The month of September brought an unexpected but very welcome rally in stock markets, as many equity ETFs enjoyed their best month of the year. September also set a number of records from the product development perspective in the ETF industry; more than two dozen new funds from a handful of different issuers hit the market, and the month’s additions had pulled in aggregate assets of nearly $300 million by month end. The month also saw Claymore rebranded under the Guggenheim name, as well as the departure from the ETF industry of two issuers, Geary and GlobalShares.
In total 27 new ETFs were born in September, covering a wide variety of markets, asset classes, and investment strategies. The net increase in the ETF lineup, however, was only 19, as three different issuers announced the closing of eight ETFs in aggregate.
Highlights from ETFs that began trading in September include:
- Barclays launched the S&P VEQTOR ETN (VQT). This ETN is unique in that it will saddle the line of both passive and active, tracking the S&P 500 Dynamic VEQTOR Total Return Index.
- iShares announced the opening of its New Zealand ETF, the MSCI New Zealand Investable Market Index Fund (ENZL). This fund marks the first equity ETF to maintain a specific focus on the Kiwi economy, and has been a hit with investors in its brief history. The fund tracks the MSCI New Zealand Investable Market Index and has already gained over 7% while attracting more than $50 million in assets.
- Vanguard had a busy month by rolling out an astonishing 16 new ETFs; Vanguard S&P 500 ETF (VOO), S&P Mid-Cap 400 ETF (IVOO), S&P Mid-Cap 400 Value ETF (IVOV), S&P Mid-Cap 400 Growth ETF (IVOG), S&P Small-Cap 600 ETF (VIOO), S&P Small-Cap 600 Value ETF (VIOV), S&P Small-Cap 600 Growth ETF (VIOG), S&P 500 Value ETF (VOOV), S&P 500 Growth ETF (VOOG), Russell 1000 ETF (VONE), Russell 1000 Value ETF (VONV), Russell 1000 Growth ETF (VONG), Russell 2000 ETF (VTWO), Russell 2000 Value ETF (VTWV), Russell 2000 Growth ETF (VTWG), Russell 3000 ETF (VTHR). Each of these funds will closely compete with already existing funds, primarily iShares products. VOO received a considerable amount of attention as it's Vanguard’s first S&P 500 ETF and it is being offered at lower fees than existing funds.
- State Street introduced its Global Natural Resources ETF (GNR) in mid-September. This new fund tracks the S&P Global Natural Resources Index, which is comprised of 90 of the largest publicly traded companies, based on market capitalization, in global natural resources and commodities businesses.
- EGShares, the only ETF issuer to maintain a product line dedicated exclusively to emerging markets funds, released its Emerging Markets Consumer Titans Index Fund (ECON), which has gained over 4% since inception. The fund tracks the Dow Jones Emerging Market Consumer Index, a benchmark that consists of retailers, automakers, food and beverage producers, and travel companies, among others. ECON has also been a hit with investors; after less than a month of trading, assets are already approaching $25 million.
- PIMCO debuted two new bond ETFs, including the Build America Bond Strategy Fund (BABZ) and the PIMCO Investment Grade Corporate Bond Index Fund (CORP). The actively-managed BABZ will invest in taxable municipal debt securities publicly issued under the Build America Bond program, while the passively-indexed CORP will track an index that consists of U.S. dollar denominated investment grade corporate debt securities.
- WisdomTree brought a new currency ETF to market in late September, launching the Dreyfus Commodity Currency Fund ETF (CCX). The new fund will seek to match total returns reflective of money market rates in selected commodity-producing countries and changes to value of such countries’ currencies relative to the U.S. dollar.
- iShares joined in the action by releasing three new international ETFs just days before September came to a close. The company released the first-ever Philippines ETF, the MSCI Philippines Investable Market Index Fund (EPHE), along with MSCI Small Cap Brazil Index Fund (EWZS) and MSCI Small Cap China Index Fund (ECNS).
- UBS expanded its MLP lineup, launching the E-TRACS 1x Monthly Short Alerian MLP Infrastructure Total Return ETN (MLPS), the first inverse MLP ETP. This marks the fourth MLP fund offered by UBS; MLPS will track the Alerian MLP Infrastructure Total Return Index, the benchmark to which two other UBS ETNs are linked.
September also saw a large number of ETF filings, setting the stage for a continued expansion of the industry heading into the fourth quarter and 2011:
- iShares filed for a 0-5 year TIPS ETF, setting the stage for the company to roll out a complement to the ultra-popular TIP.
- Guggenheim, formerly known as Claymore, filed for nine high yield corporate bond ETFs with maturity dates stretching from 2012 to 2020.
- PowerShares also threw new ideas into the mix by filing for four funds: KBW Premium Yield Equity REIT Portfolio (KBWY), KBW High Dividend Yield Financial Portfolio (KBWD), KBW Global ex-U.S. Financial Sector Portfolio (KBWX), and KBW Property & Casualty Insurance Portfolio (KBWP).
- Janus Capital Group threw its hat into the ETF arena by filing for a number of various ETFs that will likely hit market in the second quarter of 2011.
- Rydex filed for 19 new equal-weighted ETFs as the firm looks to beef up its presence in the industry.
- The Hartford Financial Services Group waded into ETF waters, filing for exemptive relief to launch actively managed ETFs that will focus on both American and international investment-grade debt.
- ProShares filed for a unique long/short ETF that will expand a relatively small corner of ETF investing.
- Charles Schwab revealed plans to bring a real estate ETF to market, moving into more direct competition with established ETF issuers.
- Vanguard seems poised to continue its recent expansion, filing for approval on a global ex-U.S. equity ETF.
Though the ETF industry boomed this month, with dozens of new funds, some funds have shut their doors, as they have had trouble gaining traction with investors.
- Geary Advisors shut down its two ETF offerings, including the Oklahoma Exchange-Traded Fund (OOK) and the Texas Exchange-Traded Fund (TXF).
- Javelin announced that its Dow Jones Islamic Market International Index Fund (JVS) will be shutting down, leaving the firm with one U.S.-listed ETF.
- GlobalShares decided to close five funds, effectively ending the firm’s short time in U.S. ETF space. The FTSE Emerging Markets Fund (GSR), FTSE All-Cap Asia Pacific ex-Japan Fund (GSZ), FTSE All-World ex-U.S. Fund (GSO), FTSE Developed Countries ex-U.S. Fund (GSD), and FTSE All World Fund (GSW) will see their end on October 6th.
Disclosure: No positions at time of writing.
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