5 ETFs to watch this week

With agriculture and emerging markets, investors hope to capitalize on themes that worked well in 2010.

By TheStreet Staff Jan 3, 2011 11:35AM

Tools for your stock portfolio © CorbisBy Don Dion, TheStreet

 

Here are five exchange-traded funds you should watch this week.

 

1. Market Vectors Rare Earth/Strategic Metals ETF (REMX)

 

Rare-earth metals stole headlines last week after news that China was planning to pare back its export quotas in 2011. This industry has become exciting to watch, and REMX has had little trouble gathering an impressive following. Although it is only 2 months old, the fund already boasts an average trading volume of more than 400,000.

 

Rare-earth metals will likely become increasingly important because they are used to produce various components needed to power smart phones and other handheld gadgets. Risk-tolerant investors may find REMX an exciting product in the new year.

 

2. Market Vectors Agribusiness ETF (MOO)

 

The agriculture industry enjoyed an impressive performance in the past six months as investors attempted to position themselves to take advantage of the increasing food demand from emerging markets. This is a trend I see continuing in the beginning of 2011.

Investors looking for the most conservative agriculture pure play should turn to MOO. Unlike other products backed by futures contracts, MOO tracks a collection of companies heavily involved in the industry.

 

This week, two notable holdings, Mosaic (MOS) and Monsanto (MON), will release their quarterly earnings reports. Their performance over the past three months will likely play an important role in directing MOO's action for the week.

 

3. iShares Dow Jones Transportation Average Index Fund (IYT)

 

The transports look prepared to start out 2011 on a strong note, and IYT is the best way to access them. Last week, investors received optimistic news regarding e-commerce.

 

As a result of the winter storm that battered the Northeast, many snowed-in shoppers turned to their computers to get their post-holiday shopping done. This news bodes well for big-name delivery services such as FedEx (FDX) and UPS (UPS).

 

The airlines were offered some promising words as well. Although winter weather has weighed on the industry throughout the past week, Delta (DAL) said Friday that most of its operations are back to normal.

 

4. ETFS Physical Palladium Shares (PALL)

 

Investors will be greeted by a bevy of economic data points this week, including auto and truck sales numbers. The reports will influence the price performance of platinum and palladium, as the two white metals are essential ingredients in the production of catalytic converters.

This week marks the first anniversary of the launch of PALL and the ETFS Physical Platinum Shares (PPLT). These funds have quickly amassed an impressive following and helped transform physically based precious-metals funds into must-have holdings.

 

5. Vanguard Emerging Market ETF (VWO)

 

The ongoing ETF price wars will be an interesting story to watch in 2011. Leading the assault is Vanguard, which has launched a slew of products such as VWO that directly undercut the expenses of veteran funds such as iShares MSCI Emerging Market Index Fund (EEM). In doing so, the company's products have managed consistently to steal away assets.

 

In 2010, other companies have adapted this strategy as well. For instance, the iShares Gold Trust (IAU) recently cut its expense ratio in an attempt to gain a leg up on the physically backed gold ETF industry leader SDPDR Gold Shares (GLD).

 

Thus far, the plan appears to be paying off. According to the National Stock Exchange's November flow data, IAU managed to attract more than $200 million. The GLD, meanwhile, saw more than $250 million head for the exits.

 

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