Here are the top 8 ETF positions for moderate risk clients at my Registered Investment Adviser, Pacific Park Financial, Inc.:

There are several items worth noting above. First, the only international ETF holding is a dollar-hedged bond fund, PowerShares Emerging Market Sovereign Debt (PCY). Stop-limit loss orders and trend identification have been critical in minimizing exposure to emerging markets that clients had previously owned.

Second, risk is measured on the downside. It follows that limiting loss to roughly one-half of the S&P 500’s drawdown is a venerable result.

Third, the total yield of the above-described portfolio is roughly 2x the 10-year yield at approximately 3.6%. In general, moderate investors benefit immensely from pursuing an aggregate yield that is 100 basis points (1%) greater than a prominent stock benchmark like the S&P 500. (Note: The popular index currently yields about 2%.)

Looking ahead, one should expect a phenomenal buying opportunity. It will not happen until Germany blinks or until the European Central Bank (ECB) takes a bold step toward stabilizing the region’s finances. But it will occur. Low deficit European countries could become attractive at that time, making exchange-traded vehicles like Germany (EWG), Austria (EWO) and Sweden (EWD) rapid risers.

For now, though, targeted asset allocation calls for assets with wide spreads over comparable treasuries. That is the premise for allocating to investment grade corporate bonds via iShares Intermediate Credit (CIU), dividend stocks via Vanguard High Dividend Yield (VYM) and dollar-hedged emerging market bonds via PowerShares Emerging Market Debt (PCY).

You can listen to the ETF Expert Radio Show “LIVE”, via podcast or on your iPod. You can follow me on Twitter @ETFexpert.

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.

There are quite a few problems with Mr. Fitzpatrick’s assertion. Unemployment is woefully high due to a low participation rate, but unemployment has held steady. Oil prices are high, yet they’ve been falling recently; gasoline prices have dropped 16 cents in May.

Declining economic activity? Manufacturing and service sector activity are expanding, even if that expansion is tepid. Housing collapse? That one already happened.

Don’t get me wrong. I’m not playing devil’s advocate for the game. I’ve been warning folks for months about Europe’s potential to drag risk assets into the proverbial toilet. Review:

1. March 16. Relatively Tight Credit Weighing On Overseas Stock ETFs
2. April 18. 5 Influential ETFs Hold Back U.S. And International Stocks

What I am saying is that fewer and fewer pundits are willing to say that U.S. stocks can avoid buckling under the weight of Europe’s economic troubles. In fact, business writers are producing features that read like obituaries.

So are U.S. stocks already dead? In truth, U.S. large caps have only corrected 6.5%. And the 3-month lows for the S&P 500 haven’t infected each and every sector.

My guidance to readers resembles what I am actually doing for my Pacific Park Financial clients. In the equity arena, we have little to no exposure to foreign equities at this time. Meanwhile, we are holding domestic ETFs, including dividend ETFs, consumer ETFs and pharma ETFs.

I have explained the rationale with charts. The chart for Vanguard All World excl U.S. (VEU) clearly demonstrates a downtrend, while the chart for Vanguard Total U.S. Market (VTI) still shows an uptrend.

In essence, it is more sensible to let unemotional stop-limit orders or trend identification determine when to sell U.S. stock positions. Assets like PowerShares S&P 500 Low Volatility (SPLV), SPDR Select Consumer Staples (XLP) and Vanguard High Yield (VYM) simply haven’t ”stopped out” or fallen below moving average support.

You can listen to the ETF Expert Radio Show “LIVE”, via podcast or on your iPod. You can follow me on Twitter @ETFexpert.

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.

In the chart below, UUP’s black bars in May graphically depict the recent aversion to risk. And yet, the greenback’s appeal is not entirely new. The price of this ETF has effectively stayed above a long-term trendline for 6 months.

So what might this mean for a forward-thinking ETF investor? Essentially, countries with lower deficits as a percentage of their respective economic output should become attractive assets in the 2nd half of 2012.

Perhaps ironically, one of the worst offenders in this arena is the United States, with a 2012 estimate of -9.3%. That said, countries like the U.S. and Japan have been able to run monstrous deficits without immediate consequences during wars and/or recessions; smaller countries in Europe (e.g., Portugal, Ireland, Greece, etc.) haven’t had that luxury. It follows that lower deficit countries (e.g., Germany, Finland, Sweden, etc.) will become more attractive investments… as soon as the world conjures up a way to bail out Europe and its financial institutions.

Towards the very end of 2011, the European Central Bank (ECB) was extremely successful in lessening concerns about the eurozone crisis. They served up refinancing loans with 1% over 3 years, boosting cash flow and increasing credit availability.

However, as I pointed out in previous posts, interbank lending in Europe flatlined in mid-March after 10 previous weeks of delcining 3-month LIBOR rates (1/1-3/15). In effect, you can see the positive impact of the ECB intervention on a low deficit country fund like iShares MSCI Germany (EWG); it rallied 20% at roughly 2x the rate of the U.S. markets.

So here is what the forward-thinking investor may wish to consider. The anti-austerity shift abroad all but assures greater monetary easing by the 2nd half of 2012. The European Central Bank (ECB) will have little choice but to ”print money/expand its balance sheet/lend/bail out.” And once it happens, the lower deficit country ETFs should enjoy a dramatic pop.

The three that deserve the most consideration? iShares MSCI Germany (EWG), iShares MSCI Sweden (EWD) and iShares MSCI Finland (EFNL).

I wouldn’t invest in these today, but I am keeping them on my watch list. If the ECB acts (which it will) and if the markets then respond favorably with respective prices climbing above long-term trendlines (which they should), the gains in these funds could be superb.

Granted, a much larger theoretical question is…  how long would the infusions satisfy market participants? That’s not something that anyone is able to gauge.

Therefore, in my targeted asset allocation approach, I prefer assets with wide spreads over comparable treasury bonds. They include ETFs that represent dividend stocks, high yield corporates, investment grade corporates, intermediate munis, preferred shares and pipeline MLPs.

You can listen to the ETF Expert Radio Show “LIVE”, via podcast or on your iPod. You can follow me on Twitter @ETFexpert.

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.

Now the VIX is back above 20. At that level, options participants anticipate an “annualized” change of 20% over a 30-day period (5.7% over 30 days). Even more noteworthy? The popular “fear gauge” closed above its 100-day moving average for the first time in 2012.

The markets were relatively sanguine just 5 short trading days ago. Since that time, however, many sector investments representing cyclical growth in the U.S. economy have dropped below important trendlines. Consumer Discretionary (XLY), Technology (XLK) and Financials (XLF) are all below respective 50-day moving averages.

In mid-April, I discussed 5 influential ETFs that had been holding back the domestic and international markets; each had broken down on a long-term technical basis. They included iShares MSCI Brazil (EWZ), SPDR Select Energy (XLE), Vanguard Europe (VGK), China 25 Index (FXI) and the SPDR Gold Trust (GLD).

Here in the second week of May, the aforementioned “influencers” have fallen even further. Along with them, iShares MSCI Australia (EWA) and Vanguard All-World ex U.S. (VEU) have also entered technical downtrends.

With world stocks dropping precipitously, and with U.S. stocks also weakening, has there been any equity enthusiasm? Only in the business arenas that are less sensitive to economic cycles.

Below you can find 5 ETFs that weathered the storm of hard core selling in May. You could consider adding non-cyclicals to your current portfolio and/or, at the very least, have a plan to protect against downside risk.

You can listen to the ETF Expert Radio Show “LIVE”, via podcast or on your iPod. You can follow me on Twitter @ETFexpert.

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.

Until recently, major tabs at the Morningstar home page included “Stocks,” “Funds” and “ETFs.” Today, the fire engine red lettering for ”Bonds” commands the surfer to click accordingly.

Want to get a list of analyst favorites? Would you like to screen by risk or return? Then you better have a premium membership. Yet if you’d like to know whether adding any more bond exposure to your portfolio is sensible… recognize how the media inadvertently contribute to herd behavior.

Before the investing public gathered all of its news from the web, the “Magazine Indicator” used to serve as a reliable guide for when to travel the opposite direction. For instance, in March of 2000, Smart Money adorned its cover with 15 Great Tech Stocks: What’s Next for the Market’s Hottest Sector — And How To Profit From It. March of 2000, of course, was the beginning of the tech collapse. And those 15 great tech stocks? They are collectively down 75%…  12 years later.

The media’s job is to get eyeballs. When we are greedy, they tap into our greed, and when we are fearful, they tap into our fears.  I remember when I received another magazine in December of 2007. The Economist’s  cover portrayed George Washington piloting a $1 airplane going down in flames. Like a good contrarian, I remember thinking that the U.S. dollar would probably get stronger — not weaker – in a matter of months. (And it did.)

Here is what happened to PowerShares DB Dollar Bullish (UUP) in the year following the cover depicting the dollar’s demise:

Morningstar’s cherry “NEW” focus on bond investing is tapping into the same psychology as in the examples above. Money inflows into bonds have dwarfed inflows into equities. In many instances, equity funds are seeing outflows as bonds keep up their winning streak. And whether by subscription or advertising, Morningstar understands that investors want more “cow bell” bonds.

Unfortunately, investors may not understand that Morningstar is giving us what we want, even if it may not be what we need. With a 10-year Treasury Bond yielding 1.85%, even a conservative utilities stock fund like SPDR Select Utilities (XLU) with a 4% yield could  trade at the same price a decade from now, and XLU would double the performance of a comparable Treasury note.

I am not suggesting that investors abandon every ETF with the name “bond” on it. Indeed, not all of the 36 Bond ETFs hitting fresh 52-week highs are in danger of a bond bubble bursting. With yield spreads as wide as they were at the start of 2012, I still maintain an allegiance to funds like iShares iBoxx High Yield Corporate (HYG) with an annual payout of 7.25%, high-yielding taxable equivalents like PowerShares Insured National Muni (PZA) as well as iShares MBS Fixed-Rate (MBB).

I am suggesting that there’s no reason the 10-year yield couldn’t surge from 1.8% to 3% by year’s end, or the 30-year hopping from 3.0% to 4.5%. Under this scenario, Treasury Bond ETFs could see price depreciation in the 10%-15% range.

Stock ETFs may or may not be popular in the summer or fall. Nevertheless, just as one would employ hedges or stop-limit orders on stock assets, one needs to protect against loss in bond assets as well.

You can listen to the ETF Expert Radio Show “LIVE”, via podcast or on your iPod. You can follow me on Twitter @ETFexpert.

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.

Maybe they should be.

According to Birinyi Associates, the current price-to-earnings ratio of the Dow Industrials is 14.5. For the NASDAQ 100? 11.8.

Mr. Buffett had good reason to mistrust “haven’t-made-a-dime” dot-coms in the 90s. He may have an equally compelling reason to avoid Facebook shares at a P/E of 99. However, believers in fundamental value like Mr. Buffett should still recognize that the tech proxy is cheaper than the beloved blue chip gauge.

Not surprisingly, some are pointing to Facebook’s $1 billion purchase of Instagram and the 75% run-up in LinkedIn shares (LNKD) as evidence of another tech bubble. Yet even conservative estimates of future profitability put the current price of the NASDAQ 100 below the broader market’s historical P/E of 16.4 (50 year).

Venture capitalist and founder of Netscape, Marc Andreessen, recently responded to “tech bubble” charges with two potent observations. First, tech shares trade at 30-year lows. Second, the NASDAQ itself has only marginal gains and is essentially flat over the last 15 calendar years.

Granted, PowerShares NASDAQ 100 (QQQ) is currently below a near-term trendline (50-day). What’s more, Europe’s political uncertainty and economic predicament are causing many to ratchet back on risk taking.

That said, if the earnings yield for QQQ is roughly 8.5% at a time when the 10-year Treasury bond is 1.85%, how long would it take for investors to jump back in? Would they buy back in at 10% below current price levels?

It is true that cheap stocks can always get cheaper. On the other hand, pullbacks may be briefer and less shallow than they were in 2011 or 2010. I would expect strong buying support at the 200-day moving average.

It should be noted that Apple (AAPL) accounts for 18% of PowerShares NASDAQ 100 (QQQ). If you’re hesitant about single-company exposure, there are several NASDAQ 100 equal-weighting alternatives from First Trust to consider. There’s the FT NASDAQ 100 Equal Weighted Index Fund (QQEW) where Apple’s weight will stay near 1%, and there’s FT NASDAQ 100 Technology Sector (QTEC), where Apple’s weight should stay near 2.5%.

You can listen to the ETF Expert Radio Show “LIVE”, via podcast or on your iPod. You can follow me on Twitter @ETFexpert.

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.

Nevertheless, as recently as Tuesday (May 1), many commentators were giddy about U.S. stock gains. After all, the Dow had just hit a peak not seen since December of 2007.

Perhaps ironically, U.S. stocks finished the first week of May with its worst showing of the year. The Dow Industrials Trust (DIA) gave up -1.5%, the S&P 500 SPDR Trust (SPY) slid -2.4% and the Apple-powered PowerShares NASDAQ 100 (QQQQ) plummeted -3.8%.

Most of the news outlets are blaming weak U.S. employment data for April. Yet unemployment claims had fallen to a 1-year low just a day earlier. Should the media really blame deceleration in U.S hiring alone? What about the “sell in May and go away” phenomenon? Or could it be the basic desire to realize profits after a spectacular 7-month run?

In truth, it may simply be too far-fetched to think that U.S. stocks can completely decouple from the rest of the world’s markets. The idea that the iShares MSCI Spain (EWP) Fund could notch a 52-week low at the same time that the Dow Industrials Trust (DIA) could register a 52-week high flies in the face of previous risk rallies. The same can be said for the simultaneous success of the iShares 7-10 Year Treasury Bond Fund (IEF).

So what should you do next? Cut-n-run? Hold-n-hope?

The good news is… your decisions do not need to come from a place of raw emotion. For example, my colleague Rob Charette recently brought a lesser-known technical trading term to my attention; specifically, an investor can quantify the direction of a trend by determining its slope. A positive slope expresses an uptrend whereas a negative slope describes a downtrend.

If we apply the mathematical construct of slope to Vanguard Total U.S. Market (VTI) for a 50-day period, we see that the uptrend remains intact. (See the chart below.) Of course, a positive reading of .02 isn’t exactly a ringing endorsement, but it is a near-term uptrend nonetheless.

In contrast, all-world ETFs from Vanguard All World excl U.S. (VEU) to iShares MSCI All World excl U.S. (ACWX) paint a different picture. The negative slope reading of -.04 over the 50-day time frame defines a near-term downtrend for foreign stocks. What’s more, the current price of VEU is well below a 50-day moving average.

For our clients, we’ve had negligible exposure to developed world equities outside the U.S. since 2010. Yet we’ve used stop-limit loss orders and trend identification to reduce our exposure to emerging (developing world) stock ETFs here in 2012.

Indeed, U.S. equities are the premier “hold” at this moment. We still maintain our positions in Vanguard High Dividend Yield (VYM), Vanguard REIT ETF (VNQ) and Vanguard Dividend Appreciation (VIG).

Yet the best investments… and I’ve been saying this for more than a month now… may be those ETFs with historically wide yield spreads with comparable treasury bonds. SPDR Barclays Corporate High Yield (JNK), JP Morgan Alerian MLP (AMJ), Claymore Multi-Asset Income (CVY) and iShares Intermediate Corporate Credit (CIU) continue to produce income with less price volatility.

You can listen to the ETF Expert Radio Show “LIVE”, via podcast or on your iPod. You can follow me on Twitter @ETFexpert.

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.

There are reasons to be pleased with the progress of U.S. stocks in 2012. My clients continue to benefit from exposure to risk assets like Vanguard High Dividend Yield (VYM), Vanguard Dividend Growth (VIG) and Vanguard REIT ETF (VNQ).

Still, little attention has been paid to the 52-week highs reached by non-stock ETFs. For example, SPDR Barclays Intermediate Corporate Bond (ITR) and iPath 10-Year Treasury Bull ETN (DTYL) both hit new 52-week highs as 10-year yields dipped to a paltry 1.92%.

Recently, I opined that it may not matter why intermediate bond ETFs are so popular. Determining whether investors are following the Fed’s lead with ”Operation Twist” or whether they are fearful of Europe’s debt crisis may not be as crucial as benefiting from the profitable trend itself. However, I do believe an investor ignores Europe at his/her own peril.

Consider the reality that European banks are demonstrating reservations about lending to one another again. Specifically, 3-month LIBOR rates have effectively flatlined over the past 8 weeks. And some folks have been increasing their hedge positions with PowerShares DB 3x German Bund Futures (BUNT). 

European stock ETFs have floundered since 3-month LIBOR went flat. Most notably, Spain via iShares MSCI Spain (EWP) has given up a bearish -20% since mid-March. (Note: Readers may recall my suggestion for aggressive traders to consider shorting EWP in my 3/16/2012 commentary.)

Some have expressed that policymakers worldwide have the means and wherewithal to tackle the European dilemma. They explain that impressive corporate earnings and muddle-through macro-economic growth will push stocks to remarkable bull market heights by year’s end. Perhaps.

In the meantime, however, Spain’s (EWP) fresh 52-week lows may have near-term predictive value. For one thing, EWP is likely telling us that U.S. intermediate-term treasury yields may not get too far above 2% this summer. Secondly, there’s only so much pain in Spain that the U.S. stock market can shake off.

It follows that higher-yielding ETFs may represent a sweet spot. In fact, with yield spreads as wide as they are, scores of high-yielders sit on the “52-Week High List.” I like PowerShares Insured National Muni (PZA), JP Morgan Emerging Market Bond (EMB) and iShares High Yield Corporate Bond (HYG).

You can listen to the ETF Expert Radio Show “LIVE”, via podcast or on your iPod. You can follow me on Twitter @ETFexpert.

Disclosure Statement: ETF Expertis 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.

Yesterday (4/30), Mr. Kass tweeted that his largest investment was short bonds, and he listed Inverse Bond ETFs like ProShares UltraShort 20+ Treasury (TBT) and ProShares Short 20+ Treasury (TBF). This morning (5/1), the formerly famous bear took note of the ISM Manufacturing Index’s robust reading of 54.8 and wrote, “Buy stocks, sell bonds.”

For my own part, it is difficult to disagree with the basic premise. Stocks are somewhat undervalued and treasury bonds are seriously overvalued. Moreover, as long as the trend remains favorable to core Vanguard positions like Dividend Growth (VIG), High Yield Dividend (VYM), Growth ETF (VUG) and REIT ETF (VNQ), my clients will benefit from exposure to equities.

That said, the desire that others may have for exposure to treasuries may not dissipate due to an overvalued status. As I pointed out in my recent commentary on the popularity of Treasury Bond ETFs, iShares 7-10 Year Treasury (IEF) is sitting near 52-week highs. This may be an indication of ongoing investor fear or simply a recognition of the Fed’s bond buying program in the middle of the curve.

Either way, the phenomena isn’t disappearing. In fact, as the Dow flirts with new a new price peak in the current bull market, some institutional investors have loaded up on leveraged long treasury exposure. A little used “ultra” fund, ProShares Ultra 7-10 Year Treasury (UST), witnessed 25x its normal volume and an inflow of $40 million. UST only had about $15 million in its coffers the day prior.

I do not see enough value in treasury bond ownership, though I believe it is still important to garner income from corporate credit in the middle of the curve. That is why I use a fund like iShares Intermediate Corporate Credit (CIU).

Yet I find it fascinating that there are those who will pursue price appreciation by seeking daily investment results that correspond to twice (200%) the daily performance of the Barclays Capital U.S. 7-10 Year Treasury Index. In essence, if a 2% yield isn’t enough income, these folks hope to benefit from falling yields and rising intermediate term bond prices.

In the grand scheme of things, $40 million of inflow into UST may seem like a non-event. However, within that same big picture storyline, it may symbolize an ongoing commitment to treasury bond purchasing. Indeed, U.S. treasuries have exhibited far more “rebirths” in the present stock bull than almost anyone would have imagined, and the uptrend still favors the believers.

You can listen to the ETF Expert Radio Show “LIVE”, via podcast or on your iPod. You can follow me on Twitter @ETFexpert.

Disclosure Statement: ETF Expertis 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.

Instead, I’ve been more apt to stick with intermediate investment grade corporate credit, as well as short-term and long-term high yield corporate bonds. Granted, governments and central banks can print paper or create an electronic equivalent out of thin air. Yet corporate balance sheets also benefit when a central bank pursues an “easy money” policy.

Indeed, virtually all of the Income ETFs in my client portfolios have been successful producers. Even as capital appreciators, each sits at or near 52-week highs. I am talking about vehicles like iShares Intermediate Corporate Credit (CIU), Guggenheim BulletShares 2015 High Yield Corporate (BSJF) and SPDR Barclay High Yield Bond (JNK). I am also talking about taxable account winners like PowerShares National Muni (PZA), as well as opportunistic purchases like Guggenheim Multi-Asset Income (CVY) and PowerShares CEF Income (PCEF).

I’ve been exceptionally pleased by the low-risk/reasonable reward associated with the above-mentioned income producers. And yet, I freely acknowledge having underestimated the ongoing appeal of treasuries.

Earlier, I mentioned one reason that I avoided them… volatility at the long-end of the curve. Secondly, I imagined that price gains for the ETFs would be limited by record low yields. What’s more, any sign of inflation, above-anticipated economic growth, foreign government reluctance to acquire double-A-rated sovereign debt and/or a change in Federal Reserve monetary policy could have adverse effects on the asset class. 

Equally compelling, the CBOE VIX Volatility (VIX) relative to the S&P 500 SPDR Trust (SPY) has trended lower for 7 months. With the fear in the “fear gauge” waning and with stock assets gaining, wouldn’t it be reasonable to expect that investors would leave Treasury Bond ETFs and shift into Stock ETFs?

Reasonable analysis or not, Treaury Bond ETFs like iShares 7-10 Year Treasury (IEF) are sitting near 52-week highs. In other words, buyers of safe haven assets are as dedicated as risk-on purchasers of S&P 500 stock assets. Maybe more so!

With the CBOE VIX Volatility near 52-week lows and the S&P 500 near 52-week highs, it may be difficult to pin the reason for treasury bond popularity on investor fear. Equally likely, investors are buying what the Federal Reserve is buying; that is, if the central bank is purchasing shares in the middle of the curve, maybe you should too. It has been both profitable and safe.

Regardless of why U.S. Treasury Bond ETFs are popular — whether investors are “following the Fed,” avoiding stocks, or embracing non-European sovereign debt — the uptrend remains intact. And for some folks… nothing else matters.

You can listen to the ETF Expert Radio Show “LIVE”, via podcast or on your iPod. You can follow me on Twitter @ETFexpert.

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.