2018's New ETF Entrants

November 29, 2018

[This article appears in our December 2018 issue of ETF Report.]

 

During the first 10 months of 2018, we saw a steady stream of newcomers to the space in the form of issuers, brands and sponsors. We’ve listed those new entrants in the following pages, including their number of listed funds, their date of market entry, their assets under management, their website and a brief description.

 

 

Affinity is another newcomer brand, which issued its first ETF through Regents Park Funds. The Affinity World Leaders Equity ETF (WLDR) is a rather complex multifactor fund that covers developed markets and incorporates risk management in its methodology. Affinity Investment Advisors is a primarily active shop that focuses on earnings and valuation in its approach.

 

Headquartered in Kansas City, Missouri, asset manager American Century Investments has moved into the ETF space this year in a very determined way, launching five funds. These funds include active fixed-income and smart-beta equity strategies, with the American Century Diversified Corporate Bond ETF (KORP) and the American Century STOXX U.S. Quality Value ETF (VALQ) both rolling out in January.

 

Breakwave Advisors is a commodity trading advisor (CTA) that specializes in shipping and freight investments, so it’s no wonder it put its name on the Breakwave Dry Bulk Shipping ETF (BDRY) from issuer ETF Managers Group. BDRY invests in dry bulk freight futures, and Breakwave serves as its CTA. Although the fund has less than $3 million in assets, it qualifies as one of the more interesting launches of 2018.

 

Cboe Vest Financial is an asset management subsidiary of Cboe Global Markets that specializes in options strategies. Cboe Global Markets is also the parent company of ETF. com. Cboe Vest launched its first ETF, the Cboe Vest S&P 500 Dividend Aristocrats Target Income ETF (KNG), in March; the fund has an options overlay incorporated into its investment approach. Cboe Vest currently has multiple additional ETFs in registration with the SEC.

 

Defiance ETFs is an issuer that combines disruptive technology exposure with index-based investment approaches in its quest to provide retail investors with investment opportunities previously only available to larger investors. The Defiance Future Tech ETF (AUGR) was the firm’s first fund, launching in early August. It focuses on companies that develop and implement augmented and virtual reality technology. The firm is based in New York City.

 

Distillate Capital Partners launched its first ETF, the Distillate U.S. Fundamental Stability & Value ETF (DSTL), in late October. The issuer focuses on the value and quality factors, and on exploiting behavioral biases in its strategies. It also incorporates risk control measures into its approach. The issuer is affiliated with the advisory firm of the same name.

 

Impact Shares is an issuer focused on socially responsible investing, but with a twist. The firm targets specific causes in its ETFs, and partners with nonprofits that are leading supporters of those targeted causes, relying on their guidance to create indexes of companies that support those causes. In July, it launched the first ETF to focus on racial equality, the Impact Shares NAACP Minority Empowerment ETF (NACP).

 

Innovation Shares as a brand is focused on themes that investors are interested in but can’t easily access. Its indexes incorporate artificial intelligence and natural language processing into their methodologies to ferret out the companies that offer access to their targeted themes. Its first fund, the Innovation Shares NextGen Protocol ETF (KOIN), launched at the end of January and was one of the first ETFs to focus on blockchain technology.

 

Insight Shares is another label dedicated to socially responsible investing with a cause-based ethos, and its funds are issued by UBS. The firm’s first ETF, the InsightShares LGBT Employment Equality ETF (PRID), launched in January, and targets companies whose employment policies support the LGBT community. Its methodology is based on standards set forth by the Human Rights Campaign.

 

LeaderShares, partnered with issuer Redwood Asset Management, debuted in early October with the launch of the LeaderShares AlphaFactor U.S. Core Equity ETF (LSAF), a fund with a complex multifactor methodology. The firm espouses a differentiated quantitative systematic approach to investing that seeks to avoid the market distortions caused by investors piling into newly popular smart-beta strategies.

 

Marblehead, Massachusetts-based Little Harbor Advisors is a quantitative investment boutique that seeks to provide investment solutions for financial professionals and issued its first fund in April. The LHA Market State U.S. Tactical ETF (MSUS) relies on artificial intelligence to invest in a combination of large-cap stocks and futures contracts via a strategy designed to minimize losses. The fund is actively managed.

 

Metaurus Advisors is an asset manager that seeks to provide financial solutions that aren’t constrained by asset class or geography. It made its ETF industry debut with the launch in February of the U.S. Equity Ex- Dividend Fund-Series 2027 (XDIV) and the U.S. Equity Cumulative Dividends Fund- Series 2027 (IDIV), two funds that track the price return and cash dividends, respectively, of the S&P 500 Index via futures contracts.

 

The Motley Fool website and organization has long been known as a source of information for retail investors, but this year, Motley Fool Asset Management entered the ETF space with the Motley Fool 100 Index ETF (TMFC), launched via plug-and-play advisor RBB Fund, in late January. Motley Fool leveraged its analysis of U.S. equities to create the index underlying TMFC.

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