5 ETFs to watch this week

Political analysts expect nuclear energy to get a boost from Republican gains in Congress, while Macy's earnings might move the retail sector. Which exchange-traded funds offer the best exposure?

By TheStreet Staff Nov 8, 2010 11:42AM

Tools for your stock portfolio © CorbisBy Don Dion, TheStreet

 

Here are five exchanged-traded funds to keep an eye on this week.

 

1. Market Vectors Nuclear ETF (NLR)

 

Washington faced a substantial shakeup during last week's midterm elections. There will be no downtime for these newly elected legislators, as the debate over energy reform kicks off.

 

With Republicans leading the House of Representatives, political analysts predict that nuclear energy will receive some welcomed attention. ETF investors looking to gain access to this industry should look to NLR.

Although Washington debate will play a part in shaping the outlook for nuclear energy, investors should keep an eye on earnings this week as well. Industry leader Cameco (CCJ) is scheduled to report its quarterly earnings report early on Monday. CCJ is NLR's largest position, accounting for nearly 10% of its total portfolio.

2. SPDR S&P Retail ETF (XRT)

 

Earnings season will play a big part in directing the performance of the retail industry this week. XRT index constituents such as Macy's (M), JCPenney (JCP), Advance Auto Parts (AAP) and Priceline (PCLN) are all scheduled to report their quarterly performance.

 

Also, though not listed among XRT's holdings, Polo Ralph Lauren (RL) is also scheduled to release its earnings report. This firm's performance will likely provide some indication as to how teen and mid-range retailers will perform this week.

 

The consumer looks like a promising facet of the market as the global economy continues to heal and we prepare for the upcoming holiday gift giving season. Investors can use funds including XRT and PowerShares Dynamic Food & Beverage Portfolio (PBJ) to access the consumer's recovery.

 

3. Market Vectors Indonesia ETF (IDX)

 

The emerging markets continue to prove promising as investors seek out investing opportunities beyond the shores of the United States. Last week, in attempts to fend off inflation resulting from this rampant interest, nations including Vietnam and India raised interest rates.

 

While countries such as Vietnam and India appear promising, not every corner of the emerging market world is as rosy. Indonesia, in particular, could be in for a rocky ride in coming days as the nation faces continuing threat of natural disaster.

Since the end of October, Mount Merapi has been erupting, threatening villages and taking lives.

 

So far, the eruptions have had little effect on IDX's performance. Still, I would advise investors to use extreme caution when venturing into the fund in the near future.

 

4. iShares Gold Trust (IAU)

 

Precious metal ETFs scored impressive gains in light of last week's policy statement from the Federal Reserve, leading physical backed-gold funds like IAU back to previous all time highs. Gold has been an attractive source of protection against market uncertainty and will likely remain strong next week as well.

 

IAU, in particular, will be interesting to watch this week in light of last week's NSX report. The October inflow data compiled by the firm indicated that the ETF price war is having an effect on investor preference. IAU, which recently pared back its expense ratio, managed to score strong inflows from investors while industry leader SPDR Gold Shares (GLD) saw some of the largest outflows across the ETF industry.

 

This could be the beginning of an interesting new trend in the ETF industry. I will certainly maintain a close eye on how it plays out.

 

5. iPath Dow Jones UBS Natural Gas Total Return Subindex ETN (GAZ)

 

Despite their steep tumble, investors continue to turn to futures-based natural gas ETFs in an attempt to take advantage of low prices. The strong demand has wreaked havoc on the GAZ, leading the fund to develop a substantial premium, indicated by the disconnection see between the fund and its underlying assets.

 

Although I would advise investors to avoid buying GAZ, it may be interesting to watch its performance against fellow futures-based fund, United States Natural Gas Fund (UNG).

 

Investors looking for a more stable opportunity to play natural gas should turn to the First Trust ISE Revere Natural Gas Index Fund (FCG). Because it tracks equities rather than futures, it does not risk running up a substantial premium. This will ensure that it stays in line with its underlying index.

 

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