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By Robert Goldsborough

Over the past 12 months, more than 240 exchange-traded products have been launched, representing almost one sixth of all exchange-traded funds and exchange-traded notes that currently trade.

Issuers continue to pursue various corners of the market, delving more deeply into niche strategies or at times, launching "me-too" products aimed at mimicking the successful launches.

Unquestionably, the launches that have resonated with investors in recent months have been those focused on lower-volatility stocks, dividends (and other forms of high payouts), high-yield debt, and emerging-markets debt.

Morningstar's ETF research team has identified five favorite ETF launches in the past year. We believe these ETFs represent the best in innovation and the best use of the ETF vehicle and believe they all should be at the front of investors' minds as they consider various exposures. All of these funds are relatively inexpensive, offer access to a useful asset class or strategy, and are relatively distinctive.

A word of caution: These five launches by definition are not comprehensive, meaning that they do not cover all asset classes or strategies out there. As always, investors should use these funds in conjunction with other arrows in their quiver--other ETFs, mutual funds, closed-end funds, or individual stocks--to gain the exposure they are seeking. And in some cases, the funds below are best used as specialty satellite holdings, or in a tactical manner, as part of a diversified portfolio.

PIMCO Total Return ETF
For our money, PIMCO Total Return ETF (NYSEARCA:BOND) is the most game-changing new launch in the past 12 months. What's not to like? BOND is an actively managed, low-cost (0.55% expense ratio) ETF version of PIMCO founder and chief investment officer Bill Gross' wildly popular PIMCO Total Return Institutional (PTTRX) mutual fund. The PIMCO Total Return strategy in an ETF wrapper shows that popular, actively managed open-end mutual funds can be successful as ETFs (BOND now has more than $1.5 billion in assets), and it's compelling because it gives investors more flexibility. Investors now have more ways to tap Bill Gross' genius. However, we favor the ETF version for the simple fact that the ETF portfolio is far more nimble (around 300 holdings versus 19,000-plus in the mutual fund). That means that PIMCO's best individual bond ideas can be bought with large percentage allocations, making BOND effectively Gross' "best-ideas" list. And the ETF's performance out of the gate has shown this. One final note that should be somewhat reassuring to investors is that this ETF does not use swaps or derivatives, which introduce counterparty risk.

iShares MSCI Minimum Volatility ETFs
iShares' foreign minimum volatility ETFs, iShares MSCI All Country World Minimum Volatility (NYSEARCA:ACWV), iShares MSCI Emerging Markets Minimum Volatility (NYSEARCA:EEMV), and iShares MSCI EAFE Minimum Volatility (NYSEARCA:EFAV), are great products for investors interested in benefiting from the research that shows that during the past 50 years, the least-volatile stocks have performed about as well as the market, but with far less risk. Low-volatility stocks have outperformed on a risk-adjusted basis in most international stock markets studied, too, and as a result, these three ETFs open up easy and inexpensive ways for investors to tap these corners of the market. It's true that low-volatility strategies can underperform during bull markets, but we like these funds' low price tags and the fact that investors can expect good risk-adjusted returns over decade-long time horizons. The ETFs' names are fairly self-explanatory in terms of describing the regions of the world that they cover; the all-country world ETF holds companies from all around the globe, while the emerging-markets ETF holds firms based in emerging-markets countries and the EAFE fund covers companies domiciled in rich-world geographies in Europe, Australasia, and the Far East. All three ETFs hold between 170 and 275 companies, ensuring a level of diversification. ACWV charges a competitive 0.35%, while EFAV costs just 0.20%. EEMV's 0.25% expense ratio is just a shade above Vanguard MSCI Emerging Markets' (NYSEARCA:VWO) market-leading 0.20% price tag.

PIMCO Global Advantage Inflation-Linked Bond Strategy
PIMCO Global Advantage Inflation-Linked Bond Strategy (NYSEARCA:ILB) is another actively managed PIMCO ETF; it invests in developed- and emerging-markets inflation-linked bonds. Managed by PIMCO's head of its real return portfolio management team, ILB is an appealing option as a core holding, and it's the only such product currently trading that is actively managed. The ETF's bond's holdings are linked to changes in their respective local inflation-tracking benchmarks (such as the Consumer Price Index) of the sponsoring foreign governments, and as a local inflation index rises, the principal of that country's individual bonds is adjusted upward. The coupon on the bond then is paid on the higher principal, which boosts the overall effective yield of the security. A caveat for investors counting on steady distributions for income: The process works in reverse, too, so any decrease in the local inflation index will result in a decrease in the bond's principal. Also, the fund does not hedge its foreign-currency exposure, meaning that foreign exchange gains and losses are reflected in the distribution. Unlike BOND, PIMCO does not offer this same strategy in a mutual fund, making ILB's strategy a unique one. ILB charges a reasonable 0.60%.

MAXIS Nikkei 225 Index ETF
MAXIS Nikkei 225 Index ETF (NYSEARCA:NKY) gives U.S. investors access to a relatively unique strategy. As most know, the Nikkei 225, also known as "the Nikkei" or the "Nikkei Stock Average," is a widely quoted, price-weighted index that is often seen as a barometer of Japan's stock market. Until NKY's launch, the only Nikkei 225-based ETFs were available in Japan, and none had been denominated in U.S. dollars. NKY changed that. Investors should beware that this ETF's performance won't exactly track the Nikkei Index's performance because its returns also reflect changes in the exchange rate between the yen and the U.S. dollars. For investors interested in exposure to Japan, a market that trades below its book value and whose problems across its 20-year-plus bear market have been well documented, NKY, which charges 0.50%, is a compelling option. More established but similarly priced options with slightly different twists are the value-tilted, dividend-oriented WisdomTree Japan Hedged Equity (NYSEARCA:DXJ) (0.48% expense ratio), which hedges out the effects of fluctuations between the U.S. dollar and the Japanese yen, and the market-capitalization-weighted iShares MSCI Japan Index (NYSEARCA:EWJ) (0.51%), which does not hedge its foreign currency exposure.

iShares Floating Rate Note Fund
iShares Floating Rate Note Fund (NYSEARCA:FLOT) launched slightly more than a year ago, so we technically are cheating by including this fund in our list. However, the ETF, which holds investment-grade, floating-rate bonds, remains one of our favorites. The fund offers investors the opportunity to benefit from floating-rate bonds. Unlike traditional fixed-rate debt, floating-rate bonds see their coupon payments "float," based on wherever interest rates go. As a result, the prices of floating-rate bonds tend not to move much when interest rates change. Given this minimized price volatility, FLOT should appeal to investors, particularly in an environment where interest rates are expected to rise (and we recognize that rate increases are not imminent at this time). We like the fact that FLOT offers access to a corner of the market that generally is not easy for ordinary investors to tap. (Floating-rate bonds often do not trade publicly). And its low price tag (0.20% expense ratio) and liquidity cause us to favor this ETF over other similar launches, such as the cheaper but far smaller SPDR Barclays Capital Investment Grade Floating Rate ETF (NYSEARCA:FLRN). Another option, Market Vectors Investment Grade Floating Rate ETF (NYSEARCA:FLTR), actually launched slightly before FLOT, but FLTR also suffers from minimal assets and very thin liquidity. Still another option in this crowded field is PowerShares Senior Loan Portfolio (NYSEARCA:BKLN), which holds senior floating-rate bank loans with an average credit quality that is below investment grade. As such, BKLN also offers interest-rate adjustable exposure but with more credit risk. However, BKLN in many regards is in a different class of ETFs, given its higher (0.76%) price tag and the fact that it often is benchmarked with the many actively managed, bank-loan open-end mutual funds.

Disclosure: Morningstar licenses its indexes to certain ETF and ETN providers, including BlackRock, Invesco, Merrill Lynch, Northern Trust, and Scottrade for use in exchange-traded funds and notes. These ETFs and ETNs are not sponsored, issued, or sold by Morningstar. Morningstar does not make any representation regarding the advisability of investing in ETFs or ETNs that are based on Morningstar indexes.

Source: 5 Best ETFs Launched In The Past Year