AROUND THE WORLD OF ETFs

December 30, 2011

First-Ever Copper ETF Debuts
United States Commodity Funds launched the first U.S. ETF to invest in copper futures when it rolled out its United States Copper Index Fund (NYSE Arca: CPER) in November. The product carries an expense ratio of 0.95 percent.

The fund features an unusual methodology designed to alleviate the effects of contango, generally investing in two nearer-month contracts displaying the greatest degree of backwardation, but adding a third contract expiring significantly further out on the futures curve when the market slips out of backwardation.

There were already two ETNs available that covered the copper futures market, but CPER is the first product to do so utilizing the ETF structure.

New iShares Target Low Volatility
In late October, BlackRock’s iShares unit debuted four international ETFs targeting low-volatility stocks.

The four new funds use MSCI indexes that are effectively subsets of four broad-based MSCI indexes that have been screened to select the stocks that bounce around in price a bit less than the rest of the components in the broad indexes. Each of the minimum-volatility ETFs applies a rules-based methodology to determine the weight of the securities based on risk, iShares said in regulatory paperwork it filed earlier this year.

The four funds and their expense ratios are:

  • iShares MSCI USA Minimum Volatility Index Fund (NYSE Arca: USMV), 0.15 percent
  • iShares MSCI EAFE Minimum Volatility Index Fund (NYSE Arca: EFAV), 0.20 percent
  • iShares MSCI All Country World Minimum Volatility Index Fund (NYSE Arca: ACWV), 0.35 percent
  • iShares MSCI Emerging Markets Minimum Volatility Index Fund (NYSE Arca: EEMV), 0.25 percent

 

Global X Launches Social Media Fund
Global X, a firm known for its niche sector ETFs, debuted a social media ETF in mid-November.

The Global X Social Media Index ETF (Nasdaq GM: SOCL) is the first portfolio allocated entirely to social media, tracking the 25-security free-float, market-capitalization-weighted Solactive Social Media Index. It comprises companies involved with social networking, file sharing and other Web-based applications. SOCL comes with a net expense ratio of 0.65 percent.

The fund’s top holdings at launch included Tencent Holdings, Sina Corp, DeNA Co. and NetEase.com. China represented about 37 percent of the index, followed by the U.S. at 26 percent and Japan at 20 percent.

Pimco Rolls Out Country-Specific Bond ETFs
During the first half of November, Pimco launched a series of country-specific, fixed-income ETFs. Each of the funds targets local-currency, investment-grade debt issued by a developed market that has weathered the recent economic downturn fairly well in relation to other developed markets.

The funds include the following:

  • Pimco Australia Bond Index Fund (NYSE Arca: AUD)
  • Pimco Canada Bond Index Fund (NYSE Arca: CAD)
  • Pimco Germany Bond Index Fund (NYSE Arca: BUND)

Each charges an expense ratio of 0.45 percent.

 

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