10 “Risky” Exchange-Traded Funds In Conspicuous Downtrends
23 November 2009 at 10:37 am by Gary Gordon
Perhaps you are looking for a bargain near the market’s 52-week highs. Or maybe you’re preparing to make a purchase on the next tangible pullback.
Well, then, you might choose to avoid investments that are more volatile than a global stock benchmark. And you definitely want to jettison the idea of picking up an ETF that’s below a long-term trendline.
An exchange-traded fund that is more volatile than stocks might carry a standardized risk rating that is higher than the MSCI All Country World Index Fund (ACWI). There may be 50 or more unleveraged funds in that stadium. Of those 50+, there are 10 with prices below a 200-day exponential moving average.
Here are 10 inglorious funds that shouldn’t be on your “buy” screen:
| 10 “Risky” ETFs in Long-Term Downtrends | ||||||||
| Risk Grade | % Below 200-Day MA | |||||||
| Claymore Global Solar Energy (TAN) | 199 | -7.2% | ||||||
| iShares Global Clean Energy (ICLN) | 168 | -6.9% | ||||||
| SPDR KBW Regional Banking (KRE) | 170 | -4.2% | ||||||
| SPDR Russell Nomura Small Cap Japan (JSC) | 114 | -4.2% | ||||||
| Vanguard Extended Duration Treasury (EDV) | 117 | -4.1% | ||||||
| Market Vectors Global Alt Energy (GEX) | 149 | -3.5% | ||||||
| PowerShares WilderHill Clean Energy (PBW) | 177 | -2.4% | ||||||
| SPDR S&P Biotech (XBI) | 120 | -2.1% | ||||||
| PowerShares Dynamic Building & Construction (PKB) | 114 | -1.4% | ||||||
| United States Oil (USO) | 170 | -1.2% | ||||||
| % Above 200-Day MA | ||||||||
| MSCI All Country World Index Fund (ACWI) | 109 | 10.8% | ||||||
If you are a regular reader of ETF Expert, the conspicuous weakness in clean energy/alternative energy ETFs should come as no surprise. I’ve spoken about old energy’s less volatile, more consistent returns on a regular basis. (Review “Alt Energy ETFs Experiencing Near-Term Downtrends.”)
The weakness in Regional Banking (KRE) and PowerShares Construction (PKB) reflects ongoing concern about the state of commercial real estate. And Small Japan (JSC) may reflect lingering doubts about the middle class Japanese consumer’s willingness/ability to spend.
There is, however, a surprise entrant. The Vanguard Extended Duration Treasury Fund (EDV) seeks to replicate long-maturity U.S. zero-coupon debt. And while it’s not difficult to imagine investors backing away from “return-free” risk, are U.S. Treasury STRIPS that are backed by the U.S. government truly perceived as more risky than a global stock asset benchmark?
Don’t take my word for it. Risk Grades.com pegs the Vanguard Extended Duration Treasury Fund (EDV) at a risk rating of 117. In contrast, the MSCI All Country World Index Fund (ACWI) comes in at 109.
If you’d like to learn more about ETF investing… then tune into “In the Money With Gary Gordon.” You can listen to the show “LIVE”, via podcast or on your iPod.
Disclosure Statement: ETF Expert is a web log (”blog”) that makes the world of ETFs easier to understand. The content does not represent investment advice, nor are the securities discussed suitable for every investor. Pacific Park Financial, Inc., a Registered Investment Adviser 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.
Tags | "etf downtrends", "etf treasuries", "etfs downtrend", "risky etfs", "strip etf", "strips etf"
