By Seth Dowling
After a few speed bumps early in 2010, ETFs are back on track and traveling full steam ahead. In the first three months of 2010, nearly 60 new ETFs have been launched, which is already equivalent to nearly half funds to hit the market over the course of 2009. The recent SEC decision to halt approval on products using derivatives may slow this pace a bit, but April promises to be another very active month for new ETF launches. Below, we highlight some of the most interesting new funds hitting the market.
Highlights from the ETF industry in March include:
- Claymore, best known for themed ETFs and targeted sector funds, mixed things up when by releasing three new ETFs based on broad market indexes. The new funds include the Wilshire 5000 Total Market ETF (WFVK), Wilshire 4500 Completion Index ETF (WXSP), and Wilshire U.S. REIT ETF (WREI).
- Following the launch of 3x funds earlier in the year, Direxion hit the mark again this month with another six 2x and 3x leveraged ETFs. These include Daily BRIC Bull 2x Shares (BRIL), Daily India Bull 2x Shares (INDL), Daily Semiconductor Bull 3x Shares (SOXL), Daily BRIC Bear 2x Shares (BRIS), Daily India Bear 2x Shares (INDZ), Daily Semiconductor Bear 3x Shares (SOXS).
- State Street released the second U.S.-listed ETF offering exposure to Russia, one of the world’s most unique economies. RBL tracks the performance of the S&P Russia Capped BMI Index.
- First Trust introduced two new ETFs that tap into an increasingly popular investment strategy. The First Trust ISE Global Platinum Index Fund (PLTM) and First Trust ISE Global Copper Index Fund (CU) join a number of other ETFs focused on mining stocks, but are the first to specifically target these metals.
- ProShares launched three inverse ETFs to expand its existing product line. The ETFs hitting the market include Short FTSE/Xinhua China 25 Index (YXI), Short Basic Materials (SBM), and Short Real Estate (REK).
- IndexIQ launched two single-country small-cap equity ETFs. The IQ Canada Small Cap ETF (CNDA) will track the performance of the IQ Canada Small Cap Index, while the IQ Australia Small Cap ETF (KROO) will seek to replicate the IQ Australia Small Cap Index.
- Direxion expanded into Europe with the cross-listing of six leveraged ETFs on the Amsterdam market of NYSE Euronext: Daily Emerging Markets Bull 3x Shares (EDC), Daily Large Cap Bull 3x Shares (BGU), Daily Financial Bull 3x Shares (FAB), Daily Emerging Markets Bear 3x Shares (EDZ), Daily Large Cap Bear 3x Shares (BGZ), and Daily Financial Bear 3x Shares (FAZ).
In addition to the wide variety of products that hit the market, March experienced continued growth in the product pipeline, as issuers filed plans for some interesting products, including fixed income opportunities and international exposures. Among the highlights:
- A leading provider of inverse and leverage ETFs, ProShares filed for the approval of seven new ETFs. Four “ultra” international ETFs include Brazil, Pacific ex-Japan, MSCI Europe, and MSCI Mexico Investable Market. The remaining three ETFs are based on the KBW Regional Banking Index and include an Ultra (200% daily exposure), Short (-100% daily exposure), and Ultra Short (-200% daily exposure) positions.
- State Street continued to make headlines by filing the Barclays Capital International Corporate Bond (IBND), which could become the first U.S.-listed ETF to track the performance of the investment-grade corporate sector of the global bond market.
- For the second consecutive month, PIMCO made plans to build on the comany’s fixed income ETF presence. The firm filed for approval on six new bond ETFs including PIMCO 0-3 Year Banking Sector Corporate Bond Index Fund, PIMCO 1-5 Year High Yield Corporate Bond Index Fund, PIMCO Emerging Markets Aggregate U.S.$ Denominated Bond Index Fund, PIMCO High Yield Corporate Bond Index Fund, PIMCO Investment Grade Corporate Bond Index Fund, and PIMCO Build America Bond Strategy Fund.
- The latest development in the ETF arena comes from the Vermont Based firm Teucrium Trading LLC. Toward the end of March, the company filed for approval on an ETF that invests in the Chicago Board of Trade Corn Futures. This could become the first U.S.-listed pure play corn ETF.
Also in March, WisdomTree (WSDT.PK) completed the previously announced shuttering of ten ETFs. These funds became the first (but likely not the last) to close their doors in 2010, a “make or break year” for many ETF issuers. Despite these closures, March saw a net increase in the number of exchange-traded products, and brought the number of first quarter product launches to about 60.
Disclosure: No positions at time of writing.
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