Index Universe's Weekly ETF Review, February 3-9

Includes: FFA, FVD, FVL, INP, RWX
by: IndexUniverse

No new listings?  Can it be?  The ETF industry takes a break for a week…


Get Away Clean

…but only a week.

As mentioned previously, First Trust (NYSE: FFA) will roll out two new ETFs on Valentine’s Day: the First Trust NASDAQ Clean Edge U.S. Liquid Series Trust (NDAQ: QCLN) and First Trust NASDAQ-100 Ex-Technology Sector Index Fund (NDAQ: QQXT).

For more details on the funds, see our earlier coverage.

In a twist, First Trust will also roll out a Unit Investment Trust [UIT] version of the Clean Edge fund. The UIT will function as an actively screened version of the ETF; First Trust will choose stocks within the index that it thinks will beat the market.  Investors will pay a hefty 3.95 percent sales charge for the service, compared to just 60 basis points for the straight ETF.


Three Good Ones From First Trust

First Trust’s eclectic line-up of exchange-traded funds can be hit-or-miss, but the three new funds filed with the SEC last week include a number of possible winners.

First Trust laid out plans to launch the following funds:

First Trust ISE-Revere Natural Gas Index Fund (AMEX: FNG): This ETF track the recently ISE-Revere Natural Gas Index, an equal-weighted bogie consisting of 30 companies that derive a significant portion of their revenue from natural gas.  The index is quantitatively screened to select companies with good value characteristics and the potential to outperform the market.

See’s initial coverage of the underlying index here.

It’s worth noting that Barclays Global Investors has filed for an ETF tied to the price of natural gas futures, creating a potential arbitrage play between equity- and futures-based exposures.

First Trust ISE Water Index Fund (AMEX: FWT): This fund will track the ISE Water Index, a cap-weighted index of (currently) the 36 largest companies that derive the bulk of their revenue from the potable water and wastewater indexes.

First Trust Chindia Index Fund (AMEX: FCI): Introducing a new word to the investing lexicon, the “Chindia” fund tracks the performance of 40 Chinese and Indian companies with American Depository Receipts trading on U.S. exchanges. While the ADR exposure may not be ideal, the fund will no doubt appeal to individual investors hot to access these hot markets.  There’s no word yet on the balance of China vs. India weighting.

All funds will list on the American Stock Exchange. Expense ratios have not been disclosed.

The prospectus is available here.

First Trust REIT

Hopping – perhaps a bit late – on the real estate bandwagon, First Trust has also filed for a new ETF tied to the S&P REIT Index.  The First Trust S&P REIT Index Fund (AMEX: FSR) will track an index that includes virtually all U.S.-listed REITs.

One group sure to be worried about the filing is Wells Asset Management, which runs a fund tied to the same index.  First Trust hasn’t disclosed its expense ratio yet, but I’m guessing it will be more than a smidge lower than the Wells S&P REIT Fund (WSPBX), which charges 1.74 percent and an incredible 5 percent load.

The prospectus is available here.

Almost Another

It’s not official yet, but First Trust has made plans to convert another closed-end fund to ETF-status. The board of directors for the $280 million First Trust Value Line 100 Fund (AMEX: FVL) voted to transition the fund to ETF-status, as a way of eliminating the 8-15 percent discount to net asset value [NAV] that has historically plagued the fund. Shareholders have until March to approve the deal, but the fund is anticipating a “yes” vote: FVL shares jumped 6 percent on the news, all but eliminating the NAV discount before anything was made final. First Trust says the expense ratio on the fund will be reduced.

For more, see’s recent coverage.

The new prospectus is available here.

Recently Listed ETFs

The SPDR MSCI ACWI ex-U.S. ETF (AMEX: RWX) and iPath India ETN (NYSE: INP) are turning into powerhouse funds, gather $71.9 million and $42.9 million in assets last week, respectively. Other recently launched funds – including the ProShares sector funds, HealthShares and iShares fixed-income – are struggling to gain assets.

Meanwhile, the pain continues at the First Trust Value Line Dividend Index Fund (AMEX: FVD), the converted closed-end fund, which lost $31 million on the week. It has now lost nearly half its assets since converting from a closed-end fund to an ETF in December 2006.