ETF Watch: July 25–August 7

 |  Includes: BWX, LVL, MES
by: IndexUniverse

By Heather Bell


New Market Vectors ETF Tracks GCC Markets

A third exchange-traded fund investing in Middle Eastern oil kingpins is now out, offering a more concentrated and a bit pricier portfolio.

The Market Vectors Gulf States Index ETF (NYSE: MES) launched in late July. It tracks a Dow Jones index of public companies headquartered or doing most of their business in Gulf Cooperation Council countries.

The GCC was set up in 1981 both as an economic alliance as well as a way for the six member nations to protect themselves against geopolitical threats in the region. Each also endorses free-trade policies and has set up a common marketplace to exchange goods and services.

As of July 10, the ETF's benchmark included five GCC countries: Kuwait (52.3%); United Arab Emirates (25.8%); Qatar (14.9%); Oman (4.4%) and Bahrain (2.6%). Saudi Arabia, a driving force behind formation of the GCC, was not listed in the index at that time because it is not considered to be open to foreign investment. The Dow Jones Global Titans GCC 40 Index tracks 40 companies in the GCC using a modified market-cap size weighting methodology.

MES charges an annual net expense ratio of 0.98%.


BGI Plans International Treasury ETFs

Barclays Global Investors is once again seeking to expand its fixed-income offerings–this time with a pair of ETFs tracking international treasury bonds. There’s not a lot out there in the way of international fixed-income ETFs.

The iShares S&P/Citigroup International Treasury Bond Fund will track an index that covers treasury bonds denominated in local currencies from 19 different developed markets excluding the U.S. Aside from Japan and Canada, all of those countries are located in Europe.

The index’s component bonds must have a remaining maturity of more than one year and be weighted according to market value and the outstanding debt of the issuing country–countries with more debt outstanding are weighted lower than countries with less debt outstanding.

A second ETF in registration, the iShares S&P/Citigroup 1-3 Year International Treasury Bond Fund, follows a similar methodology but limits its components to those with maturities between one and three years.

State Street has a similar fund, the SPDR Lehman International Treasury Bond ETF (AMEX: BWX), that tracks an index from Lehman Brothers.


Claymore Seeks To Change LVL’s Benchmark

Claymore has filed with the SEC to change the benchmark for the Claymore/BBD High Income Index ETF (AMEX: LVL), effective September 30. The new benchmark would be from Standard and Poor’s and the fund’s new name would be changed to the Claymore/S&P Global Dividend Opportunities Index ETF.

Currently, LVL tracks an index provided by Benchmarks By Design that tracks up to 150 U.S.-listed securities with high dividend yields, including stocks, ADRs, REITs, MLPs and preferred stock. The new, proposed benchmark tracks a list of 100 high-yielding stocks and ADRs drawn from the securities trading on the exchanges of the 34 countries included in the S&P/Citigroup Broad Market Index.