Daily ETF Watch: 13 Funds Launch This Week

June 11, 2014

Five issuers are flooding the ETP market with 13 new ETFs and ETNs this week.

A total of 13 new ETPs are coming to market this week focused on equities and fixed income in a number of pockets of the developed world, with the rollouts including two “bespoke” ETNs associated with famed California-based advisor Ken Fisher.

This week’s product rollouts include six ETFs from State Street Global Advisors focused on the “quality” factor; four from iShares that are part of an expansion of its “Core” lineup of ETFs; and a trio of exchange-traded notes—two from UBS and one from Credit Suisse.

The three ETNs—including the two associated with Ken Fisher that are leveraged and focused on large-cap stocks, and a third focused on ex-energy master limited partnerships—go live today.

Year-to-date, 93 ETFs have launched or will launch, compared with 62 for the same period last year. All told, as of today exactly 1,600 ETFs are now listed in the U.S., with total assets under management just shy of an all-time high at $1.836 trillion, according to data compiled by ETF.com Analytics.

‘Bespoke’ ETNs?

The trio of ETNs—include the two Ken Fisher-related leveraged ETNs sponsored by Credit Suisse and UBS, are as follows:

The two Fisher-linked ETNs, identified with “FI” in their names, could well be set for instant success. In past ETN launches, Fisher has allocated significant client assets to the ETNs in the immediate aftermath of their launches, making those funds successful from the start.

For example, the Barclays ETN+ FI Enhanced Global High Yield ETN (FIGY) launched last May and is currently managing about $1.6 billion, thanks to the fact that FIGY was created as a bespoke product for asset manager Fisher Investments, which presumably holds most of the notes outstanding.

FIGY’s notes are unadvertised—lacking even a website—because they aren’t intended for independent investors, and neither are these new ETNs.

The third ETN, also from UBS, is:

Expense ratios were not available for the ETNs.

SSgA’s Quality ETFs

Among the launches on Thursday, June 12 are six from State Street Global Advisors that focus on “quality” stocks in various developed markets. These ETFs, which seek to isolate companies that have performed well over time and in different market conditions, come at a time when investors are wondering where growth will come from as interest rates rise from their low post-crash levels.

The new smart-beta ETFs will screen for value, low volatility and quality stocks in developed markets, and include:

  • SPDR MSCI Australia Quality Mix ETF (QAUS)
  • SPDR MSCI Canada Quality Mix ETF (QCAN)
  • SPDR MSCI Germany Quality Mix ETF (QDEU)
  • SPDR MSCI Japan Quality Mix ETF (QJPN)
  • SPDR MSCI Spain Quality Mix ETF (QESP)
  • SPDR MSCI United Kingdom Quality Mix ETF (QGBR)

Fees were not yet available for the new offerings.

 

iShares ‘Core’ Four

Thursday’s launches also include iShares’ rollouts of four brand new “Core”-type ETFs that will be part of a 10-fund expansion of the “Core” lineup of cheap ETFs that it introduced in October 2012.

The expansion of iShares’ “Core” brand, effective tomorrow, will also involve the repurposing of six existing funds. Those existing funds will mostly have lower expense ratios than previously, and together those six existing ETFs have about $5.6 billion in assets.

The 10 new Core funds—and, where applicable, their new tickers, new expense ratios and names (amended with the word “Core”)—are as follows:

U.S. Equities

  • iShares Core Dividend Growth ETF, a new fund that will begin trading on Thursday, June 12 under the symbol “DGRO” with an annual expense ratio of 12 basis points
  • iShares Core MSCI Europe ETF, a new fund that will begin trading on Thursday, June 12 under the symbol “IEUR” with an annual expense ratio of 14 basis points
  • iShares Core MSCI Pacific ETF, a new fund that will begin trading on Thursday, June 12 under the symbol “IPAC” with an annual expense ratio of 14 basis points
  • iShares Core U.S. Growth ETF (IWZ | A-90), an existing fund that will assume the new trading symbol “IUSG” on Thursday, June 12. Its expense ratio will drop at that time from 25 basis points a year currently to 9 basis points, or $9 for each $10,000 invested
  • iShares Core U.S. Value ETF (IWW | A-91), an existing fund that will assume the new trading symbol “IUSV” on Thursday, June 12. Its expense ratio will drop at that time from 26 basis points a year currently to 9 basis points
  • iShares Core High Dividend ETF (HDV | A-67), an existing fund that will continue to trade with the symbol “HDV,” but with a lower annual expense ratio of 12 basis points from 40 basis points currently

U.S. Fixed Income

  • Shares Core Total USD Bond Market ETF, a new fund that will begin trading on Thursday, June 12 under the symbol “IUSB” and with an annual expense ratio of 15 basis points
  • iShares Core U.S. Credit Bond ETF (CFT | B-89), an existing fund that will assume the new trading symbol “CRED” on Thursday, June 12. Its expense ratio will drop at that time from 20 basis points a year currently to 15 basis points
  • iShares Core U.S. Treasury Bond ETF (GOVT | A-97), an existing fund that will continue to trade with the symbol “GOVT,” but with the same annual expense ratio of 15 basis points.
  • iShares Core GNMA Bond ETF (GNMA | C-84), an existing fund that will continue to trade with the symbol “GNMA,” but with a lower annual expense ratio of 15 basis points from 25 basis points previously

Filing

Launches are not the only items dominating ETF news today.

PowerShares has put into registration an application seeking permission to launch nontransparent active ETFs, and the application seems to be the same as one based on a patent owned by New Jersey-based Precidian Investments.

It’s the fourth firm that has asked for “exemptive relief” using this concept. Those firms include iShares parent BlackRock; SSgA; Precidian itself; and now PowerShares.

None of the petitions has been approved by the Securities and Exchange Commission, but industry scuttlebutt suggests the petitions are indeed moving through the SEC bureaucracy toward approval.

PowerShares said in the filing that the concept involves a blind trust that will allow its funds’ holdings and trading activity to stay in the dark to market participants on a daily basis.

The firm said in the paperwork that the blind trust will allow its proposed funds to use proprietary investment strategies and techniques that would otherwise be exposed to the potential for “free riding” if it operated as an index ETF.

“In a typical index-based ETF, it is necessary for Authorized Participants to know what securities must be delivered in a creation or will be received in a redemption in order for the typical in-kind creation and redemption process to function,” according to the filing.

“For the Trust, however, the Authorized Participant’s knowledge of the securities comprising the portfolio of a fund is not important for purposes of creation and redemption since underlying portfolio securities are not delivered to or received by the Authorized Participant directly.”

Instead, creation units will be created solely by the deposit of cash equal to NAV, and redemptions will be capable of being liquidated for cash at values that are extremely close to NAV. The use of cash for creations, and in-kind redemption through a blind trust, preserves the integrity of the active investment strategy and eliminates any potential for “free riding,” according to the filing.

PowerShares’ proposed initial active ETF will be called the PowerShares Real Estate Securities Portfolio.

 

 

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