By Stoyan Bojinov
December continued the impressive wave of product innovation that has become expected of the ETF industry. Various issuers introduced first-to-market products and continued the impressive expansion of the exchange-traded product pipeline. After starting with a flurry of activity, product launches slowed in the second half of the month leading up to the holiday season. Still, more than a dozen new ETFs debuted in December. Below, we highlight all of the new additions to the ETF lineup over the last month, as well as some new fund filings:
ETFs that began trading in December include:
- UBS (UBS) launched the E-TRACS Daily Long-Short VIX ETN (XVIX). The new exchange-traded note is linked to the S&P 500 VIX Futures Term-Structure Index Excess Return, and is the first U.S.-listed exchange-traded product to offer investors both long and short exposure to VIX benchmarks, with positions rebalanced on a daily basis. The underlying index is a composite that measures the return from taking a long 100% position in the S&P 500 VIX Mid-Term Futures Index Excess Return with a short 50% position in the S&P 500 VIX Short-Term Futures Index Excess Return.
- AdvisorShares released the first actively managed ETF focusing on the high yield debt space. The Peritus High Yield ETF (HYLD) gives investors access to a team of managers experienced in the high yield bond arena while still offering the flexibility, transparency, and liquidity of an ETF.
- PowerShares debuted four new financial equities ETFs, all based on KBW (KBW) benchmarks. The KBW Premium Yield Equity REIT Portfolio (KBWY) will seek to replicate a dividend-weighted index consisting of between 25 and 40 small-cap and mid-cap U.S. equity REITs. The new High Dividend Yield Financial Portfolio Fund (KBWD) will also track a dividend-weighted benchmark, with its underlying holdings being financial companies that are principally engaged in the business of providing financial services and products. The KBW International Financial Portfolio (KBWX) will reflect the KBW Global ex-U.S. Financial Sector Index, a benchmark made up of ADRs of about 60 non-U.S. financial companies. Lastly, the KBW Property and Casualty Insurance Portfolio (KBWP) will invest in the stock of property and casualty insurance companies.
- ETF Securities rolled out the White Metals Basket Trust (WITE), which invests in silver, platinum, and palladium. WITE is an interesting commodity play since it presents an appealing option for investors looking to hedge against inflation and a drop in the greenback, but are worried about a gold bubble. The fund currently allocates 55% of holdings to silver, 33% to platinum, and 12% to palladium.
- Rydex launched five new equal-weighted equity ETFs, including both domestic and international funds. The company’s growing lineup of equal-weighted ETFs has been gaining popularity as investors are looking for alternatives to funds such as SPY or EEM, both of which are linked to market capitalization-weighted benchmarks. The new funds include: Russell 1000 Equal Weight ETF (EWRI), Russell 2000 Equal Weight ETF (EWRS), Russell Mid Cap Equal Weight ETF (EWRM), MSCI EAFE Equal Weight ETF (EWEF), and MSCI Emerging Markets Equal Weight ETF (EWEM).
- Direxion rolled out three new products this month, one of which is the company’s first non-leveraged product. The Direxion Airline Shares ETF (FLYX) will seek to replicate the NYSE Arca Airline Index, a benchmark designed to measure the performance of highly capitalized and liquid U.S. and international passenger airline companies identified as being in the airline industry. The new leveraged funds include the Daily Gold Miners Bull 2x Shares ETF (NUGT) and Daily Gold Miners Bear 2x Shares ETF (DUST). Both products will offer leveraged daily exposure to the NYSE Arca Gold Miners Index, a benchmark that consists of domestic and international stocks engaged primarily in the mining of gold and silver.
- RBS (RBS) released the U.S. Large Cap Trendpilot ETN (TRND), a product that alters its investment strategy depending on recent market trends. TRND tracks the RBS US Large Cap Trendpilot Index, which utilizes a systematic trend-following strategy. This new ETN provides exposure to either the S&P 500 Total Return Index or the yield on a hypothetical notional investment in 3-month U.S. Treasury bills, depending on the relative performance of the S&P 500 on a simple historical moving average basis.
- ProShares came out with its new RAFI Long/Short ETF (RALS), which seeks to replicate the RAFI US Equity Long/Short Index. This new fund employs a fundamental weighting methodology that has become increasingly popular among investors, with a long/short twist. If a company’s cap weight is larger than its RAFI weight, it will have a short position in the underlying index. If the RAFI weight is larger than the cap weight, a long position will be maintained.
- State Street (STT) made an interesting switch in its broad-based domestic equity funds lineup, ditching Dow Jones indexes in favor of benchmarks maintained by Standard & Poor’s. The switch puts State Street in more direct competition with issuers like iShares and Vanguard, both of whom offer ETFs linked to the S&P indexes.
December was a busy month for new ETF fillings, with the fund proposals briefly profiled below:
- AdvisorShares announced in a recent SEC filing a partnership with Madrona Funds in order to offer investors actively-managed access to several different corners of the market. These new funds forsake traditional cap-weighting systems and instead use forward-looking analysis in order to determine the weightings, potentially offering investors the chance to achieve outsized returns.
- Direxion recently filed for 24 new funds, including both 1x and 3x ETFs. The proposed products target a variety of asset classes, including NASDAQ volatility, the wireless communications sector, and a handful of leveraged bull/bear products further expanding into the domestic equity and fixed-income space.
- Guggenheim filed for an actively-managed short-term high-yield bond fund. According to the filing, the Guggenheim Enhanced Short Duration High Yield Bond ETF would seek “to maximize total return, through monthly income and capital appreciation, consistent with capital preservation.” The fund is going to focus on junk bonds close to maturity, most having an effective duration of one year or less.
- Global X plans to expand its lineup of exchange-traded products, recently filing with the SEC for an oil equity ETF. The proposed fund will track the Solactive Global Oil Equities Index, a global benchmark tracking firms engaged in the production and refinement of crude oil around the world.
- Van Eck recently made a filing to the SEC for an Andean ETF targeting the equity markets of Chile, Peru, and Colombia. The proposed fund from Van Eck would seek to replicate the Market Vectors Andean Index, a benchmark comprised of securities of companies located in Colombia, Peru, and Chile, or that it generate at least 50% of revenues in Andean countries. Besides offering exposure beyond Brazil, the proposed fund would also have a heavier tilt towards small caps, making it an alternative to many of the existing products in the Latin America Equities ETFdb category.
Disclosure: No positions at time of writing.
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