AROUND THE WORLD OF ETFS

March 02, 2007

 

IndexIQ: Indexing Intangibles

In one of the more unusual ETF filings in recent months (and that's saying something), a group called IndexIQ has filed for 20 new ETFs tied to "intangible" indexes, grouping things like the "Most Innovative," "Most Powerful" and "Most Productive" companies. IndexIQ says these intangible attributes "too often are overlooked in equity analysis, but represent many of the strongest drivers of corporate growth and equity returns." The idea is similar to the "intellectual property" indexes developed by Ocean Tomo, one of which serves as the basis for an ETF from Claymore.

There is no word yet on expense ratios or on where the new ETFs will be listed.

Revenue Weighting

VTL Associates, a newcomer on the ETF stage, filed papers with the SEC for the right to launch three revenue-weighted ETFs:

TIGERS Revenue-Weighted Large Cap Index Fund
TIGERS Revenue-Weighted Mid Cap Index Fund
TIGERS Revenue-Weighted Small Cap Index Fund

The funds represent a new twist on the "fundamental indexing" theory advanced by Rob Arnott's Research Affiliates (RAFI). Unlike Arnott's famous RAFI indexes, however, which use a combination of four fundamental factors, VTL focuses on just one: revenues. The company believes that revenues are the fairest and least corruptible "fundamental" measure, and that using revenue-weighting leads to balanced indexes that don't unfairly bias against certain sectors. Not coincidentally, it also creates indexes with strong backtested performance.

The new TIGERS funds will use the same securities that are in the S&P 500, S&P MidCap 400 and S&P SmallCap 600 indexes. The large-cap fund will charge 50 basis points in annual expenses, while the mid-cap and small-cap funds will charge 55 basis points. Tickers are not available at this time. For more, see the article by Vincent Lowry in this issue of JoI.

Healthshares 20

Almost a year ago, a group called Ferghana-Wellspring filed papers with the SEC for the right to launch 12 disease-focused ETFs. The idea for the funds was to track the performance of companies involved in a certain area of medical research: say, "cancer," or "dermatology."

Many people dismissed the funds as too narrowly focused, and when no new news was heard about the products, most observers wrote them off.

Well, it looks like they were wrong. Ferghana-Wellspring has refined, expanded and rebranded its filing: the group recently filed papers with the SEC for the right to launch 20 "Healthshares" ETFs. The ETFs will take disease-specific, category-focused and regional approaches to slicing up the health care industry. The filing includes 17 disease- and technology-focused ETFs, as well as funds targeted at Asian Health, European Drugs, European Medical Products and a health care composite that combines the other 19 funds.

The funds will list on the NYSE, and expense ratios will range from 75 to 95 basis points.

ETF Lifecycle

A group called TDAX Funds filed papers to launch five "lifecycle" ETFs based on proprietary indexes from Zacks. The new funds are being billed as "Independence Shares," and are:

Zacks 2010 Lifecycle Index
Zacks 2020 Lifecycle Index
Zacks 2030 Lifecycle Index
Zacks 2040 Lifecycle Index
Zacks In-Target Lifecycle Index

Like all lifecycle funds, these funds offer balanced exposure to different asset classes—stocks, bonds, international stocks, REITs, etc. These particular indexes rely on a Zacks methodology that uses black-box quant strategies in an attempt to outperform the market.

The "In-Target" fund takes a general approach, creating a portfolio of securities designed to fit the needs of most investors.

There is no word yet on expense ratios or tickers.

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