ETF Giants Lay Groundwork For New ETFs

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 |  Includes: DIVS, HDIV, IDIV
by: Stoyan Bojinov

Just as volatility has been persistent in the markets lately, developments on the product activity front have been plentiful. Several industry giants, including iShares, State Street and Russell have all laid down the groundwork and filed with the SEC for a handful of new - and potentially exciting - products.

iShares is planning to beef up its product lineup with a new commodity offering (see SEC Filing):

  • Dow Jones-UBS Roll Select Commodity Index Trust: This ETF will seek to track the Dow Jones-UBS Commodity Index, which is a liquidity and production-weighted index that tracks the prices of a diversified group of futures contracts on physical commodities. The trust holds long positions in CERFs (commodity excess return futures contracts) and also earns interest on the assets used to collateralize its holdings. This ETF’s underlying index may diverge from the Dow Jones-UBS CI since it employs a unique roll process designed to mitigate the effects of contango.

Russell is making plans to debut three new dividend-focused funds:

  • High Dividend Yield ETF (HDIV): This fund will passively seek to replicate the price performance of the Russell U.S. Large Cap High Dividend Yield Index. The underlying holdings will consist of high yielding securities from the Russell 1000 Index. The portfolio will be market cap-weighted and rebalanced quarterly.
  • Small Cap High Dividend Yield ETF (DIVS): This fund will seek to replicate the performance of the Russell U.S. Small Cap High Dividend Yield Index. This ETF will consist of high yielding, small cap stocks selected from the Russell 2000 Index. The underlying portfolio will evaluate holdings based on financial stability, and like HDIV, it will also be market cap-weighted and rebalanced quarterly.
  • International High Dividend Yield ETF (Pending:IDIV): This fund will passively seek to replicate the price performance of the Russell Developed ex-U.S. Large Cap High Dividend Yield Index. This ETF will select dividend paying securities from the Russell Developed ex-U.S. Large Cap Index based on yield and financial stability. IDIV will achieve its international exposure by investing in American Depository Receipts (ADRs), Global Depository Receipts (GDRs) as well as European Depository Receipts (EDRs).

State Street laid out plans for two international products (see SEC Filing):

  • SPDR MSCI EM 50 ETF: This ETF will hold of 50 of the largest constituents of the broader MSCI Emerging Markets Index. This ETF will be limited to investing in depository receipts when it comes to establishing exposure in Brazil, Mexico and Russia. Additionally, investments in real estate trusts and China B shares will be excluded.
  • SPDR MSCI ACWI IMI ETF: This ETF will seek to track the price performance of the MSCI ACWI IMI Index, which consists of publicly-traded companies spread out across developed and emerging markets.

Disclosure: No positions at time of writing.

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