Around The World Of ETFs

August 25, 2009


Pimco Launches ETF, Plans More

Bond giant Pimco launched its first ETF in early June with the debut of the Pimco 1-3 Year U.S. Treasury Index Fund (NYSE Arca: TUZ). TUZ charges just 9 basis points and is the lowest-cost fixed-income ETF on the market.

In related news, Pimco also made three filings with the SEC to launch a total of 13 fixed-income ETFs, including five actively managed funds, with the rest based on indexes from Merrill Lynch.

The list of eight index-based ETFs includes the following:

• Pimco 0-1 Year U.S. Treasury
• Pimco 3-7 Year U.S. Treasury
• Pimco 7-15 Year U.S. Treasury
• Pimco 15+ Year U.S. Treasury
• Pimco 20+ Year Zero Coupon U.S. Treasury
• Pimco Broad U.S. TIPS
• Pimco Short Maturity U.S. TIPS
• Pimco Long Maturity U.S. TIPS

The list of five active ETFs includes:

• Pimco Enhanced Short Maturity Strategy
• Pimco Government Limited Maturity Strategy
• Pimco Prime Limited Maturity Strategy
• Pimco Short-Term Municipal Bond Strategy
• Pimco Intermediate Municipal Bond Strategy

No pricing was included in the prospectuses.

Russell Investments Seeks To Enter ETFs

Russell Investments has filed with the SEC for exemptions that would allow it to create actively managed and index-based ETFs.

The July 2 filing designates Russell Investment Management Company as the adviser to the funds and Russell Financial Services as the distributor. It also specifies that the funds could cover domestic stocks, international stocks or fixed income, but no individual funds were actually described in the filing.

A subsidiary of Northwestern Mutual, Russell Investments has a total of $136 billion under management.

Finally! MacroMarkets Housing ETFs Debut

MacroMarkets rolled out its long-awaited and oft-delayed home price securities on June 30.

The MacroShares Major Metro Up (NYSE Arca: UMM) and the MacroShares Major Metro Down (NYSE Arca: DMM) are designed, respectively, to deliver 300 percent of the upward and downward movements of the S&P/Case-Shiller Home Price 10 Index, the leading benchmark of residential home prices in the U.S. They are the first products that allow investors to speculate on the direction of residential home prices.

The products gain exposure to real estate prices through MacroMarkets’ unique “teeter-totter” product structure. The funds hold Treasury securities as their sole asset and shift their holdings between them according to the movements of their underlying index.

UMM and DMM carry expense ratios of 1.25 percent.

EGA Emerges With Sector ETFs

Emerging Global Advisors made its debut in the ETF arena in May with the launch of the first of its proposed emerging markets sector funds, marketed under the Emerging Global Shares name.

The New York-based firm rolled out the EGS Dow Jones Emerging Markets Energy Fund (NYSE Arca: EEO) and the EGS Dow Jones Emerging Markets Metals & Mining Fund (NYSE Arca: EMT). Both funds track 30-stock indexes provided by Dow Jones Indexes as part of its Dow Jones Titans series. A third fund, the EGS Dow Jones Emerging Markets Titans Composite Index Fund (NYSE Arca: EEG), was launched in July and tracks a 100-stock composite index that draws its components from 10 narrow sector indexes.

EEO and EMT charge an expense ratio of 0.85 percent apiece, while EEG charges 0.75 percent.

ProShares Launches First 130/30 ETF

ProShares launched the first so-called 130/30 ETF, the ProShares Credit Suisse 130/30 ETF (NYSE Arca: CSM), on July 14. As its name implies, the portfolio will try to outperform traditional long-only funds by using a combination of leverage and short-selling to achieve a portfolio that has 130 percent exposure to stocks expected to outperform the market, and 30 percent short exposure to stocks expected to trail the market. The fund tracks an index provided by Credit Suisse and charges 0.95 percent in annual expenses.

According to the firm, the new fund is the first of what will be an entire lineup of funds marketed as Alpha ProShares.

ALPS Launches Sector ETF-Of-ETFs

In early July, ALPS launched a new ETF-of-ETFs designed to provide equal-weighted exposure to the various sectors of the U.S. economy.

The new ALPS Equal Sector Weight ETF (NYSE Arca: EQL) takes an equal-weighted position in each of the nine Select Sector SPDR ETFs and rebalances that position on a quarterly basis. The fund is designed to avoid overinvesting in “bubble” sectors, such as telecom in 1999 or finance in 2007, and thereby achieve higher risk-adjusted returns.

The fund charges 0.55 percent in annual expenses, which includes the assumption of 0.21 percent in expenses for the underlying Select Sector SPDR ETFs.

Van Eck Debuts Small-Cap Brazil ETF

Van Eck Global expanded its suite of ETFs in early May with the launch of the Market Vectors 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, which is arguably a bit on the large side. However, compared with the dominant iShares MSCI Brazil ETF (NYSE Arca: EWZ), BRF has a pronounced small-cap tilt, with its weighted average market cap of $1.4 billion versus EWZ’s $28.4 billion.

The fund charges 0.73 percent in expenses.

iShares Launches Emerging Market Infrastructure ETF

Barclays Global Investors launched a new emerging market infrastructure ETF on June 19. The iShares S&P Emerging Markets Infrastructure Index Fund (Nasdaq: EMIF) holds a portfolio of 30 large-cap emerging market infrastructure companies focused in markets like China, Brazil and Argentina.

It charges a management fee of 0.75 percent.

First Islamic ETF Debuts In U.S.

July 1 saw the launch of the first U.S. ETF to follow an investing style tied to Islamic beliefs.

The JETS Dow Jones Islamic Market International Index Fund (NYSE: JVS) from Javelin Investment Management tracks an index of 100 companies outside the U.S.

The ETF charges an expense ratio of 0.60 percent. Following Shariah law, it will avoid investing in companies involved in alcohol, gaming, weapons production, pork products and certain types of entertainment such as casinos, gambling and pornography.

JETS expects to launch a full family of Islamic-marketed ETFs.

iShares Debuts First Peru Fund

BGI launched the iShares MSCI All Peru Capped Index (NYSE Arca: EPU) on June 21. A similar fund is also expected from new ETF provider Global X Management Co. soon.

According to a BGI statement, Peru is Latin America’s fastest-growing economy, with a gross domestic product growth rate of more than 9 percent last year. EPU tracks an MSCI index holding the top 25 Peruvian stocks by free-float adjusted market cap sizes. It comes with an expense ratio of 0.63 percent.

Old Mutual Plans ETF Market Entry

Old Mutual has filed a registration statement for five ETFs, all of them tracking indexes provided by the FTSE Group.

The list includes the Old Mutual FTSE All-World Fund, Old Mutual FTSE Emerging Markets Fund, Old Mutual FTSE All-Cap Asia Pacific ex Japan Fund, Old Mutual FTSE All-World ex US Fund and Old Mutual FTSE Developed Markets ex US Fund.

Vanguard already offers ETFs tracking the FTSE All-World Index and the FTSE All-World ex US Index, so it will be interesting to see if newcomer Old Mutual will be able to beat Vanguard’s low fees.



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