AROUND THE WORLD OF ETFs

August 17, 2012

SSgA Debuts More Corporate Debt SPDRs
State Street Global Advisors in June launched two corporate bond ETFs—one focused on a combination of U.S. investment-grade and high-yield credits and the other focused on investment-grade corporate debt from the emerging markets.

The SPDR BofA Merrill Lynch Crossover Corporate Bond ETF (NYSE Arca: XOVR), which has an expense ratio of 0.30 percent, straddles the lower end of the investment-grade debt and the higher end of the high-yield debt categories. Its primary competitor is the iShares Baa-Ba Corporate Bond Fund (BATS: QLTB), which also charges 0.30 percent.

The SPDR BofA Merrill Lynch Emerging Markets Corporate Bond ETF (NYSE Arca: EMCD) comes with an expense ratio of 0.50 percent; its largest competitor is the actively managed WisdomTree Emerging Markets Corporate Bond Fund (Nasdaq GM: EMCB), which carries an annual expense ratio of 0.60 percent.

SOCL Adds Facebook
A week after one of the most infamous initial public offerings in history, Facebook quietly made its debut in the ETF world in late May, as the third-biggest holding of the $25 million Global X Social Media Index ETF (NYSE Arca: SOCL).

When it was added, Facebook had an 8.79 percent weighting in the fund, behind first-place LinkedIn and Tencent Holdings.

Interestingly, even before the addition, Facebook's IPO appeared to trigger a boost to SOCL's assets, driving them up from $18 million to $25 million.

However, the ETF that is really getting scrutiny with regard to Facebook is the PowerShares QQQ Trust (Nasdaq GM: QQQ). Due to a recent rule change, Facebook could be added to the fund's underlying Nasdaq-100 Index just three months after its IPO. The fund's potential weighting in that ETF is uncertain because the underlying Nasdaq index bases its weighting on the value of the shares issued, and not the value of the company.

USCF Launches First Broad Metals ETF
United States Commodity Funds in June launched the first broad futures-based metals fund that covers both precious and industrial metals. Previously, most futures-based metals ETFs and ETNs have either focused on industrial or precious metals, but not both, with a few products targeting specific metals.

The United States Metals Fund (NYSE Arca: USMI), which comes with an all-in annual cost of about 0.90 percent, has a management fee of 70 basis points, while trading commissions will max out at 5 basis points and "other" expenses won't exceed 15 basis points, according to the company.

The fund has 10 eligible metals, to which it assigns weights based on an assessment of each metal's market liquidity and overall economic importance. Those metals, which currently are traded primarily on major U.S. or U.K. exchanges, include primary aluminum, copper, nickel, zinc, lead, tin, platinum, silver, palladium and gold.

ProShares Rolls Out Bearish Euro ETF
ProShares rolled out a bearish euro play versus the dollar in late June. The ProShares Short Euro ETF (NYSE Arca: EUFX) offers the single daily inverse performance of the spot U.S. dollar price of the euro as measured by the EUR/USD cross rate published by Bloomberg at 4 p.m. every day. EUFX costs 0.95 percent.

The fund owns currency futures contracts and relies on cash instruments and U.S. Treasurys for collateral, the company said in its most recent prospectus.

With EUFX, ProShares now has five currency-focused ETFs on the market, including EUFX and two other double-exposure euro-dollar plays, as well as two yen-focused funds—one a double-exposure bullish play on the yen-dollar cross, the other a double-exposure bearish play.

 

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