12/14/2007: ETF Expert's Morning Review

1. The SPDR FTSE/Macquarie Global Infrastructure 100 Fund (GII) was the first ETF to address the worldwide demand for highways, railtracks, electricity, airport services, marine ports and clean water. However, many have been less than impressed with this fund's low volume and exceptionally high correlation to the iShares S&P Global Utilities Fund (JXI).

Enter a competitor in the infrastructure arena from iShares, the S&P Global Infrastructure Index Fund (IGF). Unlike the FTSE/Macquarie Index, IGF has a only a 40% weighting to utilities. (The former has 90% allocated to the utility segment.) The S&P Global Infrastructure Index Fund (IGF) has another 40% in industrial companies that may better reflect true infrastructure needs.

IGF is also less expensive. Its expense ratio is 0.48% versus 0.60% for GII.

2. Matt Hougan writing for Seeking Alpha declares a turning point for the ETF industry. Specifically, Hougan points to the announcement that the ProShares Fund family will be launching a "130/30" fund.

What's a 130/30 fund? It will endeavor to get 130% of the upside of highly rated stocks while taking a 30% short position in the low rated stocks. If you were waiting for easy access to a popular hedge fund concept, this may be your opportunity.

Of course, there's very little known about the so-called quantitative strategy that ProShares will employ in this vehicle. And we have no idea of the cost... though it is safe to say that it will be on the higher side for ETF investing.

Hedge funds, in general, have had an exceptionally difficult time in 2007. However, the interest in hedging with one investment, rather than owning long and short ETFs, is likely to find an audience very quickly.