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 High Yield Corporate Bond ETFs For 2012

As confidence in a sustainable economic recovery continues to remain wary, unemployment remains high, the equity markets remain volatile and consumer demand grows at a snail’s pace, high yield corporate bonds, and the exchange traded funds that track them, could pose an opportunity for investors. 

One of the biggest reasons that these bond ETFs have appeal is the widening spread between the yields they offer as compared to those offered by US Treasuries.   Some of these high-yield instruments offer 12-month yields greater than 7% as compared to a mere 0.11% offered on a 12-month Treasury note. 

Supply and Demand To Boost 3 Water ETFs

Supply and demand forces are dictating that the global water sector is expected to witness growth and positive price support in the future, making the PowerShares Water Resources (PHO), the PowerShares Global Water (PIO) and the Guggenheim S&P Global Water (CGW) attractive investments.

According to the World Resources Institute, consumption of water has been growing at a rate more than twice that of population growth.  Demand for the essential commodity is expected to increase by more than 50 percent over the next 15 years in developing markets and by more than 15 percent in developed markets like the United States. 

Three ETFs To Play Rising Rice Prices

Poor weather conditions around the world may result in a supply shock, pushing rice, grain and other agricultural-based commodities higher and giving positive price support to the ELEMENTS Rogers Intl Commodity Agri ETN (RJA),  the PowerShares DB Agriculture Fund (DBA) and the iPath DJ-UBS Agriculture TR Sub-Idx ETN (JJA).

According to the UN Food and Agriculture Organization, Thailand witnessed the its worst flooding in more than 50 years resulting in nearly 13 percent of the nation’s rice crop to be destroyed.  This is vital to global supply as that Thailand accounts for more than 30 percent of global rice exports. 

Four ETFs To Cash In On Rising Food Prices

Supply shocks over the past two years in wheat and corn continue to take their toll on food prices, which will likely provide positive price support to the iPath Dow Jones-UBS Agriculture Subindex Total Return ETN (JJA ), iPath Dow Jones-UBS Grains Subindex Total Return ETN (JJG),  (DBA), UBS E-TRACS CMCI Food T ETN (FUD) and Market Vectors Agribusiness ETF (MOO).

On the production side, both wheat and corn have taken a major hit over the past couple of years as natural disasters and crop disease have plagued some of the major producing parts of the world.  Russia, for example, witnessed a severe drought over the past few years which has curtailed production of wheat, forcing the Kremlin to halt exporting the commodity to ensure that domestic supply can meet domestic demand.  Similarly, the current drought in Texas is starting to take its toll on corn production keeping prices of corn elevated.  In fact, the Agriculture Department expects a national average corn yield in the US of 153 bushels per acre, nearly 4% lower than its earlier forecasts. 

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.

Two Coal ETFs Expected To See Upside

Over the past week numerous analysts have raised their outlook on the U.S. coal sector as global demand for the commodity continues to rise amidst disruptions in global supply.

According to the U.S. Energy Information Agency, U.S. coal exports rose 49% during the first quarter of 2011 from the same quarter a year ago, pushing exports to their highest quarterly levels since 1992.  This growth has primarily been supported by a recent surge in demand for steam coal, which witnessed a 160% increase during the same time period, followed by a 21% increase in coking coal exports.  Although steam coal appears to be the larger catalyst in export growth of coal, coking coal remains the primary coal export, accounting for 64% of all coal exports.

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. 

Two ETFs To Play Indonesia’s Appeal

As many investors seek to find the next emerging opportunity, the Asian nation of Indonesia may be the answer to their prayers.

According to Liem Denning of the Wall Street Journal, Indonesia is the next Brazil, which was the best performing BRIC nation over the past five years and is ripe for exponential growth.  A major driver behind Indonesia’s appeal is the fact that it is flush with natural resources.  The Southeast Asian nation is the world’s largest exporter of thermal coal and palm oil and has an ample supply of crude oil, natural gas, tin, copper and gold.