The newest offerings from Horizons are the Horizons AlphaPro Managed S&P/TSX 60 ETF (HAX) and the Horizons AlphaPro Gartman Fund (HAG.UN). These are the first two Canadian ETFs with active management.

Active management is what converted many mutual fund investors to ETF investors in the first place. Since 80-85% of actively-traded mutual funds under perform the closest matching benchmark index, it seemed crazy to stay with mutual funds when index funds and index ETFs came on the scene.  Since most ETFs passively follow the movements of the underlying index, they should rarely ever under perform that index.

Well, apparently the Horizons people are willing to prove that they’re part of that 15-20% who will have better returns than the indexes; so let’s have a look at what they’re offering…

With HAX, the goal is essentially to re-weight the constituents of the S&P/TSX 60 index so as to overweight sectors that show greater potential and underweight sectors that are expected to under perform.  The portfolio is expected to be rebalanced twice weekly (the active management part of the equation).  The MER is 0.7% and there is also a performance fee (kind of a “bonus” to the manager if the fund exceeds certain preset values).  So the worst part of mutual funds (active management) is also being joined by the second worst aspect of mutual funds (higher fees).

The rebalancing of the portfolio will be guided by a methodology provided by Ron Meisels of Phases & Cycles Inc. Since the methodology also includes short-selling, HAX is also starting to look like a hedge fund.

HAG.UN, on the other hand, doesn’t even pretend to follow an index.  It is based on recommendations coming from a newsletter… The Gartman Letter. The stated objective is to provide an “opportunity for capital appreciation through long or short positions in global equities, commodities, fixed income and currencies”.

While no explanation is given for the delay, HAG.UN is expected to automatically convert into an actively managed ETF by no later than March 31, 2010.

Naturally, until we have sufficient trading history, we won’t be reporting trend and consistency values for these new ETFs just yet.

It will be interesting to see if actively managed ETFs catch on.  We are naturally skeptical, given the dismal history of the mutual fund industry, but do believe that individual investors can do better than the general averages. Whether it’s choosing the right mix of ETFs, or picking the best performing stocks in an index like the S&P/TSX 60, or simply staying out of the market when overall conditions are poor, individual investors have far more options at their disposal than fund managers.

As with most ETFs these new instruments track established indexes so by investing in them, your return will be tied to index performance.

The Claymore Global Real Estate ETF tracks the Cohen & Steers Global Realty Majors Index. The constituent companies are reviewed and updated quarterly. The Claymore Global Infrastructure ETF tracks the MFC Global Infrastructure Index.

The relatively high management fee of .65% for both funds is relatively high compared to US-traded counterparts, but Canadians won’t have the tax and exchange rate issues associated with US investments.

For more, visit the Claymore web site. [At the time this is being published, there is no further info at the web site, but that should change shortly.]

As before we’ll try to be exhaustive with regard to Canadian ETFs, but more selective when it comes to finding interesting  opportunities among US and other international ETFs.  Those requiring more have the option of subscribing to our Premium Service ETF database of over 500 global ETFs, complete with trend and consistency values based on 10, 20 and 40 week moving averages. Other features and fields are being added regularly to accomodate the needs of “power ETF investors” who have the spreadsheet skills or technical analysis software to appreciate what we have to offer.

Look for more data and charts in our DATA & CHARTS workbook over the coming weeks too. Our Canadian and country ETF charts and data will remain there, and you can expect coverage of high liquidity US index funds very soon too.

An educational video page is in the works, and since there are so many excellent sources of ETF information available on the net, we’ll be building up our Links page. We know that what we have to offer here is quite unique, so we don’t consider any the the excellent web sites we’ll be adding to our list competitors in any way.

One unfortunate negative consequence of our upgrade, is that we’ve shifted to new blogging software to put out these updates. Our previous software provider has gone out of business, so we’d rather be using software that will be supported as required. Transferring our archives from the previous system is largely a cut-and-paste exercise, so we’ll likely just bring across those previous entries that still have educational value.

The bottom line is that we hope you’ll appreciate the changes that are happening now and in the near future. Feel free to send us feedback at any time… feedback@ProfiTrend.com.

But there is a new kid on the block - exchange traded notes (ETNs). First introduced by Barclays Bank PLC of London in 2006, ETNs are debt instruments linked to an index (,unlike ETFs, which are generally equity investments linked to an index).

Barclays Global Investors of San Francisco now offers 16 iPath ETNs, and other investment banks are following suite. UBS Investment Bank introduced 8 ETNs earlier this month.

While some see ETNs as a threat to to ETFs and mutual funds, we see them as complementary. As we restructure this site to include more coverage of global opportunities in ETFs, we’ll no doubt include ETNs as well. To date our pool of ETFs in Canada is fairly small, and the number of ETNs is nil. For that reason we hope to discuss other opportunities here for those who opt for ETFs and ETNs as their investment vehicle of choice.

More info on ETNs: http://en.wikipedia.org/wiki/Exchange_Traded_Notes

So, those of you looking for the relative performance of Canadian ETFs or how Canada stacks up in the global economy, you’ll still find the current charts and numbers you need.

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This time we’ll bring your attention to some Claymore ETFs that weren’t available at the last Claymore update.

Claymore Global Agriculture ETF

The goal is to provide investment results corresponding to the MFC Global Agriculture Index.

Claymore Global Monthly Yield Hog ETF

This one is intended to replicate the Zacks Global Yield Hog Index… capturing dividends, REIT income, LP income and income trust distributions.

Claymore 1-5 Yr Laddered Government Bond ETF

For bond investors who want to avoid the outrageous MERs of bond mutual funds, this one is for you. With an MER of just 0.15%, you’re getting exposure to the DEX 1-5 Yr Government Bond Index.

Claymore Natural Gas Commodity ETF

Natural gas prices fluctuate considerably based on inventories and demand (which is usually weather-related). But this is a great way to enter that market without the complexities and risks of the futures market. The ETF is intended to track the NGX Canadian Natural Gas Index. There is no leverage, so risks are minimal relative to other ways of investing in natural gas. All the same, you can speculate on higher or lower prices, or just hedge against your personal heating bill.

Claymore Equal Weight Banc & Lifeco ETF

Everyone’s nervous about investing in the financial services sector these days, but that situation won’t last indefinitely. This ETF tracks the performance of the largest Canadian banks and life insurance companies. Dividends are paid quarterly. Also, keep in mind that if you don’t like the sector, you can sell ETFs short just like regular stocks. Just remember to buy-back when it looks like financials are bottoming.

You’ll be able to find more details on all of these at the Claymore web site .

In earlier updates we’ve talked about Baclay’s iShares and Claymore’s latest ETFs. Look to our back issues… the info won’t be out of date for quite a while.

This time we continue coverage of the Horizons Betapro ETFs. We’ve already discussed their Bull and Bear S&P/TSX 60 ETFs last time. That detailed analysis should be reviewed again if necessary to appreciate the fact that these are leveraged investments. Whether you are calling for rising or dropping prices, you double the movement in the underlying index if the index moves in the direction you forecast. If the underlying index moves 1%, your ETF moves 2% if you’ve picked the right ETF. Naturally, if you’ve picked the wrong one, you lose at twice the pace of the index.

Indications so far are that these leveraged ETFs are enormously popular. Of the 50 or so ETFs offered in Canada (yes, we’ll catch up eventually!), the Betapro S&P/TSX 60 Bear Plus ETF is the second most actively traded… with some 600,000 shares moving daily. The Betapro S&P/TSX 60 Bull Plus ETF is sixth most active, with 100,000 shares traded daily. These vehicles are particularly good for short-term traders who want to capitalize on anticipated “shocks” (i.e. volatility spikes) in the markets.

Well, BetaPro Management Inc has followed through with several sector-specific ETFs based on the same principle… tracking indexes for FINANCIAL SERVICES, ENERGY and GOLD. Naturally, each of those represents a pair of ETFs.. one for the bullish side and one for the bears. The latest six funds (2×3) were introduced in June, so it’ll be a while before we can share trend and consistency values in our DATA & CHARTS workbook.

Here are the indexes they track and the trading symbols: FINANCIAL SERVICES tracks the S&P Capped Financials Index (Bull: HFU, Bear: HFD), ENERGY tracks the S&P/TSX Capped Energy Index (Bull: HEU, Bear: HED), and GOLD tracks the S&P/TSX Global Gold Index (Bull: HGU, Bear: HGD).

The latest three pairs had an initial unit value of $20 ,and management fees are 1.15%… higher than more traditional ETFs; but you’re presumably paying for the implementation of the algorithms they require to maintain the doubling effect and related trading costs.

Visit the BetaPro web site for more detail on all BetaPro ETFs discussed here, and perhaps others that they have in the pipeline.

In times of turmoil like this, it’s sometimes worth considering some opportunities to take advantage of downward moves without the risks of selling stocks short.

Stock and index options are one obvious choice, but many investors aren’t willing to take the time to learn the complexities of derivatives.

ProShares Advisors LLC offer two exchange traded funds (ETFs) that not only let you pick the direction of the market, but offer you some leverage as well if you’re sure you’re right.

Both the Horizons BetaProS&P/TSX 60TSX 60 Bull Plus ETF (Symbol: HXU) and the BetaPro S&P/TSX 60 Bear Plus ETF (Symbol: HXD) are based on the S&P/TSX (LargeCap) 60 index… but they are designed to double the prices moves in that index either up or down. This first chart demonstrates that they seem to be working as they should.

We used the iShares S&P/TSX 60 as a basis for comparison (Symbol: XIU). XIU tracks the S&P TSX 60 index directly without any adjustments. We used percentage price changes to make the comparisons, since the Bull and Bear ETFs started at $25 in January, whereas the much older XIU was already up around $75.

You can easily see that the price moves in HXU and HXD, the Bull and Bear ETFs, are much wider than the XIU. Nonethless, it’s not clear how much the new ETFs are really living up to their promise of doubling the XIU move up and down. So, to look into that further we prepared a second chart…

What we did was simply double the XIU price moves for each week to determine what the HXU and HXD should have been theoretically and compared those values with the actual data. The chart is a bit difficult to read mainly because the match is so close that the lines overlap most of the time. We found that the average weekly differences between theoretical and actual values was about 0.15%. It’s safe to say that these investment vehicles are performing as they should.

It’ll be some time before we can factor in the results of distributions (dividends), trading commissions and other transaction costs, but we already know that the management expense ratio (MER) is relatively high for the Bull and Bear funds at 1.15%. The MER for XIU is just 0.17% by comparison. Nonetheless, the extra MER may be worth it for the net gains if you make the right call at the right time.

Finally, you don’t necessarily have to be pessimistic long-term to use the Bear ETF. Suppose you have a portfolio positioned for longer-term gains, but you’re about to leave for a two week vacation. You could purchase some HXD (Bear) shares before you leave as insurance. If the market dips while you’re gone, the gains from HXD will at least partially offset losses in your stock portfolio. Of course, if the market continues upward, you’ll lose some value in the Bear ETF by the time you get home.

Fortunately, for the time being, there are a limited number of players who are supplying us with ETFs, so it’s just a matter of dropping by their web sites now and then to see what’s new.

Barclays Global Investors Canada has about 25 ETFs in their iShares family. We covered a few of their latest in the last update. Horizons Beta Pro Funds is currently the smallest player, but their ETFs leverage your investments either up or down, depending on your call on the market direction. We had some research results to illustrate the performance of those funds over at our sister site, TSX TrendWatch back in March, if you want to search for it in the Weekly Update archives. We’ll update that document and bring it over here in a future ETF Update.

That leaves our mid-size ETF provider, Claymore Investments Inc. Their crop has grown to 11 funds (excluding duplicates that are “advisor class” counterparts for the common ETF shares… we’ll get into that another time). So far we’ve just commented on their BRIC ETF in the April 15 ETF Update. (All back issues are accessible via links at the bottom of this section or the Archives link to the right.)

The latest from Claymore is the Claymore S&P Global Water ETF (symbol: CWW), which started trading last week. It’s intended to track the S&P Global Water Index, which in turn represents the performance of 50 equity securities whose business has to do with… you guessed it… water. Half of the companies are involved are water utilities or provide water system infrastructure. The remainder produce water equipment or materials.

The shares official came to market on June 4 with an initial price of $20. They closed last Friday at $19.70. There are 844,000 units outstanding, and the MER is 0.60%.

The fund is global as claimed, with the heaviest weightings going to companies based in the US (28%), France (20%), Japan (16%) and the UK (14%). Canada’s representation is a meagre 0.61%. What’s wrong with that picture? In terms of both quality and quantity I’d say that we have all those other countries beat hands down.

As time goes on we’ll be introducing other Canadian ETFs and, as price history accumulates, we’ll be adding them to our DATA & CHARTS workbook. Stand by for more commentary soon. We’ll try to get something new and interesting out here at least once a week. We’re also still working on an email alert service to let you know when new material arrives here. Now, we’ll leave you with a research tip…

Research tip: There are many ETF-oriented web sites out there. Most are oriented to the US market, but you’ll still find useful articles and advisories that complement what you’ll find here. This time we’d like you to have a look at Morningstar’s ETF section . It covers the US exchange-listed ETFs only, but many ETFs listed on US exchanges actually represent global investments, such as the country funds you’ll find in our DATA & CHARTS workbook. So, have a look around over there. There are some good screening tools and you can actually get a complete list of US ETFs without having to go through multiple web pages. It’s a great way to print off a listing for reference when you’re not online.

Unfortunately, it’s not all that obvious when new ETFs appear. Papers like the Globe and Mail have dropped their full listings (I had hoped they would continue in the Saturday edition at least); and unlike shares like income trusts that have a fixed suffix (”.UN” in that case), ETFs don’t. That means you need to find a financial web site with a special ETF section (like Yahoo! Finance or GlobeInvestor), or stumble on a press release or newspaper article that covers new ones. We’ll do our best to do that for you, but don’t be surprised if we don’t catch them all right away.

There were three new ETFs from Barclays Global Investors Canada that began trading on the TSX last week (Friday I believe).

Two address the SmallCap market… something I’ve frequently said is long overdue. There’s an iShares CDN SmallCap Index Fund (symbol: XCS), which attempts to emulate the S&P/TSX SmallCap Index, and an iShares CDN Russell 2000 Index Fund (symbol: XSU), intended to mimic the performance of the most popular US smallcap index, the Russell 2000. The latter is claimed to be hedged to the Canadian dollar. The MER for the Russell ETF is 0.35%, whereas the MER for the XCS is 0.55%. Both were initially priced at $20 and started with a net asset value of $30M each.

The third new ETF is the iShares CDN Jantzi Social Index Fund (symbol: XEN). The fund picks stocks to mimic the Jantzi Social Index, which applies a number of environmental, social and governance ratings in the selection of its constituents (60 companies in total). The MER is 0.50%, and it also starts with a net asset value of $30M and a unit value of $20.

I personally have two problems with “ethical investing”… (1) To the best of my knowledge there is no “ethical” mutual fund or ETF (or similar vehicle) that has ever outperformed a similar mix of stocks without that extra restriction; and (2) There are no absolutes when it comes to what’s ethical and what’s not, so I prefer to apply my own judgement, rather than have some fund manager do it for me.

Here’s a simple example. Jantzi Research, the creators of the index, exclude any company involved in nuclear power, while considering fossil fuel companies ethical. Although I personally own stocks on both sides of that fence, I’d rather see less CO2 destroying the ozone layer and inviting global warming, and more nuclear power plants which do nothing to damage the atmosphere. But that’s just my call. You’ll have to decide for yourself.

The good news is that with our relative trend analysis™ (RTA) approach, we’ll eventually be able to report on how this new ETF is performing relative to its counterparts. I’ll put together an update in 10-12 weeks, when the data are in.

We’ll leave it at that for this update. As usual you’ll be able to see how the more established Canadian ETFs are doing in the DATA & CHARTS workbook, along with how Canada is doing relative to other countries when tracked via country ETFs.

We hope to officially launch a Premium Service for “power ETF investors” soon. It will eventually contain all ETFs that we can possibly invest in. We’ve got about 350 in the database now, but more are announced almost every week, especially in the US. Once again, we’ll have to wait for the price history in many cases before computing reliable trend and consistency values.

Subscribers to the TSX TrendWatch Premium Service have been getting the full ETF database as a surprise bonus for a few weeks now, and have been providing some excellent feedback. Thanks!

Now what could those countries possibly have in common and why should we care? We’ll get to that, but first, let’s introduce an ETF for Canadian investors that’ll let you participate. It’s the Claymore BRIC ETF, traded on the TSX (symbol: CBQ). Claymore Investments has introduced a family of ETFs to compete with Barclays Global Investors Canada, the first significant player in the Canadian ETF market with their iShares series.

Here’s how Claymore describes their BRIC ETF…

The Claymore BRIC ETF seeks to provide long-term capital growth by replicating, to the extent possible, the performance of the BNY BRIC Select ADR Index which tracks the performance of companies from Brazil, Russia India and China which trade as American depositary receipts (“ADRs”) and/or Global depository receipts (“GDRs”) on a U.S stock exchange.

The index utilizes ADRs for the exposure to each of the four BRIC countries because the stock markets in each of these countries is relatively underdeveloped and do not provide sufficient liquidity and/or listing standards. By utilizing the ADRs, the Manager believes the index will be more efficient and will be focused on the higher quality, blue chip companies from these four countries. Given that the ADRs underlying the index are U.S.-dollar denominated, the Claymore BRIC ETF will hedge its exposure to U.S. dollars reduce currency risk.

Companies are selected using a proprietary methodology developed by the Bank of New York (“BNY”) and that several criteria including trading on a U.S. exchange and minimum liquidity, share price and market capitalization levels.

You’ll find more information at the Claymore web site or by downloading the CBQ Investor Guide .

BRIC investments have significant investment potential since the GDP of these four countries is growing at a faster pace than the “big boys” that we’re accustomed to following. In the decade from 1995 to 2005, the GDP of BRIC countries rose about 8% annually, compared with about 7% for the UK and 5% for the US. A $10,000 investment in 2001 in the BNY BRIC Select ADR Index (on which the Claymore BRIC ETF is based) would have grown to about $42,000 by the end of 2006.

This is clearly a capital gains play, since the dividend yield is a paltry 1.07% and there’s a management expense ratio (MER) of 0.63%.

All the same, if you’re looking for an emerging market opportunity, this may be the place to be. The BRIC ETF was just introduced last September, so we don’t have a lot of price history. The current trend value is 1.3%, but we could use a higher consistency value than the current 46%.