5 ETFs to watch this week

Keep an eye on geopolitical events and funds tracking energy, agriculture and emerging European markets. With video on ETF trends.

By TheStreet Staff Apr 4, 2011 10:12AM

By Don Dion, TheStreet


Here are five ETFs to watch this week.


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


Japan is still struggling to contain the threat of a nuclear crisis, causing sentiment towards the nuclear energy industry to sour. Concerned about the detrimental long-term impact this event may have, droves of jittery investors have turned elsewhere to get their energy fix. Natural gas has been a major beneficiary amidst this shift.


The sudden popularity of this fuel has led to an interesting and concerning development for one of the more popular natural gas-related exchange traded products. GAZ, a futures-based note designed to target price changes, has developed a substantial premium in recent weeks, causing it to trade out of line with its underlying index. The effects of this premium can be seen when comparing day-to-day action of GAZ against fellow futures-backed ETF, United States Natural Gas Fund (UNG).


As of last Thursday, the fund's premium stood at 14%.


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In the past I have warned investors about the dangers of these disconnects. While it will be interesting to see where the fund heads in the coming week, I urge investors to stick to the sidelines.


2. Market Vectors Agribusiness ETF (MOO)


Monsanto (MON), a seed giant and top MOO holding, will report earnings this week, providing investors with additional clues regarding the state of the agriculture industry.


The past week proved strong for the equity-based MOO as the fund powered to four consecutive days of gains. Rising food prices helped lift a number of futures-based agriculture funds as well. The Teucrium Corn ETF (CORN) witnessed a strong jump late last week after a USDA report ignited supply concerns.

With spring upon us and planting season gearing up, investors may want to keep agriculture-related ETFs on their radar.


3. iShares Dow Jones U.S. Broker-Dealers Index Fund (IAI)


A recent surge of consolidation activity has swept through the exchange industry, making it a closely watched region of the financial markets throughout the opening months of the new year.


Late last week, the team of Nasdaq OMX Group (NDAQ) and Intercontinental Exchange (ICE) announced a hostile bid of $11.3 billion for NYSE Euronext (NYX). This bid beats out a previous offer earlier this year by Deutsche Boerse. In the coming days, it will be interesting to see how talks pan out.


IAI allows investors to gain access to a number of the players involved this most recent development. ICE, NDAQ, and NYX together account for close to 14% of the fund's index.


4. iShares Russell 2000 Index Fund (IWM)


Although it has been slow and painful at times, the market's recovery has proven to be resilient as it has withstood ample domestic and international headwinds. The small-cap-focused Russell 2000 index hit a notable landmark over the past week. Thanks to a strong push higher during the final week of March, the closely watched index managed to recapture levels last seen in late 2007.

There are still plenty of pockets of turmoil that could pressure investor sentiment in the days ahead. While I remain confident that the economic recovery is intact, investors should continue to maintain a level of defense to protect against upheaval.


5. SPDR S&P Emerging Europe ETF (GUR)


The media has remained focused on the political turmoil sweeping through Northern Africa and Middle East and the crisis facing Japan. In Europe, meanwhile, the debt issues that gripped the EU in 2010 have persisted, making the region a difficult one to navigate.


While investors question the state of vulnerable nations such as Spain, Italy, and Portugal, the Eastern portion of this continent has become a region of interest. GUR, which combines exposure countries such as Poland, Hungary, Turkey and Russia, has witnessed a jump in popularity over the past month.


Like other emerging markets, nations hailing from Eastern Europe tend to behave in a more volatile fashion than their developed neighbors. Investors will want keep a close watch on their positions in order to avoid any unwanted dips.


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