December 15, 2010

Vanguard Debuts Russell-Based ETFs
Vanguard launched seven new funds based on Russell indexes in September as part of an ambitious expansion plan to have a broad lineup of Vanguard products that give different advisers who favor different indexes the tools they need. In keeping with Vanguard’s aggressive stance on expenses, the new funds carry annual expense ratios ranging from 0.12 percent to 0.20 percent—priced to undercut its main competitor, iShares.

The new Russell-based funds, their tickers and annual expense ratios are:

  • Vanguard Russell 1000 ETF (Nasdaq GM: VONE), 0.12 percent
  • Vanguard Russell 1000 Value ETF (Nasdaq GM: VONV), 0.15 percent
  • Vanguard Russell 1000 Growth ETF (Nasdaq GM: VONG), 0.15 percent
  • Vanguard Russell 2000 Index Fund (Nasdaq GM: VTWO), 0.15 percent
  • Vanguard Russell 2000 Value Index Fund (Nasdaq GM: VTWV), 0.20 percent
  • Vanguard Russell 2000 Growth Index Fund (Nasdaq GM: VTWG), 0.20 percent
  • Vanguard Russell 3000 Index Fund (Nasdaq GM: VTHR), 0.15 percent

Van Eck Debuts First-Ever Rare Earths ETF
In late October, Van Eck Global rolled out the Market Vectors Rare Earth/Strategic Metals ETF (NYSE Arca: REMX), which invests in companies engaged in the production, refining and recycling of rare-earth and strategic metals and minerals.

The new fund is the latest foray by a U.S. ETF sponsor into minor metals, amid surging global demand for materials like gallium, which is used to make a host of specialized high-tech equipment. Strategic metals are essential to many industries. However, these metals, often byproducts of other mining operations, are not only difficult to extract but are also likely to be in increasingly short supply in the next few years.

REMX tracks a an index of 24 companies engaged in the production, refining and recycling of up to 49 rare earth and strategic metals and minerals. REMX has a net expense ratio of 0.57 percent.

US ETF Assets Top $900 Billion
Assets in U.S. ETFs crossed the $900 billion threshold for the first time on Sept. 28, propelled by inflows into gold and other commodities and a strong move in the equity markets.

To be sure, the jitters coursing through the global economy have made the asset gathering anything but linear. Europe’s sovereign debt crisis caused a dip in assets in early spring. But since June, assets have been rising again. The more than 1,000 U.S ETFs had a total of $903.38 billion as of Sept. 28.

Globally, the ETF industry now has about $1.35 trillion in assets, including funds listed in Europe and Asia.

WisdomTree Launches Commodity Currency ETF
WisdomTree launched a new “commodity currency” fund in late September.

The WisdomTree Dreyfus Commodity Currency Fund (NYSE Arca: CCX) tracks a basket of eight currencies of emerging as well as developed commodity-producing economies: the Australian dollar, Canadian dollar, Norwegian krone, New Zealand dollar, Brazilian real, Chilean peso, Russian ruble and South African rand. The countries’ exports include everything from milk and mutton to gold, diamonds, silver and oil.

CCX aims to track the money market rates in each of the eight currencies as well as the changes in those rates relative to the U.S. dollar by combining a U.S. cash base with forward currency contracts. The new fund carries an expense ratio of 0.55 percent.

Pimco Launches BABs, Corporates ETFs
Pimco launched two new ETFs in September focused on investment-grade corporate bonds and Build America Bonds municipal debt.

The Pimco Investment Grade Corporate Bond Index Fund (NYSE Arca: CORP) is based on the BofA Merrill Lynch US Corporate Index, an unmanaged index comprising U.S. dollar-denominated, fixed-rate corporate debt with at least $250 million outstanding. Pimco’s fund will track the index using a proprietary representative sampling process. CORP carries total operating expenses of 0.32 percent.

The Pimco Build America Bonds Strategy Fund (NYSE Arca: BABZ) is an actively managed ETF that invests in investment-grade Build America Bonds listed in the Barclays Capital Build America Bonds Index with a par value of at least $250 million. BABZ carries an expense ratio of 0.45 percent. Build America Bonds are taxable municipal bonds.

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