AROUND THE WORLD OF ETFs

August 17, 2012

 

Van Eck Acquires Australian ETF Firm
Van Eck has acquired Australian Index Investments in an apparent bet on the growth potential of Australia's ETF markets. Terms weren't disclosed.

Australian Index Investments, renamed Market Vectors Australia after the transaction, currently oversees close to AUD $30 million in ETF assets under management, Van Eck said in a June press release.

Market Vectors Australia will continue to market and dispense ETFs in the Australian market. Those efforts will include the Sydney-based Australian unit's six existing sector-focused ETFs. The company is also retaining its staff and Chief Executive Officer Annmaree Varelas, Van Eck said.

As of now, the Australian ETF market—with 70 ETFs and about $5 billion in assets—is in its infancy compared with markets in Europe and the U.S.

Global X Unveils Hedge Fund ETF
Global X rolled out an ETF targeting the top holdings of leading hedge fund managers in early June. The Global X Top Guru Holdings Index ETF (NYSE Arca: GURU) invests in top U.S.-listed equity positions reported in 13F regulatory filings made by a select group of hedge funds, as identified by the fund's Germany-based index provider Structured Solutions.

The index's components are selected based on 13F filings, which hedge fund managers submit to the Securities and Exchange Commission 45 days after the end of each quarter. Global X noted in GURU's registration statement that as of April 30, the fund's underlying index included 51 constituents, drawn from the filings of a pool of 68 different hedge funds. The index methodology screens out hedge funds that have less than $500 million in assets or high turnover rates in their equity holdings.

GURU comes with an annual expense ratio of 0.75 percent, according to the fund's latest prospectus.

UBS Adds To Etracs Lineup
UBS launched two leveraged dividend-focused ETNs in late May.

The Etracs Monthly Pay 2x Leveraged Dow Jones Select Dividend Index ETN (NYSE Arca: DVYL) and the Etracs Monthly Pay 2x Leveraged S&P Dividend ETN (NYSE Arca: SDYL) are similar in that they both double the performance of their respective benchmarks. DVYL charges an annual expense ratio of 0.35 percent, while SDYL costs 0.30 percent.

Although both DVYL and SDYL target companies that have high and growing dividends and weight those companies by their indicated annual dividends, there are some key differences in their index methodologies.

DVYL is linked to the Dow Jones U.S. Select Dividend Index, which only looks back at five years' worth of a stock's dividend history. By comparison, the S&P High Yield Dividend Aristocrats Index underlying SDYL goes back 25 years into a stock's dividend performance to select its securities. Also, SDYL's index caps individual components at a 4 percent weighting, while DVYL's index caps them at 10 percent.

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