the ETF Research Center and enter the ticker symbol in the toolbox on the right.

Schwab Emerging Markets Equity (SCHE)
Alerian MPL ETF (AMLP)
Global X Silver Miners ETF (SIL)
iShares MSCI Indonesia Investable (EIDO)
iShares MSCI Poland Investable (EPOL)
Schwab Intl Small-Cap Equity (SCHC)
iShares MSCI New Zealand (ENZL)
Global X China Materials ETF (CHIM)
Mars Hill Global Relative Value (GRV)
Global X Lithium ETF (LIT)
First Trust BICK Index Fund (BICK)
iShares MSCI Europe Financial Sector (EUFN)
Vanguard S&P 500 ETF (VOO)
Wisdomtree International Hedged Equity (HEDJ)
First Trust ISE Global Copper (CU)
Global X Brazil Mid Cap ETF (BRAZ)
Emg. Global Shares INDXX India Small Cap (SCIN)
IQ Canada Small Cap ETF (CNDA)
Global X Brazil Consumer ETF (BRAQ)
Emg. Shares DJ Emg. Mkt.s Consumer Titans (ECON)
Market Vectors India Small Caps (SCIF)
Market Vectors Latin America (LATM)
IQ Australia Small Cap ETF (KROO)
Globalshares FTSE Developed (GSD)
Vanguard S&P 500 Growth ETF (VOOG)
Vanguard S&P Mid-Cap 400 Growth (IVOG)
Vanguard S&P Small-Cap 600 Growth (VIOG)
Vanguard S&P Small-Cap 600 (VIOO)
Vanguard S&P Small-Cap 600 Value (VIOV)
Jefferies TR/J CRB Wildcatters E&P (WCAT)
First Trust ISE Global Platinum (PLTM)
iShares MSCI Emg. Mkts. Materials Sector (EMMT)
Globalshares FTSE All-World (GSW)
Globalshares FTSE All-Cap Asia Pacific ex-Japan (GSZ)
iShares MSCI ACWI ex-US Consumer Staples (AXSL)
Market Vectors Egypt Index (EGPT)
iShares MSCI ACWI ex-US Materials (AXMT)
SPDR S&P Russia ETF (RBL)
Globalshares FTSE All-World ex-US (GSO)
iShares MSCI ACWI ex-US Cons. Disrectionary (AXDI)
Wilshire US REIT ETF (WREI)
iShares MSCI ACWI ex-US Telecom Services (AXTE)
iShares MSCI ACWI ex-US Industrials (AXID)
iShares MSCI ACWI ex-US Energy (AXEN)
iShares MSCI ACWI ex-US Health Care (AXHE)
iShares MSCI ACWI ex-US Utilities (AXUT)
Vanguard Russell 2000 Growth (VTWG)
iShares MSCI ACWI ex-US Info Tech (AXIT)
Vanguard Russell 2000 (VTWO)
Vanguard Russell 1000 Growth (VONG)
Vanguard S&P Mid-Cap 400 ETF (IVOO)
Vanguard Russell 2000 Value (VTWV)
Vanguard S&P Mid-Cap 400 Value (IVOV)
Vanguard S&P 500 Value ETF (VOOV)
Vanguard Russell 3000 (VTHR)
Vanguard Russell 1000 (VONE)
One Funds (ONEF)
Wilshire 4500 Completion ETF (WXSP)
Vanguard Russell 1000 Value (VONV)
SPDR S&P Global Nat. Resources (GNR)
Global X China Energy ETF (CHIE)
Emg. Global Shares INDXX India Infrastructure (INXX)
Global X Brazil Financials (BRAF)
IQ South Korea Small Cap ETF (SKOR)
Global X Copper Miners ETF (COPX)
iShares MSCI Ireland Capped (EIRL)
IQ Taiwan Small Cap ETF (TWON)
WCM/BNY Mellon Focused Growth (AADR)
iShares MSCI Emg. Mkts. Financials Sector (EMFN)
Pax MSCI N. American Sustainability (NASI)
Wilshire 5000 Total Market (WFVK)
iShares MSCI USA Index Fund (EUSA)
iShares MSCI ex-US Financials (AXFN)
iShares MSCI Far East Financial Sector (FEFN)
JETS Contrarian Opportunity (JCO)

As always your questions & feedback are most welcome.
 
Sincerely,
 
Michael Krause
AltaVista Research