Archive for July, 2009

A look at ETF Trading Volumes and Total Assets

July 5, 2009


With Exchange-Traded Funds (ETFs) multiplying faster than mosquitoes in a puddle of water these days, it is worth examining how some of the more established ones are faring with respect to trading volumes and total assets. To find out, I looked up data on ETFs introduced before 2008 by iShares and Claymore and obtained the average trading volume data from the TSX website.

The ETFs in the two spreadsheets below are sorted on how much in fees (column 5) each ETF earns for the vendor (total fees = total assets * management fee). The idea is to figure out which ETFs are more likely to be liquidated due to too little assets or too little trading volumes. This isn’t mere idle speculation — ETF closures are reaching epidemic proportions south of the border.

Ron Rowland, a money manager, maintains an ETF Deathwatch on the Invest with an Edge website. To qualify, an US-listed ETF must be at least 6 months old and have an average daily value trade of $100,000 or less (which according to Mr. Rowland is the cut-off for a sustainable fund). The good news is that the vast majority of iShares and Claymore ETFs appear sustainable according to Mr. Rowland’s criterion. The bad news? iShares CDN Jantzi Social Index Fund (XEN) and Claymore S&P Global Water Index Fund (CWW) would have qualified for the list.

This and That: Best of the blogs update

July 2, 2009


It is a bit quiet on the Canadian Money Forum this week owing to the holidays but check out this thread that contains some excellent posts on the basics of bonds.

  1. Voting for the “best of the blogs” continues on the Globe & Mail website. iBankCoin, a blog liberally sprinkled with four-letter words is a runaway winner at 533 votes but Million Dollar Journey (311 votes) and Squawkfox (296 votes) are headed towards a photo finish. The votes will be tallied on Monday and your vote may decide who goes home with the silver medal.
  2. This week, Bernie Madoff was sentenced to 150 years in prison for running the largest Ponzi scheme in history. Jonathan Chevreau wonders if investors should diversify among money managers in the post-Madoff world. Then again, hiring multiple money managers isn’t without its share of problems.
  3. Larry Swedroe explains how to avoid being scammed by the Bernie Madoffs of the world.
  4. Avner Mandelman reckons that investors can estimate the intrinsic value of certain securities rather easily.
  5. Michael James says that the assaults on private-sector pensions will, unfortunately, continue.
  6. On Canada Day, Four Pillars highlighted some of the newer financial blogs.
  7. I almost chocked on my morning coffee when I read the title of Gail’s post: The Upside of Credit Cards. Gail hasn’t gone over to the dark side — she explains that credit cards are simply a tool and there are benefits in using them responsibly.
  8. Million Dollar Journey featured a post that answered some common questions regarding financial coaching.
  9. I find a written investment policy statement incredibly useful in keeping emotions in check during periods of euphoria or panic. Financial Highway explains the basics of an IPS.
  10. Money Energy says that stress can lead to bad money decisions.

Sleepy Portfolio 2Q-2009 Report Card

July 1, 2009


I’ve been tardy in keeping the Sleepy Portfolio in line with the target allocation (cash — 5%, bonds — 20%, stocks — 70% and REITs — 5%), failing to rebalance earlier in the year. As a result, the low-risk part of the portfolio had a higher allocation compared to target and the portfolio missed out on some of the strong rebound in the equity markets. Still, the portfolio is up 5.2% year-to-date and fixed-income and cash still make up 32.7%, compared to a target of 25%.

[Sleepy Portfolio at end of 2Q 2009]

Fortunately, I was paying more attention to our portfolios, rebalancing it regularly when adding new savings to our accounts. As a result, our portfolios performed much better and are up 16% YTD. I did get around the rebalancing the Sleepy Portfolio and will post an update next week.

[Sleepy Portfolio chart since inception to 2Q 2009]