A dozen new ETFs came to market in October, and seven bit the dust. Assets declined by 1.3% as the $18 billion of new inflows could not overcome the $49 billion of market-related losses. The listed product count now stands at 1,937 (1,749 ETFs and 188 ETNs) with $2.38 trillion of assets.
All in all, it turned out to be a relatively boring month for the industry, as many market participants seemed to be sidelined coming into the November election. Trading activity fell to $1.39 trillion, a 20% decline from September's level, and an 18% drop from October 2015.
Four of the new product introductions represent segments of the socially responsible investment universe. Oppenheimer sponsored two ESG (environmental, social, and governance) funds that will use revenue weighting instead of capitalization weighting. State Street SPDRs was behind the launch of two fossil-fuel-reserves-free funds targeting foreign developed and emerging markets.
Two launches were actively managed ETFs: Franklin Liberty Investment Grade Corporate Bond (FLCO) and Natixis Seeyond International Minimum Volatility (NYSEARCA:MVIN). However, they did not add to the actively managed fund count, as AdvisorShares EquityPro (NYSEARCA:EPRO) and AdvisorShares YieldPro (NASDAQ:YPRO) were among the closures. Assets in actively managed ETFs increased by 4.1% for the month, bucking the decline registered for the overall industry.
The 35 largest ETFs and ETNs, just 1.8% of the available products, account for more than 50% of industry assets. At the other extreme, the 1,047 (54.1%) smallest funds only account for 1% of industry assets. It is clearly an industry of "haves" and "have nots" when it comes to assets. This skew is also apparent in the stark 18X difference in the average asset level of $1.2 billion and the median asset level of just $69 million.
|October 2016 Month End||ETFs||ETNs||Total|
|Currently Listed U.S.||1,749||188||1,937|
|Listed as of 12/31/2015||1,644||201||1,845|
|New Introductions for Month||12||0||12|
|Delistings/Closures for Month||7||0||7|
|Net Change for Month||+5||0||+5|
|New Introductions 6 Months||124||7||131|
|New Introductions YTD||190||13||203|
|Net Change YTD||+105||-13||+92|
|Assets Under Management||$2,357 B||$23.2 B||$2,380 B|
|% Change in Assets for Month||-1.3%||-2.6%||-1.3%|
|% Change in Assets YTD||+12.4%||+8.4%||+12.4%|
|Qty AUM > $10 Billion||54||0||54|
|Qty AUM > $1 Billion||272||5||277|
|Qty AUM > $100 Million||827||35||862|
|% with AUM > $100 Million||47.3%||18.6%||44.5%|
|AUM Flows for Month||+$17.8 B||+$0.44 B||+$18.2 B|
|AUM Flows YTD||+$181.4 B||+$1.83 B||+$183.6 B|
|Monthly $ Volume||$1,317 B||$68.8 B||$1,386 B|
|% Change in Monthly $ Volume||-20.1%||-23.6%||-20.3%|
|Avg Daily $ Volume > $1 Billion||7||1||8|
|Avg Daily $ Volume > $100 Million||81||6||87|
|Avg Daily $ Volume > $10 Million||299||10||309|
|Actively Managed ETF Count (w/ change)||159||+0 mth||+22 ytd|
|Actively Managed AUM||$28.1 B||+4.1% mth||+22.7% ytd|
Data sources: Daily prices and volume of individual ETPs from Norgate Premium Data. Fund counts and all other information compiled by Invest With An Edge.
New products launched in October (sorted by launch date):
- Lattice Real Estate Strategy ETF (NYSEARCA:RORE) was launched on 10/4/16 and then changed its name to Hartford Multifactor REIT ETF (RORE) effective 10/24/16. It follows the Hartford Risk-Optimized Multifactor REIT Index, which tracks the performance of publicly traded U.S. REITs. It selects companies with a combination of investment factors, including high quality, high momentum, and low valuation. The ETF has an expense ratio of 0.45% (RORE overview).
- Franklin Liberty Investment Grade Corporate ETF (FLCO), launched 10/5/16, is an actively managed ETF that seeks to provide a high level of current income, while seeking preservation of capital, by investing at least 80% of its net assets in investment-grade corporate debt securities and investments. The manager may invest up to 40% of net assets in foreign securities, including those in developing markets, and up to 15% of its net assets in non-U.S.-dollar-denominated securities. Its expense ratio is capped at 0.40% (FLCO overview).
- Spirited Funds/ETFMG Whiskey & Spirits ETF (NYSEARCA:WSKY), launched 10/12/16, seeks to track the performance of the Spirited Funds/ETFMG Whiskey & Spirits Index, a modified cap-weighted index of global companies. The niche consumer-staples ETF includes core companies that are principally engaged in the production, distillation, storage, or aging of whiskey and non-core companies that derive a portion of their revenue from whiskey and spirits. WSKY has an expense ratio of 0.75% (WSKY overview).
- Elkhorn Lunt Low Vol/High Beta Tactical ETF (LVHB), launched 10/20/16, will track an index designed to tactically rotate between low-volatility and high-beta stocks in the S&P 500. Although tactical in nature, the fund will always remain fully invested. The ETF seeks to capture alpha created by the wide dispersion between low-volatility and high-beta stocks and comes with an expense ratio of 0.49% (LVHB overview).
- Deutsche X-trackers Barclays International Corporate Bond Hedged ETF (IFIX), launched 10/25/16, seeks to track the Barclays Global Aggregate Corporate Ex USD Bond Index (USD Hedged). The "international" portion of its name is misleading as the fund has 19% exposure to the U.S. and it tracks a "global" index. The ETF is currency hedged and comes with an expense ratio of 0.30% (IFIX overview).
- Deutsche X-trackers Barclays International Treasury Bond Hedged ETF (IGVT), launched 10/25/16, seeks to track the Barclays Global Aggregate Treasury Ex USD Issuer Diversified Bond Index (USD Hedged). Unlike IFIX, this ETF is "international" and holds no U.S. Treasury securities. Holdings are currency hedged, and the ETF has an expense ratio of 0.25% (IGVT overview).
- SPDR MSCI EAFE Fossil Fuel Reserves Free ETF (EFAX), launched 10/25/16, tracks an index of companies within the MSCI EAFE Index that do not own fossil-fuel reserves. The underlying index defines fossil-fuel reserves as proved and probable coal, oil, or natural-gas reserves used for energy purposes, but it does not include metallurgical, or coking, coal, which is primarily used in steel production. The ETF has its expense ratio capped at 0.20% (EFAX overview).
- SPDR MSCI Emerging Markets Fossil Fuel Reserves Free ETF (EEMX), launched 10/25/16, tracks an index of companies within the MSCI Emerging Markets Index that do not own fossil-fuel reserves. The underlying index defines fossil-fuel reserves as proved and probable coal, oil, or natural-gas reserves used for energy purposes, but it does not include metallurgical, or coking, coal, which is primarily used in steel production. The ETF has an expense ratio of 0.30% (EEMX overview).
- Natixis Seeyond International Minimum Volatility ETF (MVIN), launched 10/27/16, is an actively managed ETF using an international equity strategy that selects stocks based on risk (standard deviation) and correlations rather than investment fundamentals. It seeks to outperform the broad international equity markets, both developed and emerging, over a full market cycle while reducing risk. It holds a diversified portfolio of typically 80 to 160 low-volatility stocks that are hopefully an optimal mix. MVIN caps its expense ratio at 0.55% (MVIN overview).
- Premise Capital Frontier Advantage Diversified Tactical ETF (TCTL), launched 10/28/16, is a fund-of-funds ETF that will track the Premise Capital Frontier Advantage Diversified Tactical Index. The Index consists of an investible portfolio of ETFs with exposure to major U.S. and non-U.S. asset classes. Weightings are subject to a trend adjustment and a risk adjustment. The trend adjustment will reduce exposure to individual asset classes determined to be in a downward trend. The risk adjustment will reduce overall exposure to equity asset classes (and increase exposure to fixed-income asset classes) as the aggregate size of equity asset classes determined to be in a downward trend grows. The ETF has an expense ratio of 1.06% (TCTL overview).
- Oppenheimer ESG Revenue ETF (NYSEARCA:ESGL), launched 10/31/16, seeks to track the OFI Revenue Weighted ESG Index. It screens for companies within the S&P 500 Index that have favorable environmental, social, and governance ("ESG") practices. Selected securities are then weighted by top-line revenue. The expense ratio is capped at 0.40% (ESGL overview). Oppenheimer Global ESG Revenue ETF (NYSEARCA:ESGF), launched 10/31/16, seeks to track the OFI Revenue Weighted Global ESG Index. It screens for companies within the MSCI ACWI (All Country World Index) that have strong environmental, social, and governance (ESG) practices. It then weights each security by top-line revenue instead of market capitalization. ESGF caps its expense ratio at 0.45% (ESGF overview).
Product closures in October and last day of listed trading:
- Direxion Daily FTSE Developed Markets Bull 1.25x (NYSEARCA:LLDM) 10/7/16
- Direxion Daily FTSE Emerging Markets Bull 1.25x (NYSEARCA:LLEM) 10/7/16
- Direxion S&P 500 Volatility Response (NYSEARCA:VSPY) 10/7/16
- VanEck Vectors Gulf States (NYSEARCA:MES) 10/7/16
- VanEck Vectors Indonesia Small-Cap (NYSEARCA:IDXJ) 10/7/16
- AdvisorShares EquityPro (EPRO) 10/21/16
- AdvisorShares YieldPro (YPRO) 10/24/16
Product changes in October:
- WisdomTree Commodity Services (NYSEARCA:GCC) became a broken product when it "temporarily" suspended the ability of authorized participants to purchase creation baskets effective October 4.
- Lattice ETFs, a subsidiary of Hartford Funds, changed the names of all its ETFs from Lattice to Hartford Multifactor effective October 24.
Announced product changes for coming months:
- TrimTabs Intl Free-Cash-Flow (NYSEARCA:FCFI) will delist and close before the market open on November 1, 2016.
- Horizons ETF Management announced on November 1 that it intends to acquire the four Recon Capital ETFs (DAX, QYLD, USMR, and BMLA).
- The iShares Real Estate 50 ETF (NYSEARCA:FTY) will change its index, name, and ticker effective November 3, becoming the iShares Core U.S. REIT ETF (NYSEARCA:USRT).
- Ten iShares ETFs will undergo reverse splits effective November 7.
- Guggenheim BulletShares 2016 Corporate Bond (NYSEARCA:BSCG) and Guggenheim BulletShares 2016 High Yield Corporate Bond (NYSEARCA:BSJG) are set to mature and terminate at the end of the year. The final day of listed trading will be December 29, 2016, with the complete maturity distribution payable the following day.
Previous monthly ETF statistics reports are available here.
Disclosure: Author has no positions in any of the securities, companies, or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) is received from, or on behalf of, any of the companies or ETF sponsors mentioned.