ETF Expert

Lipper Research recently recorded 36 of 745 ETFs with gains over a rolling 12-month period. 32 of those ETFs were short-selling vehicles.

In truth, there aren't any equity ETFs with YTD gains for 2008. You have a few short-term treasury winners. And then there are a couple of world currencies… the Japanese Yen and the U.S. dollar.

I've talked about the reasons for the success of these 2 currencies at length on my radio program, "In the Money With Gary Gordon." (Listen to the show "live" or via podcast at this link.)

There are several factors that have led to dollar strength and yen dominance. Investors around the world had been borrowing the low interest rate yen and purchasing higher yielding currencies like the Australian dollar. When investors fear risk, however, they sell the higher yielding currencies and purchase the perceived safety of the low-yielding fruit like the yen. Moreover, the 2 largest economies (U.S., Japan) are the beneficiaries of risk aversion.

But it gets worse. How many investors would have expected the currencies of Sweden, Canada and Australia to work their way into bear market numbers? The Euro, the Peso, and the British Pound… all of these currencies have fallen more than 20% from their highs.

It is interesting to note that many of the YTD losses on currency investments are not that much different from the % drop from the high. This is because… until the summertime… many world currencies were still peaking. Most of the damage occurred alongside the escalation of the credit crisis and the unwinding of the so-called yen carry-trade.

Are there opportunities outside of the yen and the U.S. dollar? Not in the near-term. As long as risk aversion remains intact, few investors will venture beyond perceived safe harboring.

By the same token, when the credit crisis moves from the front of the hood to the trunk… as seen in the rear-view mirror… commodity rich countries may begin to look attractive once more. Canada (FXC) and Australia (FXA) should certainly stabilize… and gain a bit of ground on the U.S. once again.

Disclosure Statement: ETF Expert is a web log ("blog") that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Advisor with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.