by Cathy Carlson
As the summer winds down, apparently so too does the impressive pace of expansion in the ETF space. Although August launches were a big drop off from the previous month, the industry still saw the introduction of more than a dozen new exchange-traded products. Whereas many of the products rolled out in previous months have been “first-to-market” concepts, the new ETFs that began trading in August will compete more closely with existing funds. August has debuted products which are variations of a pre-existing fund. The new funds range from fixed-income to emerging market local debt to the first Indian Infrastructure ETF.
Not surprisingly, the ETF pipeline continued to fill with some interesting ideas, some of which could hit the market in the fourth quarter of the year. August also saw a handful of funds shut down; in total, seven ETFs from Claymore and Grail went the way of the dodo.
Highlights from ETFs that began trading in August include:
- Charles Schwab launched its first three fixed-income funds, including the U.S. TIPS Fund (SCHP), the Short-Term U.S. Treasury ETF (SCHO), and the Intermediate-Term U.S. Treasury Fund (SCHR). SCHP tracks the performance of the Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L), a benchmark also linked to the ultra-popular TIP. SCHO aims to replicate the performance of the Barclays Capital U.S. 1-3 Year Treasury Bond Index, which also serves as the basis for iShares’ SHY. SCHR tracks the performance of the Barclays Capital U.S. 3-10 Year Treasury Bond Index, offering exposure to Treasuries with intermediate maturities.
- WisdomTree debuted its Emerging Market Local Debt Fund (ELD), an actively managed ETF that invests in local debt denominated in currencies of emerging markets. Component countries include Malaysia, Brazil, Mexico, and Indonesia.
- iPath introduced eight new treasury ETNs: the U.S. Treasury Steepener ETN (STPP), U.S. Treasury Flattener ETN (FLAT), U.S. Treasury 2-Year Bull ETN (DTUL), U.S. Treasury 2-Year Bear ETN (DTUS), U.S. Treasury 10-Year Bull ETN (DTYL), U.S. Treasury 10-Year Bear ETN (DTYS), U.S. Treasury Long Bond Bull ETN (DLBL), and U.S. Treasury Long Bond Bear ETN (DLBS). The most unique of these new notes are STPP and FLAT; the Steepener ETN tracks an index designed to increase in response to a “steepening” of the U.S. Treasury yield curve and decrease in response to a “flattening” of the U.S. Treasury yield curve, while the Flattener ETN seeking to do the opposite.
- U.S. Commodity Funds rolled out the United States Commodity Index Fund (USCI), an ETF that invests in a basket of commodity futures utilizing a strategy designed to minimize the impact of contango.
- EGShares launched the India Infrastructure ETF (INXX), which tracks the Indxx India Infrastructure Index. The benchmark consists of 30 companies involved in the country’s infrastructure industry.
- Claymore introduced the Wilshire Micro Cap ETF (WMCR), which seeks to replicate the Wilshire US Micro-Cap Index. That benchmark consists of approximately 1,600 micro cap stocks.
- ALPS rolled out the Alerian MLP Fund (AMLP), which offers exposure to the increasingly-popular MLP sector. AMLP is the first ETF to do so (a handful of ETNs came along previously). AMLP seeks to replicate the Alerian MLP Infrastructure Index, a benchmark that provides exposure to the infrastructure component of the Master Limited Partnership asset class in including companies earning at least 50% of the EBITDA from assets that at not exposed to commodity price changes.
- Market Vectors launched the Small Cap India ETF (SCIF) providing exposure to publicly traded, small capitalization companies in India. SCIF becomes the second ETF to do so, following in the footsteps of a similar fund from EGShares.
August also saw a number of interesting ETF filings, including a proposed smart-phone fund:
- First Trust filed to introduce a Smartphone ETF (FONE) providing exposure to “wireless mobile communication device with advanced functions which include features such as web access.
- ETF Securities continued to push innovation in the precious metals ETF space, proposing a gold fund that would store bullion in Asia.
- Global X continues to build its ETF lineup, filing last month for an ETF investing in companies engaged in exploring for gold.
- Van Eck has plans for an Investment Grade Floating Rate Bond Fund, a potentially interesting innovation in the fixed income space.
August saw a couple of issuers pull the plug on funds that had been slow to gain traction: Claymore closed its doors on five funds (including STH, which converted to the aforementioned micro cap ETF) while Grail retired two actively managed ETFs:
- Claymore/Zacks Dividend Rotation ETF (IRO)
- Claymore/Zacks Country Rotation ETF (CRO)
- Claymore/Beacon Global Exchanges, Brokers & Asset Managers Index ETF (EXB)
- Claymore/Robb Report Global Luxury Index ETF (ROB)
- Grail Advisors RP Technology ETF (RPQ)
- Grail Advisors RP Financials ETF (RFF)
Disclosure: No positions at time of writing.
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