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The American Stock Exchange today announced that it has launched trading in three new exchange traded funds (ETFs) from PowerShares Capital Management LLC (PowerShares). The ETFs are based on equity indexes and are all sector portfolios.

"We are very excited to welcome PowerShares back to the Amex for three new ETF listings," said Cliff Weber, Senior Vice President of the Amex ETF Marketplace. "The Amex takes great pride in supporting PowerShares' 50 ETF listings on the Exchange as we continue to bring innovative products to the marketplace."

"We are very pleased to be working with the Amex to expand the PowerShares family of ETFs," said Bruce Bond, President of PowerShares. "Providing investors with direct, diversified and liquid access to the world of private equity is consistent with PowerShares' goals as an asset manager. The LSTPE Index is both unique and innovative, and it is a great fit for our growing portfolio of exchange-traded funds."

PowerShares Cleantech Portfolio (PZD)

PZD seeks investment results that correspond generally to the price and yield (before fees and expenses) of the Cleantech(TM) Index (CTIUS). CTIUS is an equally weighted index currently comprised of 75 publicly traded companies engaged in the production of any knowledge-based product or service that improves operation, performance, productivity or efficiency, while reducing costs, inputs, energy consumption, waste or pollution. Cleantech companies produce knowledge-based products or services in a variety of areas, including agriculture and nutrition, air quality, enabling technologies, environmental technologies, material and nano-technology, materials recovery and recycling, transportation and logistics, and water purification and management. Stocks will be selected by Cleantech Capital Indices LLC.

PowerShares Listed Private Equity Portfolio (PSP)

PSP seeks investment results that correspond generally to the price and yield (before fees and expenses) of the Red Rocks Listed Private Equity Index (LSTPE). LSTPE is comprised of stocks of securities and American depositary receipts of publicly listed private equity companies, including business development companies and other financial institutions or vehicles whose principal business is to invest in and lend capital to privately-held companies. Stocks in the LSTPE will be selected by Red Rocks Capital Partners LLC.

PowerShares WilderHill Progressive Energy Portfolio (PUW)

PUW seeks investment results that correspond generally to the price and yield (before fees and expenses) of the WilderHill Progressive Energy Index (WHPRO). WHPRO is a modified equal-weighted index composed of companies engaged in businesses which are believed to stand to benefit from a societal shift toward the transitional energy technologies significant in improving the use of fossil fuels and nuclear power. Companies in WHPRO will be selected by Progressive Energy Index, LLC.

Goldman Sachs Execution & Clearing, LP is the specialist for PSP. LaBranche Structured Products, LLC is the specialist for PZD and PUW.

Options will also be traded on the three ETFs. The specialist for PZD and PUW options is LaBranche Structured Products, LLC. The specialist for PSP options is Susquehanna Investment Group.

Private Equity can now be somewhat traded as an ETF, an exchange traded fund. PowerShares, distributed by A I M, is launching an ETF based on private equity. The ticker on the American Stock Exchange will be listed as "PSP" and the formal names is The PowerShares Listed Private Equity Portfolio. It is based on the Red Rocks Listed Private Equity Index.

The ETF comprises of companies whose principal operations are investing in and lending to privately held companies. They have to have a minimum market capitalization rate of $50 million and a closing price above $1.00. It is diversified from 3 perspectives: stage, capital structure, and industry focus. They also consider valuation metrics, financial data, historical performance, and diversification.

The Listed Private Equity Index is noted to have a correlation coefficient of 0.703 to the S&P 500 Index over the last 10 years. The dividend yield on the index in the last 12 months was noted as roughly 5.15%, but that number also includes special dividends.

Investment manager Van Eck Global launched ETFs based on the steel and environmental services industries on the American Stock Exchange on Monday.

The Market Vectors - Environmental Services ETF seeks to track a new Amex Environmental Services Index that is made up of 24 companies involved in waste management, recycling, environmental management or consulting.

The Market Vectors - Steel ETF seeks to track a new Amex Steel index which consists of 39 companies involved in steel manufacturing, mill operation, or extraction and reduction of iron ore.

Both indices use a modified market capitalization weighting system, an announcement said.

The companies in the Steel ETF have a combined market capitalization of about $268 billion, while the companies in the Environmental ETF have a combined market capitalization of about $129 billion.

The price-to-earnings ratio on the Environmental index is about 32.4 and the PE ration on the Steel index it is about 11.0.

Two of the companies in the Environmental ETF are foreign firms, represented by American Depositary Receipts. For the steel ETF, 29 of the companies are based in North America and 10 are foreign firms represented by ADRs.

ETFs trade throughout the day on exchanges and are bought and sold through brokers.

New York-based Van Eck Global manages about $3.8 billion.

Rapidly growing China seems to be on every investor's radar screen these days.

With that in mind, TheStreet.com Ratings has uncovered an exchange-traded fund for those seeking exposure to the world's most populous nation.

The iShares FTSE/Xinhua China 25 Index Fund (FXI) , which has an eye-popping 40% one-year return, focuses on the largest companies in China (58% of holdings) and Hong Kong (42% of holdings). It is designed to generate a performance similar to that of the FTSE/Xinhua China 25 Index, which tracks the largest and most liquid companies in the Chinese (including Hong Kong) equity markets.

Indeed, the fund's focus on the large-cap and blue-chip stocks that have been powering the Chinese market is this ETF's main appeal. TheStreet.com Ratings rates FXI a buy and gives it an A rating.

The fund has another near-term attraction: Chinese bank stocks -- and the Chinese stock market as a whole -- are likely to get a boost from the Industrial & Commercial Bank of China's upcoming initial public offering, which is garnering a lot of attention.

The bank, the country's largest, is aiming to raise between $15.91 billion and $19.08 billion through the IPO, which is scheduled for Oct. 27 on both the Shanghai and Hong Kong stock exchanges.

The fund, which will surely hold ICBC shares once they hit the market, is an ideal way to take advantage of any uptrend resulting from this IPO, as well as the continuing economic expansion in China.

The portfolio, as the below table illustrates, is diversified across sectors, including the telecommunications, oil and gas, and insurance industries.

In addition, five of the fund's top 10 holdings are in the financial sector, which has a 19.82% weighting in the portfolio.

Asia's first gold-based exchange traded fund (ETF) started trading on the Singapore Exchange on Wednesday.

The ETF, known as StreetTRACKS Gold Shares, are backed by physical gold and denominated in U.S. dollars.

The investment product is designed to track gold price and trade like any stock. Investors can buy a minimum of one lot of 10 shares, with each share priced about a-tenth of the spot price for an ounce of gold.

State Street, a financial services provider, is the marketing agent for streetSTRACKS in Singapore.

The ETF closed down 30 cents at 57.30 Singapore dollars (about 36.2 U.S. dollars), a 0.5 percent discount from its opening price of 57.60 (about 36.45 U.S. dollars). Over 9,000 shares changed hands on the first day.

Mexico ETF Near High As Economy Improves

After a 29% plunge last spring, iShares MSCI Mexico Index Fund has rallied back to become one of the best performing ETFs of 2006, up 23% since Jan. 1.

The ETF suffered on the combined effects of a springtime correction in emerging markets and Mexico's election, says Nick Cherney, a portfolio manager with iShares in San Francisco.

Heading into the July 2 election, Mexican stocks started recovering. A narrow victory by conservative Felipe Calderon immediately met a challenge from the loser, leftist Andres Manuel Lopez Obrador. That unsettled Mexican markets.

On Sept. 5, election officials confirmed Calderon's victory. Still, Obrador refused to concede, and vowed to set up a parallel government. The iShares Mexico ETF struggled some, although it found support at its 50-day moving average and has continued higher.

Election Over

Cherney says the election was a key event for Mexico's markets, but only part of a major growth trend. The ETF has a 10-year annualized return of 16%, leading all iShares ETFs for that time frame.

A stable currency, abundant trade with the U.S. and development of the country's infrastructure are the main undercurrents.

Mexican imports to the U.S. are growing at a faster rate than Chinese imports, Cherney says.

"Mexico is not a short-term trend," Cherney said. "There are a lot of important structural reasons Mexico has performed as well as it has, and we don't see those reasons going away anytime soon."

The ETF is modeled after the Morgan Stanley Capital International Mexico Index and is heavily weighted on telecom stocks.

Cellular Service

Almost 25% of iShares MSCI Mexico's portfolio consists of America Movil (NYSE:AMX - News), the wireless service provider. The stock is trading near all-time highs as it produces solid earning and sales gains.

The telecom business is promising in Mexico as it is in other developing nations, says Anthony Welch, a portfolio manager at Sarasota Capital, a Florida investment advisory firm that specializes in ETF investments.

The old landline phone system was lacking in many respects. When cellular service arrived, it made for better service in a more efficient delivery.

"You still have to build towers and infrastructure," Welch said. "But it's a lot cheaper than running wires all over the country."

Other big holdings are Cemex (NYSE:CX), the cement giant, beverage company Fomento Economico Mexicano (NYSE:FMX ) and media firm Grupo Televisa (NYSE:TV).

Ian Naismith, also of Sarasota Capital, says a plus for Mexican stocks is that the highest individual and corporate tax rates are being slashed to 28%.

Betting on oil service ETFs has paid off well for investors. The energy sector has more than doubled in value over the last three years, and the recent slump in the price of crude has barely dented profits. For investors looking for a new energy play one of the most intriguing is an ETF that provides exposure to the world's second largest proven reserves: Canada's oil sands production.

Alberta Canada has about 175 billion barrels of proven reserves. This is more oil than Iran or Iraq, and second only to Saudi Arabia's 260 billion barrel reserve. But whereas Saudi Arabia pumps 12 million barrels of oil a day, Alberta currently produces barely 1 million. This lower production level reflects the relatively high cost of extracting oil from the sands.

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Crude oil is traditionally extracted from wells drilled into the ground. To extract oil from the Canadian sands the process is different: rich areas are mined to extract the oil-like bitumen, which is then refined. This process is so time-consuming and expensive that for years it was thought to be unfeasible. But technological advance combined with the rising price of crude has made oil sands production not just viable, but potentially immensely profitable.


A new ETF, the Claymore Oil Sands Sector ETF (TSX:CLO - News) will follow the Sustainable Oil Sands Sector Index, which is designed to track the future production of the oil sands. According to Claymore Investments Inc. president Som Seif, who is enthusiastic about the oil sand business, the index is tailor made for the oil sands business, designed to provide investors with "as much exposure to companies with greatest amount of oil sands business and output."


According to Seif, three key factors are involved in assembling companies to include in the index:


1. Current oil sands production in bpd

2. Projected oil sands production in the year 2015

3. Percentage of total production focused on oil sands production


In an early Claymore prospectus the top ten holdings of the proposed CLO are:

Holding Percentage
Suncor Energy Inc 11.4%
Imperial Oil LTD 9.2%
Canadian Oil Sands Trust 9.2%
Shell Canada Ltd. 7.5%
Opti Canada 7.0%
Western Oil Sands 6.6%
Synenco Energy 6.1%
UTS Energy 6.0%
Petrobank Energy and Resources 5.7%
Canadian Natural Resources 5.2%


(This allocation may have changed since recorded 7-31-06)


In comparison to a conventional oil services fund, the companies in CLO are smaller, with higher P/Es. The table below compares expected CLO holding characteristics with the conventional oil services benchmark Energy Select Sector SPDR (AMEX:XLE - News).

Price/Earnings Price/Book Average Market Cap Yield
CLO 15.33 4.17 20.2 billion 0.89
XLE 10.38 2.43 87.3 billion 1.15%


Some investors worry about the environmental degradation and relatively high cost that comes with mining oil sands. But with world-wide demand for oil growing and continued expansion of economies in India and China the price of oil will likely support the higher cost of this new production. In addition, the security of the location of the oil sands resource: far away from the hurricanes and geopolitical uncertainty that mark many other areas of conventional oil production will make the development of these oil sands facilities especially attractive.


According to Som Seif, CLO is scheduled for launch in "a couple of weeks" and should begin trading mid-October. The oil sand mining of Alberta is an emerging topic. CLO is a novel ETF that deserves a serious look from energy investors.

The first commodity-based exchange-traded fund (ETF) in Asia will be listed in Singapore this week, which may make it easier for investors to diversify their holdings in the future.

On Wednesday, State Street Global Advisors (SSgA) and the World Gold Council plan to list streetTracks Gold Shares (Gold Shares), the US$7.3-billion gold ETF that has been listed on the New York Stock Exchange since November 2004, on the Singapore Stock Exchange (SGX).

Initially, Gold Shares will raise about US$30 million, mostly from institutional investors, the bullion community and private banks across Asia, including some in Thailand. It will track the price of gold bullion in London after expenses. Each share, which represents an interest in a trust, is worth approximately 0.1 ounce of gold bullion.

James Ross, senior managing director of State Street Global Advisors (SSgA), said the ETF market had gradually developed in recent years, and the outlook for the future was bright. The secondary listing of streetTracks Gold Shares on the SGX would provide Asian investors with a different way to participate in the gold market and allow them to access this important asset class, he added.

James Burton, chief executive officer of the World Gold Council, said ETFs were popular investment alternatives in the United States.

"Asia has just started to enjoy wealth," he said. "You're young and you should think of investing in ETFs, which are products that are designed for 25 years or more for saving or investment purposes."

While the value of gold may fluctuate in the short term, it had consistently returned to its historic purchasing power parity over the long term, said Mr Ross. Investing in gold could be an effective tool for asset diversification and wealth preservation, he added.

SSgA and the Council created a partnership two years ago to develop a gold ETF that allows investors a simple, cost-effective and secure means to invest in gold. The gold ETF can be purchased on the SGX as simply as ordinary stocks. Citigroup will be the market maker to enhance liquidity, while HSBC Bank USA is the custodian.

Investing in gold ETFs, said Mr Ross, would only have a 0.4% fee as an annual expense, which was lower than buying gold bars since customers had to pay more to store them in the bank.
Mr Burton said he was convinced that the trend of gold prices was positive in the long term, given constraints in supply and rising demand, while prices in the short- to mid-term would be volatile on the back of globally sensitive issues.

Demand for gold has outpaced global mine production by about 1,200 to 1,400 tonnes per year in the past five years, while gold production levels are unlikely to increase significantly.
Furthermore, central bank sales of gold will continue to be well co-ordinated, based on the Central Bank Gold Agreement of 1999, which aimed to increase transparency and limit shocks to the system.

"After the listing of Gold Shares in Singapore, we are looking forward to launching gold ETFs in other countries in Asia, such as India where demand is quite strong," he said. "It's too early to mention more country names, but we will explore opportunities, look at regulatory schemes and work with local regulators."

Asked whether SSgA might introduce ETF products in Thailand, Mr Ross said he was sure that his staff had talked with the SET about the possibility.
The SET plans to launch an equity ETF next year, and is now in the process of designing the product, establishing a reference index and selecting market makers.

Barclays Global Investors on Monday said it had filed with the Securities and Exchange Commission to register 15.2 million new shares of the iShares Silver Trust , which has proven popular with investors as a silver play this year.

"It provides us with flexibility," said Barclays spokeswoman Christine Hudacko.

The registration would almost double the amount that could potentially be invested in the trust to 32 million shares.

iShares Silver Trust is traded on the American Stock Exchange. Barclays launched the exchange traded fund in April with a cap of about 16.8 million iShares available for investors.

"We are registering additional shares. That does not mean the trust is automatically going to buy additional metal," Hudacko said, adding that the SEC requires that a ceiling be established for the size of the fund.

The ETF is backed by silver bullion stored in vaults in allocated accounts. Each share is worth 10 ounces of silver, meaning that, fully subscribed, it could now hold 320 million ounces, an increase of 152 million.

Investors must buy the shares before the trust administrators will buy the bullion to back it.