Continuing a very active month for the ETF industry, State Street rolled out three new sector-specific funds on Thursday. Each of the new products will provide more targeted exposure than the ultra-popular sector SPDRs that focus on the nine major industries of the U.S. economy. The new ETFs include:
- SPDR S&P Telecom ETF (XTL): This ETF will seek to replicate the S&P Telecom Select Industry Index, a benchmark that includes about 60 different holdings; the largest individual components include Motorola and Verizon (VZ). Telecom companies are included in the technology SPDR (XLK), so the introduction of XTL offers enhanced granularity to that corner of the market. State Street also offers an international telecom ETF; IST currently has about $13 million in assets.
- SPDR S&P Transportation ETF (XTN): This ETF is linked to the S&P Transportation Select Industry Index, a benchmark that consists of companies engaged in various aspects of the transportation business; the underlying holdings will include airlines, railroads and trucking companies. XTN will compete most closely with THE iShares Dow Jones Transportation Average Index Fund (IYT), which has assets of almost $600 million.
- SPDR S&P Health Care Equipment ETF (XHE): This ETF will offer exposure to a sub-set of the health care industry by replicating the S&P Health Care Equipment Select Industry Index. That benchmark consists of companies that manufacture products used in a wide variety of health care applications, ranging from spine disorders to dental disease. Perhaps the most comparable ETF already on the market is the iShares Dow Jones U.S. Medical Devices Index Fund (IHI), which has more than $300 million in assets.
With January drawing to a close, the new year has already seen the launch of close to 20 new exchange-traded products. Many of these have been first-to-market ideas; ProShares has launched VIX ETFs, WisdomTree introduced a managed futures fund, and AdvisorShares introduced an active short equity ETF (HDGE). Last year, more than 200 new ETFs started trading.
Disclosure: No positions at time of writing.
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