Compared to September, which saw issuers launch more than two dozen new funds and multiple issuers shutter their entire product lines, October was a relatively slow month for the ETF industry. Though the number of new funds launched was down last month, many of the products that did hit the market were innovative, first-to-market funds that accumulated assets rather quickly. The new additions to the ETF lineup covered a number of different asset classes, including precious metals, rare earth metals, Chinese stocks. We also saw another active ETF turn in an impressive debut, indicating that perhaps growth is beginning to accelerate in that corner of the market.
October also set the stage for a flurry of activity in the final two months of the year and first quarter of 2011, as a number of issuers made filings that shed some light on future plans. And in a continuation of a trend that has played out in prior months, news of more fund closures also broke; PowerShares announced that it will shutter ten of its smaller ETFs before the end of the year.
Highlights from ETFs that began trading in October include:
- Credit Suisse rolled out its Merger Arbitrage Liquid Index (CSMA) product this month. This ETN is linked to an index that attempts to employ the merger arbitrage strategy by using quantitative methodology to generate returns. The fund has raked in over $29 million in assets, and is up slightly since it began trading earlier in the month.
- JP Morgan unleashed two new funds early this month, the Double Short U.S. Long Bond Treasury Futures ETN (DSTJ) and the Double Short U.S. 10 Year Treasury Futures ETN (DSXJ). These two ETNs offer investors options for leveraging rising rates views at the medium and long parts of the U.S. Treasury curve.
- Van Eck released its Market Vectors China ETF (PEK), the first U.S.-listed fund to offer exposure to China’s A-Shares market. This fund utilized swaps to gain exposure to securities that historically haven’t been available to investors outside of China. PEK has had a strong month, already gaining roughly 4.3% and garnishing assets of more than $33 million.
- ETF Securities announced its ETFS Physical Precious Metal Basket Shares (GLTR), which will be the first U.S.-based physically backed precious metal basket ETP. The fund holds gold, silver, platinum, and palladium, with the allocation favoring gold and silver. Though the fund is still young, it has already gained 1.8% since its inception and pulled in more than $30 million in assets.
- AdvisorShares expanded its ETF line with a new fund hitting the market. The Cambria Global Tactical ETF (GTAA) will be actively managed by Mebane Faber and Eric Richardson, who have an impressive track record at Cambria Investment Management.
- Van Eck added another fund to its lineup, releasing the Market Vectors Rare Earth/Strategic Metals ETF (REMX). This ETF provides a unique exposure to companies that are primarily engaged in a variety of activities that are related to the mining, refining and manufacturing of rare earth/strategic metals.
October 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:
- Russell filed for 8 new ETFs, laying the groundwork for an entrance into the ETF space: Russell Aggressive Growth ETF (AGRG), Russell Consistent Growth ETF (CONG), Russell Growth at a Reasonable Price ETF (GRPC), Russell Contrarian ETF (CNTR), Russell Equity Income ETF (EQIN), Russell Low P/E ETF (LWPE), Russell Small & Mid Cap Defensive Value ETF (no ticker available yet), and Russell Small Cap Defensive Value ETF (no ticker available yet).
- Van Eck revealed plans to bring two international bond ETFs to market: the Asia ex-Japan Aggregate Bond ETF, and the LatAm Aggregate Bond ETF. Shortly after, the company detailed 11 new equity ETFs in the making: All China All-Cap ETF, All China Consumer Discretionary Sector ETF, All China Consumer Staples ETF, All China Energy Sector ETF, All China Financial Services Sector ETF, All China Healthcare Sector ETF, All China Industrials Sector ETF, All China Information Technology Sector ETF, All China Materials Sector ETF, All China Utilities Sector ETF, All China Small Cap ETF.
- WisdomTree has three active foreign bond ETFs in the works, with a fund focusing on Asia, another on Latin America, and the final will focus EMEA markets in the developing world.
- JP Morgan filed for a physically-backed copper ETF, which will allow investors to allocate to the metal without the hassles of the complexities that go along with futures-based strategies.
- PowerShares joined the wave of filings by rolling out plans for five new ETFs: an S&P 500 High Beta Portfolio, S&P 500 Low Beta Portfolio, S&P 500 High Momentum Portfolio, S&P 500 High Volatility Portfolio, S&P 500 Low Volatility Portfolio.
- iShares also filed papers for a physically backed copper fund, setting the stage for a potential showdown with JP Morgan, and perhaps some interesting regulatory reviews.
- Deutsche Bank filed for five proposed ETFs: DBX MSCI Emerging Markets Currency Hedged Equity Fund (XEMG), DBX MSCI EAFE Currency Hedged Equity Fund (XEAF), DBX MSCI Brazil Currency Hedged Equity Fund (XBRZ), DBX MSCI Canada Currency Hedged Equity Fund (XCAN), and DBX MSCI Japan Currency Hedged Equity Fund (XJPN).
Though the ETF industry a wave of filings and launches, one company has announced that it will close its doors on ten of its ETFs, as they have been slow to catch on with investors.
- December 14th will mark the last trading day for the following PowerShares ETFs: Dynamic Healthcare Services Portfolio (PTJ), Dynamic Telecommunications & Wireless Portfolio (PTE), FTSE NASDAQ Small Cap Portfolio (PQSC), FTSE RAFI Europe Portfolio (PEF), FTSE RAFI Japan Portfolio (PJO), Global Biotech Portfolio (PBTQ), Global Progressive Transportation Portfolio (PTRP), NASDAQ-100 BuyWrite Portfolio (PQBW), NXQ Portfolio (PNXQ), and Zacks Small Cap Portfolio (PZJ).
Disclosure: No positions at time of writing.
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