Predicting markets and economic patterns is difficult over the next 20 years because there are many unknowns.  After all, who will be President in 2016?  What will tax laws be in 2020?  Which of today’s deadly diseases will be cured in 2020?  Which regions will experience wars by 2020?  This is why futurism may be one of the more unique approaches in investing. ETFs are often called the mutual funds of the future and our goal is to meld a futurist outlook into an investing strategies.

A rule of long-term investing is that what investments feel good today, such as those in Chinese and Indian markets, may not generate returns tomorrow.  Investors will face short-term pain for long-term gain. Futurists are always thinking beyond the next recession and the next boom behind it.

Beyond Emerging Markets… Frontier Markets

If you are thinking about China or India over the next 10 to 20 years, there is plenty to consider.  Both countries have grown exponentially as they became some of the world’s largest economies. Think post-Chindia and post-BRIC.  ”Frontier markets,” a term which has come up in recent years that goes beyond ‘emerging markets’ is ‘frontier markets.’  These “frontier market” economies still have room for growth.  Perhaps nothing illustrates this better than The NatGeo World Map at Night.

When it come to Africa and other Frontier Markets, there are three exchange-listed vehicles that we usually choose.  All are generally more volatile than the broader market stock indexes in the developed world.  Many frontier funds base performance  off of the MSCI Emerging Markets Index rather than the S&P 500.

Morgan Stanley Frontier Emerging Market Funds, Inc. (NYSE: FFD) is a small closed-end fund with roughly $105 million in assets.  This fund has diverse investments in banks, breweries, miners and utilities.  At its semi-annual report, the fund listed holdings in 21 nations including Nigeria, Argentina, Bangladesh, U.A.E., Kenya, Kuwait, Pakistan, Serbia, Qatar, Lebanon and Greece.  Average volume is light at just under 20,000 shares in a day and its 52-week range is $10.52 to $15.23.

Market Vectors Africa Index ETF (NYSE: AFK) from Van Eck seeks to track the performance of the Dow Jones Africa Titans 50 Index, which is full of companies that are headquartered in Africa or that generate the majority of their revenues in Africa.  It holds banks, breweries, miners, utilities, and more.  South Africa is where the largest number of the fund’s holdings are based. Assets under management were listed as $92 million in mid-November, its 52-week trading range is $26.60 to $34.88, and average daily volume is close to 25,000 shares per day.

iShares MSCI South Africa Index (NYSE: EZA) is an ETF that seeks to track the MSCI South Africa Index and it is one of the largest  vehicles out there since South Africa has a more established markets and is more politically stable compared with other African nations.  The fund invests in South African companies and has roughly $520 million in assets.  It trades close to 400,000 shares a day, and its 52-week range is in the low-$50s to $72.77 (flash crash low was listed as $23.00).  Its holdings include Anglo Platinum, AngloGold Ashanti, Firstrand, Gold Fields Ltd., Sasol, and Standard Bank.

Is Africa risky?  Are many other nations in the Frontiers markets risky? Absolutely.  But many of these nations have some of the biggest undisturbed deposits of natural resources.  That’s why we have highlighted these ETF and fund products rather than make individual picks.

Are You Ready For The International Water Wars?

Americans, Canadians, and many Europeans take potable water for granted.  However, Montezuma’s Revenge and many water-borne illnesses are rather common around the globe.  Building water filtration systems and desalination plants is costly. Nations are already setting limits on water resources.  Don’t ever discount the future of water.  Wars could be fought over potable water sources.  If you refer to that Nat-Geo World at Night Map, you can guess where much of the water resources are needed.

Many speculators have invested in the water industry for years.  It is no wonder that GE, 3M, and many other conglomerates have invested in the sector.  PowerShares Global Water (NYSE: PIO) and PowerShares Water Resources (NYSE: PHO) are two ETFs that compete in the world of water investing.

The PowerShares Water Resources (NYSE: PHO) seeks to track the Palisades Water index and it tends to have more of a U.S. focus.  Of course, many of these companies were hurt because they built new infrastructure ahead of housing developments that were scraped when the bubble burst.  PowerShares Water U.S. assets are close to $1 billion. It trades well over 200,000 shares per day, and its 52-week range is $14.70 to $18.68. (outside flash crash listed low of $6.99) to $18.68.

The PowerShares Global Water (NYSE: PIO) seeks to track the Palisades Global Water index, and it invests in U.S. companies and large international companies.  This is a smaller fund than the domestic water fund (PHO) from PowerShares.  Still,  it has more than $300 million in assets and trades close to 60,000 shares per day, and it has a 52-week range of $15.60 to $19.46.

J.P. Morgan Asset Management and Water Asset Management acquired Southwest Water, and that Water Asset Management is a private investment vehicle.  These are four small water mutual funds: Kinetics Water Infrastructure Advantaged Fund (KWIAX), PFW Water Fund (PFWAX), Allianz RCM Global Water Fund (AWTAX), and Calvert Global Water Fund (CFWAX).

NANO-NANO… Take Me To Your InnerSpace

The word nanotechnology, or nanotech for short, is another futurist technology. Many aspects of nanotechnology are already in use today in chemicals and other products.  This may also be one of the most controversial issues in the world of technology.  Think about atomic and molecular scale systems comprised of compounds between 1 to 100 nanometers, or one billionth of a meter.  There have been fortunes made by investors and there have been many fortunes lost.

Imagine machines so small that they could operate and move freely in your blood.  Imagine coatings that are comprised of molecules and materials small enough that they get a perfectly flat surface.  Unfortunately, you also have to consider toxicity, regulation, and the potential for a destructive use for such small products.  There is one ETF in the PowerShares Lux Nanotech (NYSE: PXN).

The PowerShares Lux Nanotech (NYSE: PXN) from Invesco seeks to track the the Lux Nanotech index.  It is comprised of some well-known companies and many companies have nanotech as a portion of their business.  The ETF has been around since the end of 2005 and has never recaptured its former highs.  It is also small at about $6 million in assets and trades under 25,000 shares a day on average.  Its 52-week range is $7.74 to $10.85.  Some of the companies in the fund include A123 Systems, Elan, 3M, GE, and Headwaters; but this ETF has some very risky and very volatile holdings as well.

Harris & Harris Group, Inc. (NASDAQ: TINY) is a nanotech venture capital fund whose website address tinytechvc.com tells what it is all about.  Its market capitalization is roughly $137 million, it trades close to 100,000 shares per day, and its 52-week range is $3.70 to $5.50.  While this is not a fund, it is close enough as the VC-company’s portfolio has more than 30 investment company holdings.  The company claimed a net asset value of $4.51 per share as of September 30, 2010, but founder Charles Harris also passed away at the end of September 2010.

Advanced Batteries… High on Lithium

All of those rechargeable batteries, batteries in consumer electronics and electric cars need lithium, which makes it a trend for futurists to consider.  There are two key risks here for this precious commodity: it could eventually run out or become uneconomical.  Moreover, China and Russia are major suppliers, which gives the sector an element of political instability.

Is it possible a better technology could come along?  Of course.  Still, there are many opportunities in the industry and it is probably no accident that behemoths such as General Electric have already invested in advanced batteries and have vowed to continue to do so. Lithium demand has nearly doubled in the past decade from above 15,000 metric tons in 2002 and is expected to rise to 55,000 metric tons by 2020 , according to the TRU Group.

Global X Lithium ETF (NYSE: LIT) is a very new ETF that launched in the summer and its holdings are solely in companies active in exploring and mining of lithium and producing lithium batteries.  So far it has been a big success.  The fund seeks to track the Solactive Global Lithium Index. Some key holdings are Sociedad Quimica Y Minera De Chile (above 22% of the fund), FMC Corp., Rockwood Holdings, Sanyo Electric, Ener1 and A123 Systems.  Assets under management are $91.5 million, it trades over 100,000 shares on an average day, in a range of $15.63 to $21.30.
Alternative Energy, In A Broader Sense

Investing in alternative energy may hold the promise of the future.  It has also been very painful even for futurists with a decade or longer outlook.  True futurists may seek an answer out of wind, solar, wave, geothermal, biofuels and even nuclear energy.  Not all alternative energy is technically renewable.  But the world needs alternative energy sources.  That is no longer even debated in public by most oil executives.

A problem that arises even for futurists with a ten-year outlook or longer is that the oil and gas giants of today may be the leaders of alternative energy in the future.  BP plc (NYSE: BP) has one of the worlds largest solar operations, and it is not unchallenged by other oil and gas giants.  Another caveat is that you do not need to be a futurist to see how many alternative energy and renewable energy investments are often considered nothing more than highly leveraged bets against the future price of oil.

PowerShares WilderHill Clean Energy (NYSE: PBW) is one of the go-to ETF products in alternative energy.  The fund is meant to track the performance of the WilderHill Clean Energy index.  Its largest holdings do seem to be more geared toward solar, which is most established alternative energy technology.  Some of its key components are First Solar, Broadwind Energy, IDACORP, JA Solar, and Suntech Power.  The fund has more than $550 million in assets, it trades over 300,000 shares per day, and its 52-week range is roughly $8.25 to $11.95.  The biggest issue is performance as it was worth over $25 at the 2008 peak versus close to $10.00 currently.

PowerShares Cleantech (NYSE: PZD) is the international and smaller competing version of the PowerShares Wilderhill Clean Energy ETF.  It is meant to track the price and yield performance of the Cleantech index.  Some of its top holdings are ABB, Corning, First Solar, IBERDROLA, Novozymes, Siemens, and Vestas Wind Systems.  Assets are about $150 million, it trades only about 14,000 shares a day and its 52-week range is $20.00 to $25.95.  This too suffers from poor performance as its shares were above $35.00 in the 2008 peak versus under $25 today.

An even more international focus in clean energy is the PowerShares Global Clean Energy (NYSE: PBD).  Its focus is to track the performance of the WilderHill New Energy Global Innovation index and many more companies are global.  Most of its larger constituent members are not known to most US investors.  The market cap is fairly small at about $160 million, it trades about 40,000 shares a day, and its 52-week range is $11.51 to $17.64.  It is far from alone in performance anxiety as this was above $30 at the peak and it is closer to $13.00 in November-2010.

Rare Earth… Not So Rare, But….

Any investors thinking of investing in rare earth should consider what happened in 2010 before putting on a futurist’s hat and taking a shot.   All caveats aside, nations such as the United States have to depend upon foreign sources of rare earth materials and these are critical for defense equipment  autos, clean energy, electronics and medical devices.  It is vital that these REOs and REEs have a local source and it is vital that we have our own sources.  The risks in investing in this might be like comparing biotech to DJIA components.  Futurists down the road will likely concede that many of the companies in this field were little more than Hail Mary passes with a story rather than real assets that could be monetized economically.

The Market Vectors Rare Earth/Strategic Metals ETF (NYSE: REMX) is the only current fund-oriented instrument that revolves around the REE and REO trade.  It is extremely new, its methodology is unproven, and its company constituents are often very risky companies with promises rather than operating histories.  The launch came at the end of October-2008 and it has been very actively traded.  For 2010, we are going to not discuss price ranges, performance, and more because of all the risks here.  Either way and regardless of how this performs, the rare earth theme is unlikely a theme that purchasing managers will not have to consider for the future.

Back to futurists and secular themes in general…

If you want to learn more about futurist thoughts and ideas, one source I have used for some time is the World Future Society.  This is not an investment web site.  It has offered insight for futurists and those who think beyond the next month for years and years.  It publishes The Futurist magazine, has free email newsletters, conferences, books, blogs, and links to many local chapters throughout the U.S. and around the world.

Predicting markets and sectors is a tricky game, and most forecasting models have a hard enough time getting the next week or month accurate.  Modeling for a decade or a generation is that much harder.

JON C.  OGG

Akamai Technologies Inc. (NASDAQ: AKAM) has more losses coming.  An options trade screened by OptionsHawk.com notes that the negative earnings effect and the drop in market cap still does not make shares attractive from a valuation perspective.  Our technical analysis affiliate, Adam Hewison of INO, has the same conclusion in his detailed chart analysis with a different target.  The conclusion is that a 15% drop for the week to $38.36 is likely to see a partial repeat with more losses.  The 52-week range is $16.11 to $46.72, and this trades at over 27-times the expected 2010 earnings.

Alcatel-Lucent (NYSE: ALU) seems like one of the earnings reports where a turnaround that couldn’t turn around was being rewarded for bad behavior.  The report in Euros showed 17% sequential growth on a 2.4% contraction year over year, but the $4.95 billion in revenues did beat the $4.72 billion estimate.  The -$0.10 per ADR loss was wider than a number of -$0.06 expected, but it kept a forecast of 1% to 5% margin growth on Flat to 5% revenue growth for 2010 based upon a growing order book and strong second half expected.  Normally we’d pan this as a failure because it is Alcatel-Lucent.  But getting a fresh AT&T designation for a contract and the magnitude of the bounce might be making this worth a look.  The 14.6% gain on triple-normal trading volume took shares from $2.60 to $2.98 versus a 52-week range of $2.25 to $4.95.  If we take our “recovery to the mid-point of a year’s range we’d have a clear sailing up to $3.60 before raising any red flags.  We also now have stable support at the 50-day moving average of $2.65 and no 200-day moving average until $3.22.  Any pullbacks would seem to be solid entry-points for longer-term turnaround investors.  It is almost painful to endorse Alcatel-Lucent because of a history of disappointments, but money is money.

American Apparel, Inc. (NYSE: APP) is a tug of war that just won’t end.  Shares fell last week from $1.80 to $1.40 before ending at $1.61 after Deloitte resigned as its accountant.  Ouch.  Where this gets interesting is that it was disclosed a month ago that billionaire Ron Burkle took roughly a 6% stake in the company and shares popped up to $1.95 from $1.77 way back then.  American Apparel has effectively not participated in the recovery.  There is a huge headline risk in this company as it has a history of questionable moves on surprising news announcements.  Get the coin toss game out here.

Bank of America Corporation (NYSE: BAC) is large enough that it might not have a huge jump, but Andrew Bary’s ‘No Card Games’ article in Barron’s this weekend called the recent weakness over it losing out from fee cuts and overdraft and late charges a buying opportunity.  At $14.04 and a 52-week trading range of $13.30 to $19.86, this is one of our ongoing Large Banks With Large Upside features.

CROCS Inc. (NASDAQ: CROX) is one we recently said that the products were not on our personal clothing shopping lists but the stock was on our radar (back at $10.50) based on a very insightful stealth research call.  The company does have earnings this coming week and it hit a 52-week high of $12.99 on Friday after announcing a settlement with Columbia Sportswear based on employee hiring issues.  The market cap is back to $1.1 billion, the stock closed at $12.83 on Friday, and its new 52-week range is $3.34 to $12.99.  This one has more than doubled so far in 2010 and CROCS will have to have a blowout quarter with much higher annual earnings guidance for it to not trade at a premium to apparel peers.  After a run up like this, taking some of that risk-based capital would seem sensible.

Ford Motor Co. (NYSE: F) is going to be one to watch this week.  Edmunds.com released a study and prediction last week that Ford was going to be the winner of the July auto sales with a gain of more than 13% year over  year for July, or  over 9% if you adjust for the one extra day of selling.  Ford and other auto companies will confirm this data early in the week.  The $12.77 close on Friday was up about 0.4% for the week.  This weekend’s Barron’s says better says are still ahead.

General Electric Co. (NYSE: GE) is one that we’d want our readers to be involved in for a longer-term outlook. It has gotten through earnings season and is continuing to eliminate some of the finance unit’s dominance.  NBC-Universal is still a deal under review but it is still in the process of being a stake divesting that will generate cash.  With a 3% dividend yield after the hike and with its share buyback commencing immediately, there is probably more of a floor under the shares.  After our review of conglomerates and their leadership over the broad market, we also found that G.E. is the conglomerate with the most implied upside for investors.

We searched for funds and ETF’s in emerging markets from Eastern Europeto Russia to Asia to Africa to South America… and the actualsell-off from highs is starting to look amazing.  We haven’t even had aglobal economic crisis that hit Asia like we did in 1998.Interestingly enough, much of this may be solely on the global growthslowdown and a flight to quality.

What else is interesting is that chasing inflows and outflows for investorsin US markets versus emerging markets in real invested dollar terms isstaggering.  To move the market value of the DJIA up 1% in realsupply/demand driven stock markets is massive.  The value of the DJIA’s30 components alone is worth more than $3.5 Trillion on last look.  Itdoesn’t really take $35 Billion worth of net excess and aggregate stockbuying to drive the entire DJIA up 1%, but so the theory goes.  But a $35 Billionrotation into even a basket of emerging markets would create one hellof a market day around the globe.

Below are some of the closed-end mutual funds and ETF’s from emergingmarkets that hit 52-week lows on Friday and we have even shown how farsome of these are off from their stated 52-week highs:

• The China Fund, Inc. (NYSE: CHN) at $28.35, down 47% from $52.97 high
• iShares Malaysia (NYSE: EWM) at $9.32, down 33% from $14.05 high
• Latin American Discovery Fund Inc. (NYSE: LDF) at $22.10, down 39% from $36.23 high
• Morgan Stanley Emerging Markets Fund Inc. (NYSE: MSF) at $16.16, down 54% from $35.45 high
• RMR ASIA REAL ESTATE (AMEX: RAF) at $10.97, down 35% from $17.08 high
• Claymore/AlphaShares China Real Estate (NYSE: TAO) at $15.99, down 42% from $27.57 high

Here are a few others with recognized names which have hit 52-week lowsin recent days or are at least very close to 52-week lows, and here we haveshown Friday’s closing price and how far down these are from stated52-week highs as well:

• Templeton Russia and East European Fund Inc. (NYSE: TRF) at $45.62, down 41% from $78.00 high
• Indonesia Fund Inc. (AMEX: IF) at $8.69, down about 38% from $14.00 high
• iShares MSCI South Africa Index (NYSE: EZA) at $53.47, down 30% from $76.90 high
• The Chile Fund Inc. (AMEX: CH) at $16.10, down about 33% from $24.00 high

If we were allowed to go on and on, this list of near-low emerging market ETF’s would go on and on as well.

Markets, particularly emerging markets, never die off permanently andindefinitely.  Many investors use these funds for their IRA’s and forlong-term speculation.  While troubles are abound in Afghanistan, Iraq,Georgia, Sudan, and other great destinations, remember the longsteadfast advice attributed to Templeton’s Mark Mobius: "Invest whenthere is blood in the streets." 

As far as where these trade in the days and weeks ahead is anyone’s guess.  Most investors start falling in love with emerging markets after they have made massive runs and when they look stable.  It takes those with guts and foresight to begin investing in these after they have seen major sell-offs.  Closed-end funds can also trade at huge premiums or discounts their net asset values, and we won’t dare make the analogy these markets are cheap just because they have sold off so much.  But all of these instruments do track markets rather than just a couple stocks and as we noted, those markets never stay down or out of favor forever.

We have started covering some of these issues for long-term investors and here are some of the recent articles:
Africa: The Final Emerging Market Frontier
On the Russian military action against Georgia
China, heading to recession?

Jon C. Ogg
August 18, 2008

Kenya’s IPO of a 25% stake in Safaricom saw high enough demand that it’s IPO was oversubscribed by the tune of almost 5-times.  Its value was about $800 million depending on which currency conversion dates you use.  This was offered at a price of 5 shillings (close to $0.08), and shares closed on the first day at 6.95 shilling on the local market after hitting a high of around 8 shillings.  This closing price gives the closing value via market capitalization of about $4.5 Billion.

Safaricom is the nations largest mobile telecom operator with over 10 million users, which sells airtime for as little as pennies and allows micro-payments to purchase small increments in airtime.

This had unfortunately seen its IPO delayed, and more peaceful times allowed the demand to surge.  Whether or not the coalition holds up or not, well all we can say it that it is Africa and political instability is all part of the risk and reward equation there.  The success of this IPO may lead to several other IPO filings and other pricings in other infrastructure stakes in the East Africa nation.

Vodafone owns a 40% stake in the offering via its Kenyan unit called Vodafone Kenya Ltd.  Before the IPO the government owned some 60% of the company, and its stake has now been reduced down to 35% after one-quarter of the company was sold off to the public.

Interestingly enough, there are reports that many locals and first time investors were disappointed and many had borrowed money to buy shares.  The extent of that isn’t yet formalized and may not be known for several days.

So why are we covering an African IPO, particularly with all the political and event risk in most African nations?  The answer is simple: this is the last true emerging and pre-emerging spot on the globe.  It is a total and complete maze for investors to participate in the investment of Africa’s development because of the questions around corruption, cross-border issues, famine, disease, poverty, and on and on.  That is also the greatest shot for long-term gains if and when the risks in Africa become mitigated even a fraction compared to today.

In the start of January 2008, we offered 3 ETF’s and mutual funds that American investors can use to invest in the development of Africa and gave a more detailed explanation of each.  The funds were T. Rowe Price Africa & Middle East (TRAMX), iShares MSCI South Africa Index (NYSE: EZA), and SPDR S&P Emerging Middle East & Africa (AMEX: GAF).  These are not for widows and orphans, nor are they for the chicken-hearted.  As more and more opportunities arise for US investors to invest in Africa, we’ll be covering it.

You can join our open email distribution list to hear about other developments in IPO’s, secondary financings, spin-offs, mergers, and other special situations.

Jon C. Ogg
June 9, 2008

The good news is that there are actually some ETF’s and funds that investors can purchase to invest directly into African markets and US or Foreign companies that operate in African markets.  Below are some of the ETF’s and funds:

• SPDR S&P Emerging Middle East & Africa (AMEX: GAF) yesterday closed $70.72; 52-week trading range $57.55 to $80.19. $50.5 million in assets.
• iShares MSCI South Africa Index (NYSE: EZA) yesterday close $131.75; 52-week trading range $103.38 to $153.79. $839 million in assets.
• T. Rowe Price Africa & Middle East (TRAMX) $13.05 yesterday NAV; recent low $10.01 Sept. 10, 2007 and high $13.05. $120.8 million assets.

So why don’t investors just buy direct stocks on exchanges of more established countries to get direct exposure?  Once again, Africa is a very dangerous neighborhood.  Crime and corruption is rampant in many African nations, political turmoil may be the understatement of the decade, they have things called civil wars there, many markets do not even have legitimate stock exchanges, many countries are mere regions recognized only by map-makers, and many companies only benefit from oil, gold and metals, or diamonds.  Mark Mobius of Templeton Funds used to say "invest when there is blood in the streets."  In Africa, blood in the streets seems to still be the norm.

Investors are always looking for the next new hot emerging market, or at better yet a hot new region to invest their money into for the long-haul to outperform developed nations.  If you have been around Asia you know a lot of the growth has already happened.  Eastern Europe already has countries in or in the process of joining the E.U.  Russia has grown enough that Czar Putin was just named Time’s Man of the Year.  The Middle East is boom town right now with development and with near-$100 oil.  South America is chugging right along.  Unless Greenland or Antarctica suddenly get waves of human population in need of infrastructure, Africa appears to be one of the last frontiers.

These are not at all the only ways to invest in Africa and there are other vehicles out there.  But these are the more easy ways for American investors to try to participate in what through time should end up being the last major emerging market frontier.

Jon C. Ogg
January 3, 2008

These are not the absolute highest performing ETF’s because some such as the Ultra ETF’s use leverage, but here are the normal unleveraged ET’s that won today:

iShares MSCI Brazil Index                                         (EWZ) +2.76%
iShares FTSE/Xinhua China 25 Index                     (FXI) +2.58%
PowerShares Dynamic Aggressive Growth           (PGZ) +2.47%
iPath S&P GSCI Total Return Index ETN                 (GSP) +2.37%
iShares Dow Jones US Oil Equipment Index         (IEZ) +2.28%
iShares MSCI South Korea Index                              (EWY) +2.27%
United States Natural Gas                                         (UNG)    +2.23%
iShares S&P GSCI Commodity-Indexed Trust       (GSG)    +2.11%
Claymore/Robeco Developed World Equity            (EEW) +2.10%
Oil Services HOLDRs                                                  (OIH) +2.10%
iShares MSCI South Africa Index                               (EZA) +2.09%

As always, even on a second strong up day there were some losers.  We back out the ‘inverse fund’ ETF’s and also the leveraged versions of each.  Also, the real estate group was the least impressive and we only included a couple variations to prevent repetition.  Here are today’s losers:

DJ Wilshire REIT ETF                                                 (RWR) (-1.16%)
iShares Cohen & Steers Realty Majors                   (ICF) (-1.14%)
WisdomTree Japan High-Yielding Equity               (DNL) (-0.94%)
KBW Regional Banking ETF                                      (KRE) (-0.78%)
Shares S&P Global Healthcare                                 (IXJ) (0.58%)
iShares MSCI Malaysia Index                                     (EWM) (0.42%)

Jon C. Ogg
June 14, 2007

What’s an easy way to tell when the market had a pretty bad hair day, other than looking at the ticker tape?  Seeing that all of the ETF winners for the day are listed as the UltraShort "Whatever" ProShares……they are the inverse move of an any underlying index, so when they are up the index or the market is down.  The top 12 performers today were all in that category. Some of these are leveraged to their index, not it doesn’t mean the worst performers are the underlying index per se.

UltraShort Real Estate ProShares (SRS) 3.52%   
UltraShort Utilities ProShares (SDP) 3.13%   
UltraShort Semiconductor ProShares (SSG) 2.09%
UltraShort Russell2000 Value ProShares (SJH) 1.66%
UltraShort Consumer Goods ProShares (SZK) 1.59%
UltraShort SmallCap600 ProShares (SDD) 1.49%
UltraShort Russell2000 Growth ProShares (SKK) 1.41%   
UltraShort Financials ProShares    (SKF) 1.36%
UltraShort S&P500 ProShares (SDS) 1.35%
UltraShort Consumer Services ProShares (SCC) 1.24%
UltraShort Russell MidCap Val ProShares    (SJL) 1.20%   
UltraShort Russell2000 ProShares (TWM) 1.06%

Other non-short ETF winners:
iShares FTSE/Xinhua China 25 Index (FXI) +1.02%
PowerShares Gldn Dragon Halter USX China (PGJ) +0.80%
HealthShares Cardiology    (HRD) +0.7%

Worse non-Ultra funds today:
Internet Infrastructure HOLDRs (IIH) -1.82%
DJ Wilshire REIT ETF (RWR) -1.76%
iShares Cohen & Steers Realty Majors (ICF) -1.76%   
iShares Dow Jones US Home Construction (ITB) -1.64%
iShares MSCI South Africa Index    (EZA) -1.60%
United States Natural Gas (UNG)    -1.55%

Today was more of a Bernake playing hankie with words than it was China.  Tomorrow’s another day.

DJIA                       13,595.46; -80.86 (0.59%)
NASDAQ               2,611.23; -7.06 (0.27%)
S&P500                1,530.95; -8.23 (0.53%)
10YR-Bond          4.9760%; +0.0470%
NYSE Volume      2,884,657,000
NASDAQ Volume 2,233,690,000

Jon C. Ogg
June 5, 2007

ETF WINNERS JUNE 4, 2007:
Oil Services HOLDRs (OIH)                                             $174.35; +2.7%
PowerShares DB Base Metals (DBB)                            $27.66; +2.6%
iShares Dow Jones US Home Construction (ITB)       $37.29; +1.6%
Ultra Russell2000 Value ProShares (UVT)                   $72.18; +1.28%
SPDR S&P World ex-US (GWL)                                       $33.65; +1.25%
Ultra Real Estate ProShares (URE)                                $62.52; +1.23%

ETF LOSERS JUNE 4, 2007:
UltraShort Oil & Gas ProShares (DUG)                         $48.90; -2.4%
iShares MSCI South Africa Index    (EZA)                       $128.25; -1.6%
HealthShares Cancer (HHK)                                            $29.25; -1.05%
First Trust AMEX Biotech Index (FBT)                              $25.52; -1.05%
iPath MSCI India Index ETN (INP)                                    $60.54; -1.03%
iShares MSCI Brazil Index (EWZ)                                     $60.65; -0.90%

DJIA                        13,676.32; +8.21 (0.06%)
NASDAQ                2,618.29; +4.37 (0.17%)
S&P500                 1,539.18; +2.84 (0.18%)
10YR Bond            4.9290%; -0.0270%
NYSE Volume       2,713,846,000
NASDAQ Volume  1,947,730,000   

If you can believe it, the PowerShares Golden Dragon-China (PGJ) only fell 0.04% on 278,000 shares, not bad for a day that Shanghai fell 8%.  Even the closed-end fund The China Fund Inc. (CHN) only saw a 0.33% drop.

Please note that is you see other winning or losing ETF’s that are the same category as one of the winners and losers that is not in here, it is because we try to default to the most liquid ETF that is means to track any given sector.

Today the main winners were led by oil & gas trackers in various segments in the oil patch: United States Natural Gas (UNG) 3.7%, iShares Dow Jones US Oil & Gas Ex Index (IEO) 2.5%, Ultra Oil & Gas ProShares (DIG) 2.45%, iShares Dow Jones US Oil Equipment Index  (IEZ) 2.35%, SPDR S&P Oil & Gas Equipment & Services (XES), SPDR S&P Oil & Gas Exploration & Prod (XOP) 2.2%, Energy Select Sector SPDR (XLE) 1.5%.

After seeing how many oil and energy ETF’s are on the market we would formally like to ask ETF managers not to open up any more oil and gas variations of ETF’s.

Jon C. Ogg
June 4, 2007