Around The World Of ETFs

June 22, 2009

PowerShares Closes 19 Funds

Invesco PowerShares closed 19 of its ETFs, a dozen of which are based on fundamental indexes created by Rob Arnott’s Research Affiliates. Their last day of trading was May 18.

The 12 FTSE RAFI ETFs included nine U.S. sectors and three international portfolios. The group also included five of the firm’s “Dynamic”-branded ETFs, which are based on complex quantitative indexes calculated using fundamental, momentum and risk factors. The remaining two ETFs marked for termination cover high-dividend stocks and international private equity companies.

PowerShares says it arrived at its decision based on asset levels, the funds’ lengths of time on the market and the potential for future growth, among other factors.

Grail Enters ETF Arena With Active Fund

Grail Advisors launched its first ETF in early May. The new fund is the first to use a team of active managers implementing traditional qualitative stock-picking processes.

The Grail American Beacon Large Cap Value ETF (NYSE Arca: GVT) is managed by a trio of veteran mutual fund and institutional subadvisers: Brandywine Global Investment, Hotchkis and Wiley Capital Management, and Metropolitan West Capital Management.

Combined, the new ETF’s aim is to outperform the Russell 1000 Index. However, it won’t track any specific benchmark when selecting its names. GVT will publish its full portfolio on a daily basis, offering complete transparency into the fund holdings. Of course, because it uses multiple subadvisers, no single subadvisers will be giving away their full strategy; it will be mixed with the other positions.
The fund charges 0.79 percent in annual expenses.

Emerging Markets Currency ETF Debuts

In early May, WisdomTree added another ETF to its lineup of actively managed currency funds.

The WisdomTree Dreyfus Emerging Currency Fund (NYSE Arca: CEW) provides exposure to a wide range of emerging market currencies. Those include: the Brazilian real, Chinese yuan, Chilean peso, Indian rupee, Israeli shekel, Mexican peso, Polish zloty, South African rand, South Korean won, Taiwanese dollar and Turkish new lira.

The firm already has eight currency ETFs, all but one of them marketed under the “WisdomTree Dreyfus” brand. This is the first of its funds to include multiple currencies bundled together. It charges an expense ratio of 0.55 percent.

Van Eck Launches Brazilian Small-Cap ETF

Van Eck Global expanded its suite of Market Vectors ETFs in mid-May with the launch of the Brazil Small-Cap ETF (NYSE Arca: BRF), the first Brazilian small-cap ETF available in the world.

The fund invests in Brazil-listed companies with market capitalizations between $250 million and $3.8 billion. At launch, the BRF fund held 52 positions. On an industry basis, its heaviest weights were in household durables (15.6 percent), food products (9.2 percent), specialty retail (7.8 percent), and paper and forestry products (7 percent).

The fund charges 0.73 percent in expenses.

Direxion Rolls Out Treasuries Triple Plays

Late April saw the launch of four leveraged and inverse ETFs tied to Treasuries. The four new DirexionShares 3x ETFs are leveraged bull and bear index-based portfolios that try to either provide 300 percent of the daily performance or 300 percent of the inverse of the daily performance of the NYSE Current 10- and 30-Year U.S. Treasury indexes.

The new Direxion ETFs include the following:

• Direxion Daily 10-Year Treasury Bull 3x Shares (NYSE Arca: TYD)
• Direxion Daily 30-Year Treasury Bull 3x Shares (NYSE Arca: TMF)
• Direxion Daily 10-Year Treasury Bear 3x Shares (NYSE Arca: TYO)
• Direxion Daily 30-Year Treasury Bear 3x Shares (NYSE Arca: TMV)

Each charges 0.95 percent in annual expenses.

 

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