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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
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Coverage at a glance
No. of ETFs
606

Total Mkt Cap ($bns)

$633.6

Avg. daily value traded ($bns)

$51.0
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October 4, 2010
Greetings!

Below please find the ETF Spotlight newsletter for the week of October 4, 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 overbought ETFs. We've also got a long list of recent NEW COVERAGE, bringing our universe to over 600 equity ETFs. Feel free to share it with others who may be interested. 
 
In this week's issue

technicianOverbought ETFs
  • Chart of the week: Overbought ETFs
  • Fund Focus: iShares MSCI All Peru Capped (EPU)
  • Revisions, asset flows & short interest
  • 2011 Book value per share estimates, growth rates and P/BV multiples for major ETFs
  • Market monitor - movers & categories
To download the full newsletter click here.
 
Chart of the week
Overbought ETFs

Last week saw the end of an exceptionally strong September as well as the end of the  quarter, when "window dressing" is often an issue ("window dressing" is when fund managers buy recent "winners" at the end of the quarter so that they will appear in the fund's quarterly report). This temporary and artificial demand may lead to weaker performance once the new quarter begins.

To find such potentially overbought ETFs, we ranked each ETF we cover by its Relative Strength Indicator (RSI), a simply indicator of price momentum. RSI can range between 0-100. Generally, readings approaching 70 or above imply a security is overbought (readings of less than 30 imply an oversold condition).

Our ranking of ETFs by the highest RSI is dominated by many smaller and more volatile emerging market country funds, most of which have ALTAR Scores--our rating of an ETF's overall investment merit--that are well below that of the broader iShares MSCI Emerging Markets fund (EEM). As a result these funds may be both overbought and overvalued.

The most overbought fund according to RSI is the iShares MSCI All Peru Capped fund (EPU) which is the subject of this week's Fund Focus. Shares are up 33% year-to-date and are trading at 1.1% premium to Net Asset Value.

Chart: Overbought ETFs
ETFs with the highest Relative Strength Indicators (RSI, 30 day)

Source: Bloomberg
To download the full newsletter, click
here.
 
Fund Focus
iShares MSCI All Peru Capped (EPU)Charts1

EPU is dominated by Materials stocks at nearly 60% of assets. As a result sales and earnings growth has been extremely strong over the past five years as commodity prices have soared. But price gains have also been robust, and these stocks now trade at a price-to-book value multiple of 3.0X, much higher than for other emerging markets, even those with similar exposure to commodities. Therefore returns going forward could well be subpar.

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