This final version will give the government new powers to break up companies that threaten the economy, create a new agency to protect consumers in their financial transactions and shine a light into shadow financial markets that escaped the oversight of regulators.  More specifically, the law will restrict banks from prop trading by limiting the amount an institution can invest in a hedge fund or private-equity fund to a maximum 3% of the bank’s capital. Companies most likely to be influenced by this regulation include big players like JP Morgan Chase (JPM), Goldman Sachs (GS), Bank of America (BAC), Wells Fargo (WFC) and Morgan Stanley (MS).

Another facet of a tighter leash on large financial companies comes from the comprehensive regulation in the over-the-counter (OTC) markets.  With the new law, routine derivatives will have to be traded on exchanges or other electronic systems and routed through clearinghouses, which increases transaction costs.  Additionally, banks who participate in derivatives trading are going to be required to turn their derivatives trading operations into affiliates.

A third artery of the new law includes an increase in the deposit-insurance fee paid by banks to the Federal Deposit Insurance Corporation (FDIC), eating away at cash that can be used to generate revenue.  In addition to this increase, the new law requires banks that package loans to keep 5% of the credit risk on their balance sheet and allow regulators to exempt certain “low-risk” mortgages from this requirement.

Lastly, the new law revamps the credit-rating industry which allows investors to sue credit-rating firms for “knowing or reckless” failure and gives the Securities and Exchange Commission (SEC) the power to deregister a firm that gives too many bad ratings over time.

In a nutshell, the new law is expected to expand consumer protection and clamp down on lending practices and may be beneficial to the average consumer, however, it is likely to have a negative impact on revenue generation and the overall bottom line of the large financial institutions.

Some ETFs that are likely to be influenced by the new law include:
• Financial Select Sector SPDR (XLF), which boasts JP Morgan Chase , Bank of America and Wells Fargo as its top holdings.
• iShares Dow Jones US Financial Services (IYG), which includes Goldman Sachs and Citigroup in its top holdings.
• Vanguard Financials ETF (VFH), which gives ample exposure to the aforementioned firms as well as includes The Travelers Companies (TRV) and Aflac (AFL), which are expected to be impacted by the newly constructed Federal Insurance Office to monitor the insurance industry and give it two cents on ways to modernize insurance regulation.

An alert investment advisor has probably heard of ETFs, but may not really know what they offer. In a nutshell, ETFs offer the ability to be traded intraday on an exchange, unlike traditional mutual funds which can only be bought and sold at the end of a trading day. ETFs give investors the ability to access hard to reach markets, like commodities, currencies and emerging markets, while being able to be sold short or utilized as a hedging tool. They are open-ended structures, which provides liquidity.

Additionally, the vast majority of ETFs are passively managed and track an index as opposed to being actively managed, which generally drives up costs. When it comes to taxes, ETFs are typically much friendlier than mutual funds due to their in-kind redemption and creation process, which prevents the triggering of capital gains.  They also rarely change their holdings, meaning they rarely have distributions.

Lastly, ETFs offer a characteristic that should be of utmost importance, transparency. One knows exactly what and how many shares of stocks, bonds, futures contracts or swaps an ETF holds on a daily basis. As for mutual funds, they are only required to disclose holdings on a quarterly basis.

Granted, ETFs carry expense ratios, but they still tend to be lower than the front-end or back-end loads, 12b-1 fees, management fees and other expenses associated with mutual funds. An investor knows exactly how much an ETF will cost without any hidden fees. To add icing to the cake, most ETFs actually move in tandem with their indexes, whereas the majority of actively managed mutual funds fail to match the performance of their respective benchmarks.

ETFs are a growing market and are here to stay. At the end of the May 2010, ETFs and ETNs (exchange traded notes) boasted nearly $798 billion in assets with 995 different listed products.

SEA seeks to replicate the performance of the Delta Global Shipping Index which includes companies that derive at least 80% of their revenues from operating or leasing ships or from the transportation of goods. Another prerequisite of the companies that are included in the Delta Global Shipping Index is that they have at least $250 million in market capitalization and a 30-day average daily trading volume of at least $2 million.

As for SEA, the ETF will carry an expense ratio of 0.65% and allocates nearly 68.9% of its sector weightings to industrials and the remaining 31.1% to energy.

Additionally, it boasts Seaspan Corp (SSW), Teekay Shipping Corp (TK), General Maritime Corp (GMR) and Teekay Tankers (TNK) as its top holdings. Lastly, SEA allocates its assets with the following geographical weightings: Greece (18.55%), United States (12.31%), Bermuda (10.29%), Japan (10.24%), Hong Kong (10.01%) and China (8.43%).

During the global recession, many ships were sidelined in an effort to reduce idle capacity, however, things are slowly starting to change. This change can be illustrated by the recent performance of the Baltic Dry Shipping Index, which measures shipping costs for commodities, and generally increases as the number of shipments increases. The Index is up nearly 28% over the past four months.

In a nutshell, as long as economies around the world continue to grow and the demand for transporting goods increases, the global maritime shipping industry will likely reap the benefits.

Tom was previously a portfolio manager with American Century Investments for twelve years.  He served as manager and co-manager on a number of equity mutual funds during his time there, including the New Opportunities and Technology Funds.  Most recently Tom was the lead manager of the firm’s flagship Ultra Fund, for which he managed approximately $10 billion in assets.

Joe Massman, Founder of The ETF Store, commented on the hiring, “Tom is an outstanding and seasoned asset manager.”  Massman continued, “Tom joining the firm is a validation of our strategy and reflects the changes occurring within the investment advisory business.  Exchange traded funds have been called the next generation mutual fund and they have benefited investors tremendously.  Now, with Tom’s experience having directly managed tens of billions of dollars, we can fully leverage the power of ETFs for our clients.”

Telford added, “I’m excited to join an innovative investment advisory firm like The ETF Store.  Exchange traded funds have changed the way investors invest, and with The ETF Store I’ll have the opportunity to bring sophisticated investment strategies to retail investors.”

Separately, Telford and The ETF Store announced the formation of Impetus Capital Management, an asset management firm that will provide ETF asset management solutions to institutional, high net-worth and third party investment advisors.

As part of this event, The ETF Store’s V.P. of Finance, Nathan Geraci, will be presenting a session titled “Introduction to Exchange Traded Funds” which will provide an overview on what exchange traded funds (ETFs) are, their history, the advantages they can have compared to mutual funds, and the benefits of using ETFs in investment portfolios.

For teachers interested in attending this event, you can register online here.  There is no cost for teachers to attend this conference and continental breakfast and lunch will be provided both days.

The SPDR Barclays Capital International Corporate Bond ETF (IBND), which tracks the Barclays Capital Global Aggregate ex-USD > $1B: Corporate Bond Index, carries an expense ratio of 0.55% and gives investors exposure to debt that is denominated in local currencies.

IBND focuses on investment-grade corporate bonds and gives exposure to the following currencies: Euro, Australian Dollar, Canadian Dollar, New Zealand Dollar, British Pound, Japanese Yen, Swiss Franc, Swedish Krona and the Danish and Norwegian Krone. Although IBND excludes US Dollar-denominated bonds, it does include bonds issued by US companies which are payable in other currencies. In fact, according to the fund’s prospectus, the US has the largest country weighting at 17.5%, followed by Germany at 16.1% and the United Kingdom at 12.5%.

In regards to sector weightings, IBND is heavily focused on financials, industrials and utilities, which constitute 46.9%, 39.5% and 11.6% of its asset base, respectively. Additionally, the underlying index that IBND seeks to track boasts a yield of 3.05%, which can be expected if IBND tracks its underlying index accurately.

Of the holdings in the newly traded ETF, all of the bonds in the fund are rated Baa or higher, with nearly half of them carrying a rating of A or better and the average maturity for the bonds is 5.3 years with a modified adjusted duration of 4.4 years.

Another notable mention regarding the international bond market is that PowerShares has also filed the necessary paperwork to launch the International Corporate Bond Portfolio (PICB), which will seek to replicate the performance of the S&P International Corporate Bond Index and give exposure to international corporate bonds.

These ETFs include the Global X Aluminum ETF, the Global X Lithium ETF, the Global X Uranium ETF, the Global X Food ETF, the Global X Shipping ETF, the Global X Waste Management ETF and the Global X Fishing ETF – all sectors or industries that are likely to reap the benefits of an expanding global economy and population.

These unique products are nothing new to Global X, who recently introduced the Silver Miners ETF (SIL) and the Copper Miners ETF (COPX), both of which provide direct exposure to companies involved in the mining and production of the respective metals.

The products are expected to enable investors to gain diversified exposure to commodity driven industries and sectors which are traditionally difficult to access and are generally more volatile than traditional equities.

Although price hikes have remained relatively low, stirring up an equally disturbing notion of deflation, eventually we will have to pay the price for spending our way out of the worst recession seen in the past five decades.  Inflation is inevitable, but how bad will it get and how do you protect yourself when it does occur?

The Federal Reserve has pledged to continue to keep interest rates at near record lows, indicating that there are subdued inflation trends and stable inflation expectations for the near future.  However, many other economists think that interest rates and prices will have to increase tremendously, eventually igniting double digit inflation.  If the Fed is proven wrong, some common plays to protect against inflation include precious metals and commodities.

Here are a few possibly plays to deal with inflation:

-Gold:  The most well-known hedge against inflation.  SPDR Gold Shares (GLD) is probably the best way to play this because it is actually backed by physical gold bullion.

-Treasury Inflation Protected Securities:  The iShares Barclays TIPS (TIP) is an ETF that invests in inflation-protected securities and adjusts its coupon payments and underlying principle to compensate for inflation as measured by the consumer price index.

-Commodities:  Commodity prices generally rise when inflation is accelerating.  Exposure can be gained through the iShares S&P GSCI Commodity-Indexed Trust (GSG).

Canada has drawn much attention due to its surplus in energy resources.  In fact, according to the U.S. Energy Information Administration, Canada has considerable natural resources and is one of the world’s largest producers and exporters of energy.  Additionally, over the past 30 years, Canada’s total energy production has increased by nearly 87 percent while its total consumption has only grown by 44 percent, leaving a sizeable surplus.

To put it into perspective, Canada has the second-largest proven crude reserves globally, it’s the second-largest exporter of natural gas globally and the fourth-largest exporter of crude oil globally.  It has nearly 180 billion barrels of crude oil, second only to Saudi Arabia.  As the global economy recovers from the financial windstorm and grows, energy will be in demand and Canada will likely be attractive.  For this reason, Index IQ launched the IQ Canada Small Cap ETF (CNDA).

CNDA offers exposure to small-cap Canadian stocks through its 100 different holdings which are comprised of energy companies (18.8%), financials (6.5%) and industrials (5.7%).  The ETF carries an expense ratio of 0.69% and seeks to replicate the performance of the IQ Canada Small Cap Index.

Australia continues to remain attractive for some of the same reasons as Canada does,  mainly its resource and commodity supply.  The continent is home to diversified natural resources giant and mining company, BHP Billiton (BHP) and metals mining giant Rio Tinto (RTP).  As a result, Australia is the world’s fourth largest producer of gold, a commodity that continues to keep its luster.  Australia is also the fourth largest producer of coal, the largest component in electricity generation, something that will likely witness increased demand as emerging markets continue to prosper.  To further bolster Australia’s appeal, the nation has heavy ties with China as it is one of the world’s largest exporters to the nation.

The IQ Australia Small Cap ETF (KROO), which carries an expense ratio of 0.69%, enables investors to reap the benefits of the Australian small-cap market.  The ETF is primarily focused on the materials sector which constitutes 26.9% of its assets, followed by consumer discretionary at 24.6% and industrials at 10.7%.