New Rogers Index

Jim Rogers has put his name on a new index that is a joint venture between CITIC Carbon Assets Management from Hong Kong and Banco Bilbao Vizcaya Argentaria that will be called the Rogers Global Resources Equity Index. It will own equities in energy, agriculture, forestry, mining and alternative energy. I was not able to find any real composition detail anywhere, the industry information came from an appearance that Jim made on Asia Squawk Box on Monday morning. The only other detail item I could was that it has 200 constituents. It could have some utility as being a unique index if each of the five industries have an equal weight or somehow weighting is modified to avoid Exxon Mobil (XOM), BP and BHP Billiton (BHP) dominating the fund. The announcement of this index addresses a point I’ve been thinking about lately which is whether it makes sense to combine energy and basic materials into one sector called resources (or any other suitable name). From the end user standpoint it can make portfolio construction a little easier. The two sectors add up to 16.5% of the S&P 500 so as is, anyone building at the sector level would probably need to make one decision about how to weight energy and another about how to weight basic materials. Obviously if they were blended into one sector there would be only decision to a make on sector weighting. A little deeper there then are decisions about how to build each sector. Within the materials sector there are many themes or niches to consider like platinum miners in South Africa, fertilizer companies...

New Rogers Index

Jim Rogers has put his name on a new index that is a joint venture between CITIC Carbon Assets Management from Hong Kong and Banco Bilbao Vizcaya Argentaria that will be called the Rogers Global Resources Equity Index. It will own equities in energy, agriculture, forestry, mining and alternative energy. I was not able to find any real composition detail anywhere, the industry information came from an appearance that Jim made on Asia Squawk Box on Monday morning. The only other detail item I could was that it has 200 constituents. It could have some utility as being a unique index if each of the five industries have an equal weight or somehow weighting is modified to avoid Exxon Mobil (XOM), BP and BHP Billiton (BHP) dominating the fund. The announcement of this index addresses a point I’ve been thinking about lately which is whether it makes sense to combine energy and basic materials into one sector called resources (or any other suitable name). From the end user standpoint it can make portfolio construction a little easier. The two sectors add up to 16.5% of the S&P 500 so as is, anyone building at the sector level would probably need to make one decision about how to weight energy and another about how to weight basic materials. Obviously if they were blended into one sector there would be only decision to a make on sector weighting. A little deeper there then are decisions about how to build each sector. Within the materials sector there are many themes or niches to consider like platinum miners in South Africa, fertilizer companies...

The Big Picture for the Week of February 27, 2011

One of the building blocks for successful country selection over the last few years has been to pick places where a middle class is ascending where there previously had been no middle class. I believe this theme will have legs for many years to come and is powering much of the spending that must be done (improved infrastructure and improved services) which will result in consumer spending that will be done (improved diet, other staple items and maybe even aspirational discretionary purchases). If it is true that destinations where a middle class is ascending makes for an attractive investment or at the very least creates a tailwind then it stands to reason that countries where the middle class is shrinking are at the very least facing substantial headwinds. This link from Mother Jones which comes via Zen Trader has all sorts of grim statistics about the wealth gap in the US. One hot topic here has been the extent to which higher prices at the pump have offset stimulus action and then this most recent leg up creating a new “tax” on consumers with economists trying to quantify the impact. Deutsche Bank’s analysis has been making the rounds, I found it at Pragmatic Capitalism, which says that a $10 increase in the price of crude leads to $0.25 per gallon and that every penny per gallon collectively costs consumers $1 billion. While I do not believe tab A can fit into slot A so neatly as implied in Deutsche’s analysis it certainly creates a framework for beginning to understand the magnitude of the problem. If filling the tank for...

The Big Picture for the Week of February 27, 2011

One of the building blocks for successful country selection over the last few years has been to pick places where a middle class is ascending where there previously had been no middle class. I believe this theme will have legs for many years to come and is powering much of the spending that must be done (improved infrastructure and improved services) which will result in consumer spending that will be done (improved diet, other staple items and maybe even aspirational discretionary purchases). If it is true that destinations where a middle class is ascending makes for an attractive investment or at the very least creates a tailwind then it stands to reason that countries where the middle class is shrinking are at the very least facing substantial headwinds. This link from Mother Jones which comes via Zen Trader has all sorts of grim statistics about the wealth gap in the US. One hot topic here has been the extent to which higher prices at the pump have offset stimulus action and then this most recent leg up creating a new “tax” on consumers with economists trying to quantify the impact. Deutsche Bank’s analysis has been making the rounds, I found it at Pragmatic Capitalism, which says that a $10 increase in the price of crude leads to $0.25 per gallon and that every penny per gallon collectively costs consumers $1 billion. While I do not believe tab A can fit into slot A so neatly as implied in Deutsche’s analysis it certainly creates a framework for beginning to understand the magnitude of the problem. If filling the tank for...

Friday Tidbits

First up is an IPO of Hutchison Port Holdings Trust which is part of conglomerate Hutchison Whampoa which will list in Singapore. The actual ports are in Hong Kong, Shenzhen and Macau but the listing, as mentioned, is in Singapore. The trust structure can be thought of as being like a REIT and this one will yield 5-6%. If you’ve been reading this blog for a while you know I think China is an important investment destination but also a very complex one. Our exposure is something of an underweight by way of the country’s weight in a couple of thematic ETFs. While I continue to believe banks, manufacturers and reverse mergers should be avoided I think things like ports, toll roads, energy and staples items are a good way to go. Chinese don’t have to speculate on real estate but there are things that they essentially have to do or money that has to be spent which is where I will continue to look. There was an article on Seeking Alpha yesterday titled Your Ira Doesn’t Have To Be Boring. The post was so bad I’m not going to link to it, I’ll just say your IRA probably should be boring. SPDR came out with two new ETFs. One is an emerging market bond fund denominated in local currency ticker symbol EBND and the other is an emerging market dividend fund ticker EDIV. Both are me too funds with some differences and some similarities. If you have interest in these spaces you should add these to the list of options to consider. Speaking of new ETFs, FactorShares listed...