ETF Expert

Standard & Poor’s infamously downgraded U.S. treasuries. Ever since, investors have been richly rewarded for purchasing bonds of the downgraded, AA-quality debt.

Now Moody’s downgraded French banks for their exposure to the sovereign debt of the PIGS (Portugal, Italy, Greece, Spain). And yet, iShares MSCI France (EWQ) rose more than 3% shortly after the announcement.

Of course, these are two very different sets of circumstances. The first example demonstrates that the world still runs to U.S. government bonds in times of world turbulence. In fact, the more than writers and analysts seem to question the sense in buying U.S. Bond ETFs, the better they seem to do. (At least that’s been the short-term trend.)

In the second case, we could be looking at a classic case of ”selling the rumor, buying the news.” There have been questions about whether European banks would get whacked with a downgrade for months. At the very moment that EWQ reached new 28-month lows, however, France’s stock market proxy seemed to find a bottom.

Neither treasuries in iShares 20+ Year Treasury (TLT) nor the ETF proxy for French stocks in iShares MSCI France (EWQ) may appeal to writer Jim Lowell. He is advocating a slew of dividend producers from iShares Select Dividend (DVY) to PowerShares Divdiend Achievers (PFM).

Nevertheless, the stock and bond markets themselves ultimately determine what “quality” is… and whether or not one should seek it out. In truth, the markets don’t particularly care whether we — writers, investors, thinkers — agree or disagree with the market’s definition of quality.

4 Of The Year’s Top Diversified ETFs – Jim Lowell, Money Show
EWQ Gyrates After French-Bank Downgrades – Oliver Ludwig, Index Universe
A Dividend ETF Goes Global – Don Dion, The Street
Mortgage REITs Rise As Chances Dim For ‘Massive’ Refi Plan – Murray Coleman, Barron’s
Despite Budget Headwinds, Defense ETFs Look Attractive – Robert Goldsborough, Morningstar     

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Disclosure Statement: ETF Expert is a web log (”blog”) that makes the world of ETFs easier to understand. Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert disclosure details here.

Tags | Defense ETFs, Dividend ETFs, France ETFs, Global ETFs, Mortgage REIT ETF, Top ETFs