With ETF product development off to a robust start in 2012, issuers are continuing to fill the pipeline with new ideas. Industry veteran PowerShares filed with the SEC to bring to market two active ETFs while First Trust has laid the groundwork to beef up its AlphaDEX lineup. Relative newcomer FlexShares made plans for a small cap fund intended for investors who are looking to round out their international exposure.
Illinois-based PowerShares has made plans to roll out two intriguing actively managed funds:
- PowerShares Equity Allocation Portfolio: This ETF seeks to achieve positive total returns in rising or falling markets that are not directly correlated to broad equity or fixed income market returns. The fund will seek to achieve its investment objective by using a quantitative, rules-based strategy that may invest in a combination of equities, volatility “VIX” related instruments, and money market instruments.
- PlowShares Commodity Rotation Portfolio: This ETF seeks to achieve capital appreciation through an active, quantitative, rules-based strategy designed to capture profits from rising or declining price trends in commodity markets. The fund’s methodology will focus on commodities which are deemed to exhibit powerful relative strength characteristics (see SEC filing).
The issuer behind the popular AlphaDEX family of products, First Trust, is planning to beef up its lineup with seven country specific ETFs. Each of the proposed funds will feature an expense fee of 0.80%:
- First Trust Germany AlphaDEX Fund
- First Trust Canada AlphaDEX Fund
- First Trust Australia AlphaDEX Fund
- First Trust United Kingdom AlphaDEX Fund
- First Trust Taiwan AlphaDEX Fund
- First Trust Hong Kong AlphaDEX Fund
- First Trust Switzerland AlphaDEX Fund
The firm is also planning on two-small cap ETFs (see SEC filing):
- First Trust Emerging Markets Small Cap AlphaDEX Fund: This ETF tracks a modified equal-dollar weighted index designed by S&P to objectively identify and select securities from the S&P Emerging Markets Small Cap BMI Index.
- First Trust Developed Markets ex-U.S. Small Cap AlphaDEX Fund: This ETF tracks a modified equal-dollar weighted index designed by S&P to objectively identify and select securities from the S&P Developed Markets Small Cap BMI Index.
All of the proposed First Trust ETFs will employ the AlphaDEX strategy, which is a quantitative indexing methodology that seeks to generate extra return relative to traditional market cap-weighted products by employing an active security selection process.
FlexShares, which debuted its first products in September 2011, is planning on expanding its lineup with an international equity ETF (see SEC filing):
- FlexShares Morningstar Developed ex-U.S. Markets Factor Tilt Index Fund (NYSEARCA:TLTD): This ETF is designed to provide broad exposure to the global developed equities market, excluding the United States, with a weighted tilt toward small cap and value stocks. Under normal circumstances the fund will invest at least 80% of its total assets in American Depository Receipts (ADRs) and Global Depository Receipts (GDRs).
Disclosure: No positions at time of writing.
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