Posts filed under “Investing”

Coming Soon: India ETF

"So far, ETF investors have been mostly shut out of India, but that could be about to change."

So says the WSJ’s Ian Salisbury. In an article this week, he discussed a new global index fund development. Apparently, several firms are working on ETFs that will track either the largest Indian companies (Barclays), or a hybrid of US/Indian firms (Amvescap). These could be available to investors before year’s end.

Here’s a quick excerpt:

Barclays iPath MSCI India Index ETN will follow the MSCI India Total Return Index, according to the filing. Among the index’s 68 components, top holdings include Infosys Technologies Ltd., Reliance Industries Ltd., and Icici Bank Ltd., according to the ETN’s prospectus.

The MSCI index is broader than the Bombay Exchange Sensitive Index, or Sensex, the 30-component index that is often quoted as the benchmark for the Indian stock market much the way the Dow Jones Industrial Average is in the U.S. In addition, the MSCI index adjusts the weightings of its components to comply with foreign investment rules.

The new Barclays investment product won’t be an exchange traded fund, but an "exchange traded note," a debt security issued by Barclays, which promises investors the returns of the index. Investors who hold ETNs take on the risk that Barclays could fail to pay them. However, they don’t bear risks associated with "tracking error," the difference between the return of an index mutual fund and its underlying benchmark . . .

Mutual-fund ratings firm Morningstar Inc. says it tracks only two open-end India mutual funds, the Eaton Vance Greater India Fund, which launched in 1994, and the Matthews India Fund, which appeared last year. By contrast, Morningstar follows more than a dozen China-oriented funds. China’s economy "is bigger and there is generally more interest," says fund analyst Arijit Dutta. "But, arguably, India is a deeper and more liquid market," he adds.

Mr. Dutta notes that broader emerging-markets funds, which Morningstar generally recommends to investors over single-country funds, put, on average, about 5% of their assets in India — an amount that is more or less equal to the allocation they give China and Hong Kong combined. Closed-end funds that invest in India include Blackstone Asia Advisors LLC’s India Fund and the Morgan Stanley India Investment Fund.

Interesting idea, and makes lots of sense.

Too bad its only their large cap — I’d like to see midcap or allc ap versions also . . .

ETF Investors See Passage to India
Ian Salisbury
WSJ, December 6, 2006; Page C11

See also:

India ETF coming but don’t get too excited
Aaron Pressman
BW, June 16, 2006

Category: Index/ETFs, Investing

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Recession: The Stage Is Set

Fascinating interview With Richard Arvedlund, Founder, Cypress Capital Management, who is not particularly optimistic on the economy going forward:

WE CAN ALWAYS COUNT ON RICHARD ARVEDLUND to take a different tack. Independent and bold calls on the economy come easy to this longtime money manager, who’s seen it all in his 30-plus-year career. But his balanced investment approach, with a focus on high-yielding, big-cap stocks combined with some bets on bonds, helps his clients preserve their capital as much as build it. The founder of Wilmington, Del.-based Cypress Capital Management, which has $450 million in assets and is now a unit of WSFS Financial, is at his best in troubled times. Trouble, the way he sees it, is straight ahead.

Barron’s: It took a year, but the calls you made when we last spoke are looking pretty good now.

Arvedlund: Well, until midyear the economy was running much stronger than I had thought it would. However, a GDP [growth domestic product] slowdown has clearly begun. The GDP growth rate dropped to 1.6% in the third quarter from 2.6% in the prior quarter and 5.6% in the first quarter. We have not seen GDP growth below 2% for four or five years. We now have preconditions in place for a recession.


The preconditions would be the following: Whenever housing starts and permits drop by the rates of decline that have been exhibited — 10% to 20% — it has always preceded a recession. What is remarkably different in housing than just about any other sector of the economy is that whenever housing cycles turn down, and that’s happened twice in the last 30 years, once in the late ‘Seventies and once in the late ‘Eighties, the downturn tends to last much longer than people dream. The average cycle is three to four years.

Continue reading "Recession: The Stage Is Set"

Recession: The Stage Is Set
Interview With Richard Arvedlund, Founder, Cypress Capital Management
Barron’s, Monday, November 13, 2006

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