The popularity of index funds (ETFs) has growth exponentially since year 2000. The low cost and transparency appeal of ETFs have attracted an ever growing number of ETF providers, products as well as investors:

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Graph provided by iShares/BlackRock

Retail investors have an easy gateway to gain exposure to every asset class starting from U.S. government Treasuries (TLT), though broad range of equity ETFs down to more obscure asset classes like REITS (VNQ) or commodities (DJP).

With this rise in popularity more assets are diverted from conventional stock picking mutual funds in order to make room for ETFs. As a result, the mutual funds are losing shares while interest in ETFs is growing proportionally:

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Source

The mutual funds space, our prehistoric dinosaur, is dying a slow death to make room for more indexing products but there is one question no one seems to be

With little economic data on the calendar, and the Fed speakers back-loaded at the Chicago Fed conference later in the week, there is time to reflect on other questions (unless, of course, the Israel/Syria back-and-forth turns into something more than the last couple of jabs have produced).

It is interesting to me that analysts and journalists truly enjoy finding comparisons between present situations and actors, except when the comparisons suggest unpleasant conclusions. This is at a time when there are really no comparable periods in history to compare to, at least with respect to major global policy initiatives!

I read comparisons between Shinzo Abe's pressure on the Bank of Japan and Fed Chairman Bernanke's campaign to resurrect the American economy with ever-greater monetary policy shocks. Somewhere, I saw an analyst ask "isn't Abe taking note of the failure of U.S. monetary policy to goose the economy?" But the comparison is

Sometimes following where money is being invested is a solid course of action to gain alpha. Other times, a better opportunity lies in going the opposite direction, i.e., thinking contrarian.

Take commodities, energy and materials, which may be the most unappreciated areas of the market these days. According to a Bank of America Merrill Lynch's Global Fund Manager Survey of 250 participants who collectively manage $725 billion, energy, materials and commodities are extremely under-owned.

As you can see below, the global asset class positioning during the first week of April compared to historical data shows that energy positions are close to 3 standard deviations below the long-term average. An allocation to materials is more than 2 standard deviations below its long-term average and commodity exposure is close to 2 standard deviations below its historical measure.

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Take note of the timing, though, as it appears that it may