Tuesday, October 16, 2012

Diamond ETFs Seen Riskier Than Other Commodity Funds

Plans are afoot to create exchange-traded funds specializing in diamonds, but advisers are warning that such investments are fraught with challenges and risks.

Diamonds are more difficult to package and price in fund portfolios than other types of commodities such as gold and silver, portfolio managers point out.

"Unlike gold, diamonds trade in a very fractured private marketplace that is highly opaque and ripe with opportunities for pricing markups," says Greg Peterson, investment research director at Ballentine Partners in Waltham, Mass., which manages $4 billion in assets.

While a diamond ETF hasn't arrived in the U.S. yet, Mr. Peterson is suggesting that investors prepare for a host of new funds. More than likely, he believes that ETF sponsors are trying to capitalize on the success of other popular commodity funds, such as the $76.1 billion SPDR Gold Shares Trust (GLD).

"This is typical of the ETF industry--someone takes an interesting financially engineered product like GLD and then tries to copy it. But not everything fits so neatly into an ETF wrapper," Mr. Peterson says.

Several different fund developers are looking to move into the field, including IndexIQ, known for its ETFs that replicate benchmarks for hedge funds. It has filed for approval from regulators to create an ETF that would buy diamonds and physically store them in a vault for investors.

While global pricing information on diamonds is still difficult to formulate, enough trades are now being done online to make tracking such moves much more practical, says Abraham Stern, chief executive at industry researcher IDEX Online in New York.

"We believe enough information is now available to set an objective statistical base to build transparent pricing structures for an ETF," Mr. Stern says, pointing out that IDEX has been benchmarking such markets since 2004.

Last month, Chicago financial services provider GemShares was granted a patent for its own benchmarking process that could serve as the basis for an ETF. A leading driver behind the effort is Andrew Feldman, a financial adviser inspired by a desire to see diamonds made more accessible to investors.

"The natural users are industry players, just like airlines are for oil and miners are with gold," Mr. Feldman says.

But just building a diamond ETF doesn't guarantee professional traders will come, notes Stephen Hammers, chief investment officer at Compass EMP Funds, a registered investment adviser that runs $1 billion in separate accounts and mutual funds using ETFs. The firm in Brentwood, Tenn., includes commodities strategies as one of its areas of expertise.

Mr. Hammers views efforts to bring out diamond ETFs more along the lines of trading in lumber than gold. "Even though it's traded on exchanges, lumber hasn't attracted enough institutional investors to gain much in the way of liquidity," he says. "Diamonds could easily run into the same issues."

Unless a new ETF takes off in a big way, Mr. Hammers warns that investors might wind up shouldering higher costs related to storage, insurance and other transactional expenses than they're used to paying in more popular parts of the commodities marketplace.

Despite such possible structural flaws, a new diamond ETF is likely to draw at least some initial investor interest, says Andrew Ahrens, an adviser in Lafayette, La.

His advisory firm, which manages about $900 million in assets, has been informally asking affluent investors who own diamonds and favor alternative investments what they think about a diamond ETF.

Almost everyone questioned has found the idea appealing--at least at first, Mr. Ahrens says. As discussions advanced, however, he found that most expressed concern about widely perceived discrepancies in the market related to categorizing and pricing different grades of diamonds.

5 things to watch for in Obama vs. Romney sequel

Ready for Round Two? President Obama and Mitt Romney square off Tuesday night in their second debate, this time answering questions posed by undecided voters.

The town hall-style debate will be held at Hofstra University in Hempstead, N.Y. Moderator Candy Crowley of CNN will select the questions from the 80-member audience, who were picked in advance by Gallup.

USA TODAY will have full coverage on all of its platforms. Check your local listings on where to catch the action, starting at 9 p.m. ET. Our guide to the five things to watch:

A second chance for Obama: The president said he was too polite in his first face-to-face meeting with Romney, who got a boost in public opinion polls because of his strong debate performance two weeks ago. Obama's advisers promise he will be "aggressive" and "energetic." But if Obama swings too hard in challenging Romney's assertions, will he come off like a bully?

The wind at Romney's back: The Republican's team says the momentum belongs to Romney after the Oct. 3 debate in Denver. Romney has been practicing the same way he did for the Denver debate, by focusing on what he wants to do if elected and why the time is right for America to change course. Can he build on the gains he has already made?

The challenge of speaking directly to voters: The people posing the questions want to be persuaded, which means Obama and Romney have to be engaging, empathetic, believable, likable and presidential -- sometimes all at the same time. It's a danger to appear disengaged, as George H.W. Bush did when he looked at his watch in the 1992 town hall debate. Or to get in your opponent's face, as Al Gore did in 2000 when he walked right up to George W. Bush.

Maruti's new Alto gets 10K pre-orders

India's largest car maker Maruti Suzuki India today launched the new Maruti Alto in petrol and CNG options priced between Rs 2.44 lakh to Rs 3.56 lakh.

The petrol variant of the new Alto has been priced at Rs 2.44 lakh and would go up to Rs 2.99 lakh and promises a fuel efficiency of 22.74 kmpl.

While, the CNG variant has been priced at Rs 3.19 lakh to Rs 3.56 lakh with a fuel efficiency of 30.46 km/kg.

"We have started the booking for this new Alto since late September and before the launch we have received over 10,000 bookings," Maruti Suzuki India Managing Director and CEO Shinzo Nakanishi told reporters here.

Nakanishi further said that: "Around 200 engineers from Suzuki Motor Corporation and Maruti Suzuki were jointly involved in development of this vehicle for over four years".

The Alto was first launched in September 2000 and has registered sales of over 2 million units so far.

The price of the existing alto (petrol) ranges between Rs 2.49 and 3 lakh while the CNG variant is priced in the range of Rs 2.97 to RS 3.48 lakh.

Romney campaign raised $170 million in September

NEW YORK – Mitt Romney’s campaign said Monday that it had raised $170.4 million in the month of September, falling short of the staggering $181 million monthly total reported by President Obama’s reelection campaign.

Spencer Zwick, Romney’s national finance chairman, said in an e-mail to top donors Monday that the campaign and the Republican National Committee’s joint fundraising committee brought in $170 million in September, by far the Republicans’ biggest haul of the campaign cycle. The Romney campaign later announced that the campaign, RNC and state party participants have approximately $191 million cash on hand.

This came during Romney’s most difficult month as a candidate, when he lost significant ground in the polls and when his disparaging comments about “the 47 percent” publicly surfaced. The September total does not reflect the surge in donor enthusiasm following Romney’s performance in the Oct. 3 debate with Obama.

“This is truly an incredible testament to this group’s commitment and hard work and represents the largest amount of money we have raised to date in any given month of the campaign,” Zwick wrote in an e-mail to Romney’s national finance committee.

In a statement released to reporters, Zwick said, “With less than one month left, we will continue the hard work of raising the resources to ensure that Mitt Romney and Paul Ryan can win in November and bring real change to the American people.”

The Romney campaign said its September fundraising was fueled by small-dollar donors. More than 1 million people gave $250 or less, accounting for about 93 percent of total donations.

The announcement comes as Romney’s top donors are gathering in New York for a three-day retreat at the Waldorf-Astoria luxury hotel in Midtown Manhattan.

During the first two weeks of October, the Romney campaign raised more than $27 million online in small-dollar contributions, campaign spokeswoman Andrea Saul said. That total, over a two-week span, is higher than the campaign’s total over any previous month, Saul said.

Gallup shows Romney pulling ahead in swing states

Mitt Romney has opened up a slight lead on President Obama in the 12 most competitive states in the country, according to a new poll from USA Today and Gallup.

The poll shows Romney at 51 percent among a sample of likely voters in the 12 states, while Obama is at 46 percent.

Perhaps most strikingly, the poll shows Romney running even with Obama among women, with the two candidates tied at 48 percent.

The poll comes a week after most swing state polling showed Obama holding relatively steady. Republicans expecting a significant bounce from Romney’s debate performance two weeks ago had yet to see that momentum in the states that matter most.

The Gallup poll appears to be the first major poll covering multiple states to show that momentum registering in the states that will decide the presidency.

The same poll in mid-September showed Obama at 48 percent and Romney at 46 percent in the swing states. That poll, though, was conducted among registered voters, while the new poll is conducted among likely voters — a higher standard and one that reflects more enthusiastic voters.

(Indeed, the current poll shows the race is largely unchanged when it comes to registered voters, with Obama at 49 percent and Romney at 47 percent.)

Republicans cited the poll as a sign of their progress, while Democrats suggested the likely voter model was flawed.

Obama’s campaign released an entire memo casting doubt on the poll.

“The latest Gallup/USA Today Battleground survey showing President Obama and Governor Romney tied with women in battleground states (48-48) is an extreme outlier, defying the trends seen in every other battleground and national poll,” Obama pollster Joel Benenson said.

A Politico/George Washington University poll Monday, meanwhile, showed a tighter contest in the swing states, with Romney at 50 percent and Obama at 48 percent across the 10 most competitive states.

Yahoo CEO raids Google to hire COO

Yahoo! has appointed another key Google executive Henrique de Castro, as its chief operating officer (COO).

In a late night statement yesterday, Yahoo! said it has appointed Henrique de Castro as the COO, who would report directly to Yahoo! CEO Marissa Mayer.

De Castro would be the second big appointment that Yahoo! has made from its rival Google. Earlier this year, Yahoo! Had appointed former Google executive Marissa Mayer as its chief executive.

"De Castro will join the company on or before January 22, 2013, or as soon as he has satisfied his obligations to his current employer," the statement added.

De Castro will be responsible for strategic and operational management of Yahoo!'s sales, operations, media and business development worldwide.

"Henrique is an incredibly accomplished and rigorous business leader, and I'm personally excited to have him join Yahoo!'s strong leadership team," Yahoo! CEO Marissa Mayer said.

"His operational experience in Internet advertising and his proven success in structuring and scaling global organisations make him the perfect fit for Yahoo! as we propel the business to its next phase of growth," Mayer added.

De Castro has more than 20 years experience. Most recently, he was vice president of Google's worldwide Partner Business Solutions group, where he was responsible for advertising platforms and services for Google's publisher and commerce partners.

"The combination of Yahoo!'s unique properties with high quality content, its renewed focus on outstanding user experience and its massive reach bring tremendous value to users, advertisers and partners," de Castro said.

De Castro further added: "This is a pivotal point in Yahoo!'s history, and I believe strongly in the opportunity ahead. I can't wait to join Marissa and the team and get started".

Prior to Google, de Castro spent two years at DellCorporation, where he managed sales and business development operations across Western Europe.