The Tax Bill of ETFs and ETNs

With the tax deadline rapidly approaching, it is absoltuly essential that investors understand how their exchange traded funds (ETFs) and exchange traded notes (ETNs) will be taxed.

With the vast array of ETFs to choose from, taxes can get tricky. In general the tax treatment of ETFs is relatively simple and is applicable to long-term and short-term capital gains rules and rates. For example if one held the SPDY (SPY) for less than one year, any gains would be subject to short-term capital gains rates and if held for longer than one year, then the gains would be subject to long-term capital gains rates.

Three Utility ETFs Worth A Look

In a time when fear and uncertainty are causing the stock market to take a roller coaster ride, the attractiveness of the utility sector remains intact, and for good reason.

In general, the utility sector is known for shooting off decent dividends and carries a relatively high degree of safety. The sector remains a safe haven and tends to shine in times of uncertainty because the services that it offers are an indispensible part of life, enabling utilities to have reliable earnings streams.

Four Reasons To Short Solar ETFs

The solar energy sector continues to witness whipsaw action and downward price pressure throughout the industry is likely to prevail in the near-term future as supply and demand imbalances continue to widen. 

Fundamentally speaking, the sector has numerous headwinds and continues to remain weak.  As a whole, the sector has been plagued by falling prices, inventory buildups and extension of credit terms.  In fact, Stephen Simko of Morningstar suggests that the industry will likely bottom out in the coming months despite witnessing increased global installation activity due to lackluster demand, which will make it very difficult to reduce inventory levels and keep factories running at high utilization rates.

3 ETFs Impacted By Durbin Amendment

The Durbin Amendment seeks to reduce credit and debit card networks from imposing anti-competitive restrictions and high transaction fees on small businesses, merchants and government agencies and could provide positive support for some large-cap and regional banks. 

More specifically, the Durbin Amendment is aiming at preventing both MasterCard (MA) and Visa (V), who constitute roughly 80 percent of all credit and debit card transactions, from continuing to increase debit card interchange fee rates.  To regulate the fee structure, the amendment would direct the Federal Reserve to issue regulations to ensure that interchange fees imposed are “reasonable and proportional” to the cost incurred in processing the transaction. 

4 ETFs Hit By Falling Home Values

According to the S&P/Case-Shiller index of property values in 20 major cities, the housing sector continues to face headwinds and remains in a slump.

The index fell 3.6 percent from March 2010 to March 2011, marking the largest year-over-year decline since November 2009 and reached its weakest point since March 2003.  Furthermore, pending sales of previously owned homes dropped a whopping 12 percent in April from the prior month, forcing many home builders to be wary of when a recovery could be in sight. 

4 ETFs To Play Apple’s Stellar Quarter

Once again, technology giant Apple (AAPL) beat analyst expectations and continues to be the envy of the technology world.  This outperformance is likely to provide support to the PowerShares QQQ (QQQ), the iShares Dow Jones US Technology ETF (IYW), the Technology Select Sector SPDR (XLK) and the Vanguard Information Technology ETF (VGT). 

Four ETFs To Play An Aging Population

As the equity markets continue to remain volatile and are highly susceptible to overall investor sentiment, it is important to consider certain sectors which are able to prosper in times of challenging economic conditions and the biotechnology sector could be one. 

One of the primary drivers that biotechnology has appeal is the aging of the global baby boomer generation.  In fact, according to the Associated Press, in Japan, nearly a quarter of its total population is Japanese aged 65 and older and the Japanese government expects this group to climb to nearly 40 percent of the nation’s population by 2050.  A similar trend is emerging in the United States as the American Association of Retired Persons (AARP), expects nearly 70 million individuals to be Medicare beneficiaries over the next two decades as compared to 45.2 million in 2008. 

Two Utility ETFs To Play Energy Sector

As the energy sector remains attractive, many investors have rushed toward energy equities and energy ETFs, but the utility sector could be just as a good of a play for various reasons.

First, the vast majority of major utilities use coal and natural gas to generate power. In fact, electricity prices are primarily driven by the price of coal and natural gas, in addition to market forces influenced by supply and demand. With this in mind, it’s relatively easy to see the high correlation between the energy and utility sectors.

Seven ETFs To Fight Inflation

Although current US economic data indicates that inflation is relatively subdued, there are numerous reasons to suggest that rising prices are on the horizon.

Rising commodity prices have already prevailed as demand for corn, wheat and soybeans around the world continues to outpace supply and political unrest has sent the price of WTI crude oil north of $109 per barrel.  Furthermore, inflation has already prevailed in much of the developing world causing the People’s Bank of China to increase its benchmark one-year lending rate to 6.31 percent and its one-year deposit rate to 3.25 percent.  A similar tune was heard in India, when its central bank raised the cost of borrowing for the eighth time in nearly one year. 

4 Commercial Real Estate ETFs To Watch

As the US economy continues to show signs of improvement and corporate America is slowly starting to increase headcount, a ray of light may shine on the commercial real estate sector supporting the iShares Dow Jones US Real Estate (IYR), SPDR Dow Jones REIT (RWR), the Vanguard REIT Index ETF (VNQ) and the iShares Cohen & Steers Realty Majors (ICF). 

The first indicator that the sector is improving can be seen in the drop in U.S. office vacancies coupled with an increase in rents, in the most recent quarter.  This trend has not been seen in nearly three years.    More specifically, according to the property research firm, Reis Inc., the national vacancy rate fell to 17.5 percent in the first quarter of the year from 17.6 percent in the prior quarter, reports Bloomberg News.   Furthermore, office buildings gained a net 4.7 million square feet of occupied space during the quarter, while rents increased by $0.11 per square foot to $22.20 during the same time period.