Best ETFs For The Buck - ETF Channel

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March, 2011



Best ETFs For The Buck

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Each month, ETF Channel sorts through more than 800 ETFs to find the leader in 12 categories with regard to the average expense ratio and average trailing twelve month return; the list of ETFs below highlight the funds from these categories with the largest TTM gain paired with the lowest expense ratio.

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According to the National Stock Exchange, in 2010, ETF industry assets have increased approximately 28% since December 2009 and for the full year of 2010, net cash inflows to ETFs totaled $119 billion. It is fair to say that ETFs are now on many investors' radar screens and learning more about these instruments is becoming increasingly important.

Two factors to consider while researching ETFs are the fund's expense ratio, and their track record. Because an ETF's expense ratio determines how much is subtracted from an ETF's assets each year, it is important to keep an eye on this number. If presented with two ETFs with identical holdings, and one ETF has an expense ratio of 0.25% while the other is 0.5%, investors would naturally gravitate toward the 0.25% to juice their returns.

Additionally, within each category, there are many ETFs, and some are very similar to each other. An example would be iShares Gold Trust (IAU) versus SPDR Gold Shares (GLD). While they are not perfectly identical, they are very similar.

GLD returned 29.27% in 2010 and IAU returned 29.42% over the same period. GLD has an expense ratio of 0.4%, while IAU is 0.25%. The difference in the return between IAU and GLD is 0.15%, the exact difference between the expense ratios (0.4% vs 0.25%). So, the investor who picked the ETF with the lowest expense ratio would have come out ahead.

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TABLE OF CONTENTS

ASIA: iShares MSCI Hong Kong Index Fund

CURRENCIES: Australian Dollar Trust

EMERGING MARKETS: iShares MSCI Indonesia Investable Market Index Fund

ENERGY: S&P SmallCap Energy Portfolio

EUROPE: Vanguard MSCI Europe ETF

FINANCIAL: SPDR KBW Insurance ETF

HEALTH: S&P SmallCap Health Care Portfolio

INCOME: WisdomTree SmallCap Dividend Fund

INDUSTRIAL: Vanguard Industrials ETF

METALS: ETFS Physical Silver Shares

REAL ESTATE: Vanguard REIT ETF

TECHNOLOGY: Broadband HOLDRS

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Category

Asia

# of ETFs in Category

34

ETF

iShares MSCI Hong Kong Index Fund

Symbol

EWH

Average Expense Ratio In Category 0.57%

Expense Ratio

0.53%

Average TTM Return In Category +15.45%

Return (TTM)

+22.33%

The iShares MSCI Hong Kong Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Hong Kong market, as measured by the MSCI Hong Kong Index. 62.19% of this ETF's holdings are in Financials, followed by 12.41% in Consumer Discretionary, 11.99% in Utilities, 11.25% in Industrials, with the remainder in other sectors. Total net assets for the ETF are approximately $2 billion. The 12month yield as of 1/31/10 was 2.32%.

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Category

# of ETFs in Category ETF Symbol Average Expense Ratio In Category Expense Ratio Average TTM Return In Category Return (TTM)

Currencies

19 Australian Dollar Trust FXA 0.45%

0.40%

+6.00%

+17.24%

CurrencyShares Australian Dollar Trust is designed to track the price of the Australian Dollar net of Trust expenses, which are expected to be paid from interest earned on the deposited Australian Dollars. Total net assets for the ETF are $709,808,852.

Special Offer: Find out what Dave Moenning is holding in the ETF Channel Flexible Growth Investment Portfolio with a special 10% off coupon and 30 Days Free.

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Category

Emerging Markets

# of ETFs in Category

24

ETF

iShares MSCI Indonesia Investable Market Index Fund

Symbol

EIDO

Average Expense Ratio In Category 0.65%

Expense Ratio

0.63%

Average TTM Return In Category +14.93%

Return (TTM)

+31.47%

The iShares MSCI Indonesia Investable Market Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Indonesia Investable Market Index. The underlying index is designed to measure the performance of the top 99%, by market capitalization, of equities listed on stock exchanges in Indonesia. The ETF has total net assets of $217,998,255 and a 12 month yield of 0.58%. Top industries held: 28.79% Financials, 14.66% Energy, 13.36% Consumer Discretionary, 12.23% Consumer Staples, 10.45% Telecom.

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Category

# of ETFs in Category ETF Symbol Average Expense Ratio In Category Expense Ratio Average TTM Return In Category Return (TTM)

Energy

27 S&P SmallCap Energy Portfolio XLES 0.51%

0.29%

+37.70%

+62.60%

The PowerShares S&P SmallCap Energy Portfolio is based on the S&P SmallCap 600 Capped Energy Index, which is designed to measure the overall performance of common stocks of U.S. energy companies (those principally engaged in the business of producing, distributing or servicing energy related products, including oil and gas exploration and production, refining, oil services, pipeline, and solar, wind and other non-oil based energy). This ETF has total net assets of $115.5 million. Currently the top holding is Oil States Intl (OIS), followed by World Fuel Services Corp (INT), and CARBO Ceramics (CRR).

Special Offer: Find out what Dave Moenning is holding in the ETF Channel Flexible Growth Investment Portfolio with a special 10% off coupon and 30 Days Free.

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Category

# of ETFs in Category ETF Symbol Average Expense Ratio In Category Expense Ratio Average TTM Return In Category Return (TTM)

Europe

26 Vanguard MSCI Europe ETF VGK 0.51%

0.16%

+18.09%

+20.18%

The Vanguard MSCI Europe ETF seeks to track the performance of a benchmark index that measures the investment return of stocks issued by companies located in the major markets of Europe: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. The ETF follows a passively managed, full-replication approach, and has total net assets of $7.8 billion with 482 stocks in the portfolio. Largest holdings include HSBC Holdings, Nestle, Vodafone Group and BP.

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