Friday, August 1, 2008

Why DKA, DBN and DBU are down

Voltron says:  Looks like wisdom tree has some competition for foreign sector funds.  State Street’s new funds have slightly lower fees so people may be switching from the wisdom tree ETFs.  If that’s the case, it’s over done.  The fees are less than 1/10 of 1% lower.  Besides, wisdom tree’s funds are dividend weighted which is more in keeping with Peter Schiff’s philosophy of earning foreign dividends.

Investor's Business Daily
State Street Launches Foreign Sector SPDRs
Friday July 25, 6:13 pm ET
Trang Ho

State Street Global Advisors has unleashed a cluster of SPDRs that track the 10 sectors of the S&P World ex-U.S. Broad Market indexes. The new ETFs in the SPDR S&P International family are:

Consumer Discretionary (AMEX:IPD - News)

Consumer Staples (AMEX:IPS - News)

Energy (AMEX:IPW - News)

Financial (AMEX:IPF - News)

Health CareI (AMEX:IRY - News)

Industrial (AMEX:IPN - News)

Materials (AMEX:IRV - News)

Technology (AMEX:IPK - News)

Telecommunications (AMEX:IST - News)

Utilities (AMEX:IPU - News)

These compete with the iShares and WisdomTree international sector ETFs. The SPDRs charge 0.50% each in annual expenses, while their iShares counterparts charge 0.48% and WisdomTree 0.58%.

SPDRs Vs. IShares

The main differences between these and iShares S&P Global sector indexes: Unlike the iShares, the SPDRs don't include U.S. stocks. But they're much broader in scope.

They're a subset of the entire world index and hold companies with market caps of at least $100 million. The iShares family subdivides the narrower S&P Global 1200 index, though its offerings include companies with even less than $1 million in market cap.

The largest one by holdings, SPDR S&P International Industrial Sector, includes 1,200 stocks; iShares S&P Global Industrials (NYSEArca:EXI - News) has just 180 holdings.

SPDR S&P International Financial Sector includes more than 1,000 names. SPDR S&P International Telecommunications , with just 70 stocks, has the fewest holdings.

The iShares ETFs offer small exposure to emerging markets stocks, while the SPDRs includes only developed markets.

SPDRs Vs. WisdomTree

WisdomTree international sector ETFs also exclude U.S. stocks. The main difference is they're dividend weighted, while the SPDRs are market-cap weighted.

ETF experts expect these to perform similarly. Which you choose is just a matter of preference, says Gary Gordon, president, Pacific Park Financial.

"One person might be a stickler for fees," Gordon said. "That person should go with a State Street version over WisdomTree's. On the flip side, a long-term holder may prefer the higher dividend reward from the WisdomTree approach."

The worst hit U.S. sector as represented by iShares Dow Jones U.S. Financial (NYSEArca:IYF - News) plunged 35% in the past 12 months and 25% year to date. Foreign financials, as represented by WisdomTree International Financials (CDNX:DRK.V - News), sank 24% in the past year and 19% year to date.

Few U.S. sectors have outpaced foreign. But iShares Dow Jones U.S. Basic Materials (NYSEArca:IYM - News) returned 8% in the past year while WisdomTree International Basic Materials (NYSEArca:DBN - News) shed 5%. These are down 3% and 8%, respectively, year to date.

These additions bring State Street's total number of ETFs to 80.


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