As far as ETF launches go, this year has been pretty active so far. Through the end of April, ETF issuers unveiled 62 new products—slightly less than the 69 ETFs that had launched at this time last year.
Odds are that 2017 won't end up as a record year when it comes to the number of launches (that title currently belongs to 2011, with its 308 launches), but there are more than enough products coming out that at least a few are bound to catch an investor's eye.
Within this year's new ETFs, there have been plenty of solid offerings. From cheaper versions of existing funds to socially responsible funds of all stripes to fresh smart-beta funds, investors have a lot of new ETFs they can consider. But among those, only a handful has been novel and compelling enough to really spark my interest.
Fully conceding that "interesting" is a subjective term, here are the four ETF launches that have stood out the most to me:
SPDR Long Dollar Gold Trust (GLDW)
There's a big market for gold among investors. They like to use gold ETFs to hedge all manner of concerns―from economic to geopolitical. Inflows into established gold funds were at record levels last year, but gold prices didn't see the pop one might expect.
The culprit? The U.S. dollar, which hit a 14-year high as recently as January. As the greenback has surged during the past three years, it's weighed on the yellow metal, nipping gold rallies in the bud. Enter the SPDR Long Dollar Gold Trust (GLDW).
GLDW attempts to solve gold's dollar problem by taking a long position in the buck on top of an underlying long position in physical bullion. If the dollar rises, the ETF's currency position helps offset any resulting potential losses in gold.
That's the perfect exposure for investors who want to express a bullish view on gold while expecting that the U.S. dollar will increase in value. For others who expect the dollar to decline, plain-vanilla gold ETFs are the better bet. In any case, GLDW is a much-needed product that gives investors added flexibility when it comes to gold exposure.
The fund, which launched on Jan. 27, has a 0.50% expense ratio and $26.9 million in assets.
Global X Founder-Run Companies ETF (BOSS)
The Global X Founder-Run Companies ETF (BOSS) is in the vein of other products we've seen in the past that hold companies based on corporate actions or corporate structure. Sometimes it’s insider buying, sometimes it’s buybacks, sometimes it’s share splits. In the case of BOSS, the fund holds shares of companies that are led by a CEO who founded the firm.
According to the issuer website, "founder/CEOs had 10 times higher ownership in their companies than the average S&P 500 CEO. This ... results in different incentives for founder/CEOs when compared to ‘professional CEOs’ who join companies at a later stage of a company’s life."
Additionally, "founder-run companies exhibit higher levels of innovation. These companies generate 31% more patents than the average company in the S&P 500, demonstrating a strong commitment to developing new products and technologies."
On the surface, this methodology seems compelling, but as always, the proof will be in the performance. The fund holds 100 companies and is equal-weighted. As one might expect, the top sector is technology, with a 26.6% weighting. That's followed by financials, with a 21.1% weighting; and health care, with a 19.7% weighting.
The fund, which was launched Feb. 13, has a 0.65% expense ratio and $2.3 million in assets.
Global X U.S. Infrastructure Development ETF (PAVE)
Infrastructure has been a major theme over the past year. It was a big talking point in the lead-up to the 2016 U.S. presidential election, with both Donald Trump and Hillary Clinton promising a big boost in spending on America's roads, bridges, airports and tunnels.
Earlier this year, President Trump told Congress that he would propose a $1 trillion infrastructure spending bill, the largest ever. For investors, such vast sums of potential government spending are an opportunity, but up until recently, there hasn't been a way to directly invest in the U.S. infrastructure theme.
That changed with the launch of the Global X U.S. Infrastructure Development ETF (PAVE), the first fund that targets U.S. infrastructure companies specifically. Unlike competing infrastructure ETFs, which are global in scope, PAVE holds only companies that derive more than 50% of their revenue from the U.S.
According to the issuer website, PAVE invests in "companies involved in the construction and engineering of infrastructure projects, the production of raw materials, composites and products used in building infrastructure projects, producers and distributors of heavy construction equipment, and companies engaged in the transportation of materials used in infrastructure projects."
The fund, which launched March 6, has a 0.47% expense ratio and $6.5 million in assets.
Active Alts Contrarian ETF (SQZZ)
The actively managed Active Alts Contrarian ETF (SQZZ) was slow out of the gate. It had a huge pile of cash and not enough exposure to the highly shorted stocks that it's supposed to buy. That's changed in the last several weeks.
SQZZ still has a big chunk of cash, but it’s added sizable positions to stocks with large short positions, such as Iridium Communications, Chesapeake Energy, Cheesecake Factory and Titan Machinery. The hope is that some of these highly shorted stocks will get a nice pop from a "short squeeze" fueled by a positive catalyst.
It's a cool concept, but ultimately depends on the ETF manager's ability to execute the strategy with timely buys and sells.
The fund launched March 21, has a 1.95% expense ratio and $1.3 million in assets.
At the time of writing, the author held none of the securities mentioned. Contact Sumit Roy at [email protected].