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ETF Spotlight Newsletter
A sampling of research & data on ETFs from AltaVista Research
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Coverage at a glance
No. of ETFs
597

Total Mkt Cap ($bns)
$662.8
Avg. daily value traded ($bns)
$50.2
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October 25, 2010
Greetings!

Below please find the ETF Spotlight newsletter for the week of October 25, 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 endangered dividends. We've also got a long list of recent NEW COVERAGE, bringing our universe to nearly 600 equity ETFs. Feel free to share it with others who may be interested. 

In this week's issue

technicianEndangered Dividends
  • Chart of the week: Dividends in danger
  • Fund Focus: iShares DJ Aerospace & Defense (ITA)
  • Revisions, asset flows & short interest
  • 2011 DPS estimates, growth rates, and yields for major ETFs
  • Market monitor - movers & categories
To download the full newsletter click here.

Chart of the week
Dividends in danger
By the end of this year S&P500 earnings will have returned to their long-run trend line since 1950, meaning that for corporate profits at least, the recession is over. During the downturn, many firms had to cut dividends, especially in the financial sector. But by next year dividends should be growing nicely again, up 8.6% for firms in the S&P500 SPDR (SPY), 12.6% for firms in the iShares MSCI EAFE fund (EFA) and 16.1% for those that make up the iShares MSCI Emerging Markets fund (EEM). (DPS growth rates for other major ETFs are on pg. 4 of the full newsletter).

But there are still some areas of weakness. The chart below shows the ETFs with the largest projected declines in dividends per share next year, using current consensus estimates for each fund's constituents. The list is an eclectic one, including both growth and value funds; cyclical and defensive names; small caps and large caps. Few however appear to be "deep value" portraits of an industry still struggling but with bargain valuations: 7 out of the 10 funds have an ALTAR ScoreTM--our rating of an ETF's overall investment merit--below that for the S&P500.

The dividend cuts and below-average ALTAR ScoresTM combined suggest that most of these funds are neither timely nor particular bargains. However the largest and in our opinion most interesting fund on the list, the iShares Dow Jones Aerospace & Defense fund (ITA) rates equal to the overall S&P500, and is the subject of this week's Fund Focus.

Download the full newsletter here.  

Chart: Dividends in danger
Projected decline in dividends per share, 2010-11E
Declining_ylds

Fund Focus
iShares Dow Jones Aerospace & Defense fund (ITA)f22

Aerospace & defense firms have historically delivered better sales and earnings growth than the larger Industrials sector (XLI) from which they come, although that could reverse next year as the broader economy recovers while government spending restraints act as a drag on profitability for many firms in ITA (Return on Equity is trending down). Nonetheless these stocks trade at discount valuation multiples and enjoy a higher ALTAR ScoreTM than Industrial stocks in general.

To download the full newsletter, click here.

NEW COVERAGE
We initiated coverage of 70 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)
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)
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)
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)
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