can be described as baskets of various stocks. Whether it is a
broader market domestic fund, a sector ETF or an emerging markets
equities play, the basket approach is used over and over again in
the exchange-traded products universe.
Noteworthy is the fact that as the exchange-traded products
industry has evolved, so has issuers' use of the basket
technique. The basket application that has proven so successful
with equities is being used with other asset classes and some of
those ETFs may not be getting the attention they deserve.
With that in mind, here are a few non-equities basket ETFs
that are worthy of further consideration in the current market
PowerShares DB G10 Currency Harvest Fund (NYSE:
) Remember the carry trade, the favorite tool of currency traders
looking to exploit the difference in interest rates between high
and low rate countries? That trade was savagely repudiated during
the global financial crisis, but
the carry trade is not dead
With roughly 40 countries operating with near zero or negative
interest rates, the carry trade could be starting to rebound and
that could potentially be good news for DBV. DBV's index "is
composed of currency futures contracts on certain G10 currencies
and is designed to exploit the trend that currencies associated
with relatively high interest rates, on average, tend to rise in
value relative to currencies associated with relatively low
according to PowerShares
As of January 18, DBV's holdings looked like this: Long
Australian and New Zealand dollars and Norwegian krone and short
euros, Swiss francs and Japanese yen. Home to nearly $348 million
in assets under management, DBV has gained more than three
percent in the past month.
ETFS Physical White Metals Basket Shares (NYSE:
) Following another up year in 2012, gold has now finished higher
in twelve consecutive years. Predictably, the longer gold's bull
market runs, the louder the chorus grows calling for bullion's
bubble to burst.
Fortunately, there are ways for investors to maintain physical
holdings of other precious metals and WITE presents an
alternative to owning all three of the iShares Silver Trust
), the ETFS Physical Palladium Shares (NYSE:
) and the ETFS Physical Platinum Shares (NYSE:
) because those are the metals held by WITE.
WITE has recently proved its mettle (no pun intended) to
investors. In the past month, the fund has outpace the SPDR Gold
) and slightly outpaced SLV. Platinum's surge has put PPLT well
ahead of WITE, but bullishness for platinum and palladium does
positively impact WITE. Including Tuesday's 1.4 percent gain,
WITE is up almost eight percent in the past month.
Investors for a basket fund that does not exclude gold should
consider the ETFS Physical PM Basket Shares (NYSE:
WisdomTree Dreyfus Commodity Currency Fund (NYSE:
) In a perfect world, the WisdomTree Dreyfus Commodity Currency
Fund would make for an ideal weak dollar play as the ETF is
designed to profit from increases in some of the so-called
commodity currencies. For example, higher oil prices should
benefit CCX given its exposure to major oil-producing nations
such as Russia, Norway and Canada.
CCX has been a decent performer, gaining half a percent in the
past month, and it should be noted that nearly all of the fund's
holdings are short-term Treasury bills so credit risk is not a
major issue with this ETF.
The risks with CCX that do need to be considered include the
expectation that oil supply will outstrip demand this year, which
could pressure the Canadian, Norwegian and Russian currencies, or
over 37 percent of the ETF's weight. Additionally, Australia,
another 12.4 percent of CCX's weight, could again pare interest
rates when the Reserve Bank of Australia meets early next
For more on ETFs, click
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