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. Read more of this post

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.  Read more of this post

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.  Read more of this post

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.  Read more of this post

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. Read more of this post

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. Read more of this post

Tight Supply May Boost Rare Earth ETF

In the first five months of this year, exports of rare-earth metals from China dropped more than 8 percent from a year earlier, indicating that the economic powerhouse is tightening control and global market supply which could provide positive price support to the Market Vectors Rare Earth/Strategic Metals ETF (REMX).

Although rare earth metals can be found in parts of the world, as of today, China has a monopoly on them accounting for nearly 95 percent of global production.  Therefore, when China reduces exports of the metals, a global supply constraint could emerge.  Read more of this post