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. Read more of this post

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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.  Read more of this post

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.  Read more of this post

Five Alternative Energy ETFs Facing An Uphill Battle

Most recently, President Barack Obama addressed rising gasoline and energy prices by stating that it is imperative that the US utilize sources other than fossil fuels to feed the nation’s energy appetite and lessen foreign dependency on crude oil.  

As retail gasoline prices sit near $4 per gallon in certain parts of the nation and the price of crude oil hovers around the $100 per barrel mark, the appeal for alternative energy such as solar, wind and ethanol become that much more attractive.  However, at the end of the day, renewable energy continues to remain significantly more expensive and less efficient than its fossil fuels competitors.  Read more of this post

India Infrastructure ETF Destined To Shine

India’s economy is growing at the second largest pace amongst the world’s major nations and is likely to continue to do so as the nation is abundant with an intelligent and young labor force.  Furthermore, this growth is shinning a ray of light on the nation’s infrastructure sector and boosting the appeal of the EGShares India Infrastructure ETF (INXX).

According to a recent article in The Wall Street Journal, numerous private equity firms have recognized this appeal and have turned their attention to the emerging market sector.  In fact, the article indicates that there were 48 private equity deals in infrastructure worth an estimated $3 billion last year, with another 38 infrastructure funds currently waiting to invest in India’s infrastructure.  Read more of this post

Foreclosure Inventory Could Hinder Real Estate ETFs

As the number of foreclosures around the nation continues to climb, a massive flooding of these homes into the market could result in a supply shock which could eventually depress real estate prices, effecting the iShares Dow Jones US Home Construction (IYB), PowerShares Dynamic Building & Construct (PKB) and the SPDR S&P Homebuilders (XHB).

According to Clea Benson of Businessweek, the inventory of foreclosed homes that government-controlled Fannie Mae (FNMA) and Freddie Mac (FMCC) currently have has quadrupled over the past three years and stands at a whopping $24 billion.  Furthermore, the physical number of homes that these two companies own has increased to nearly 242,000 and is likely to continue going up.  In fact, RealtyTrac, a data company specializing in compiling data on residential real estate, expects the number of homes subject to foreclosure filings to rise by as much as 20 percent this year.  Read more of this post

Four ETFs To Play Rise In Gasoline Prices

As global demand for crude oil continues to increase to record levels and supply remains constricted, the price of gasoline continues to itch upwards, passing the $3 per gallon mark in October and giving support to the United States Gasoline Fund (UGA), the PowerShares DB Energy (DBE), the iShares Dow Jones US Oil & Gas Ex Index (IEO) and the Vanguard Energy ETF (VDE).

According to the American Petroleum Institute, worldwide demand for crude oil in 2010 hit a record of more than 87 million barrels per day and in the coming year this number is expected to increase as appetites in China, the Middle East and India continue to grow and witness increasing purchasing power.    Further demand support in the current year is expected to come from developed countries, such as the United States and Germany, as they continue to witness improvements in economic climate.  Read more of this post