AROUND THE WORLD OF ETFs

February 22, 2011

Rydex Adds To Equal-Weighted Lineup
Rydex greatly expanded its lineup of equal-weighted ETFs in December and January with the launches of six ETFs tracking equal-weighted versions of popular indexes. The firm already offered 10 ETFs using an equal-weighted approach, the largest of which is the Rydex S&P Equal Weight ETF (NYSE Arca: RSP), with more than $3 billion in assets under management.

The new funds and their expense ratios are:

  • Rydex Russell 1000 Equal Weight ETF (NYSE Arca: EWRI), 0.40 percent
  • Rydex Russell 2000 Equal Weight ETF (NYSE Arca: EWRS), 0.40 percent
  • Rydex Russell Midcap Equal Weight ETF (NYSE Arca: EWRM), 0.40 percent
  • Rydex MSCI EAFE Equal Weight ETF (NYSE Arca: EWEF), 0.55 percent
  • Rydex MSCI Emerging Markets Equal Weight ETF (NYSE Arca: EWEM), 0.70 percent
  • Rydex MSCI All Country World Equal Weight ETF (NYSE Arca: EWAC), 0.60 percent

ProShares Launches First Volatility ETFs
ProShares kicked off 2011 by launching the year’s first new ETFs: two funds tied to the CBOE Volatility Index (VIX).

The ProShares VIX Short-Term ETF (NYSE Arca: VIXY) and ProShares VIX Mid-Term Futures ETF (NYSE Arca: VIXM) are designed to provide exposure, respectively, to short-term and mid-term VIX futures contracts. They compete with the iPath S&P 500 VIX Short-Term Futures ETN (NYSE Arca: VXX) and the iPath S&P 500 VIX Mid-Term Futures ETN (NYSE Arca: VXX), which launched in January 2009 and have accumulated substantial assets.

The ProShares ETFs track the same indexes as the iPath products, but are cheaper than their competitors, charging 0.85 percent in annual fees compared with 0.89 percent for the iPath products.

The products are also the first ETFs to provide VIX exposure—all other exchange-traded products based on the VIX are ETNs.

Global X Debuts Aluminum Equities ETF
In January, Global X Funds rolled out a first-to-market aluminum equities ETF that hones in on companies specializing in the widely used industrial metal.

The company hopes its new Global X Aluminum ETF (NYSE Arca: ALUM) will tap directly into the booming global infrastructure story. Lightweight and recyclable, aluminum is increasingly popular as concerns surrounding environmentally friendly construction and energy consumption mount.

Up until now, investors seeking pure and direct exposure to the base metal could only get it through the futures-based iPath Dow Jones-UBS Aluminum Subindex Total Return ETN (NYSE Arca: JJU).

ALUM tracks the Solactive Global Aluminum Index, a free-float-adjusted market-capitalization-weighted index that tracks global companies involved in the aluminum industry. The fund comes with a price tag of 0.69 percent a year.

iShares Unveils Short-Term TIPS ETF
In December, iShares rolled out a bond fund focused on short-term Treasury inflation-protected securities, or TIPs.

TIPs ETFs are not new, but the iShares Barclays 0-5 Year TIPS Bond Fund (NYSE Arca: STIP) is iShares’ first targeting the shortest end of the curve. The new fund has an annual expense ratio of 0.20 percent.

STIP invests in securities with less than five years to maturity, and some of the securities will have less than one year to maturity. That eliminates much of the risk associated with preexisting longer-dated debt, which falls more sharply in price when interest rates rise.

Unlike other TIPS ETFs, STIP holds its securities until maturity, meaning it pays out inflation-adjusted income through distributions and then returns principal to the fund for the purchase of more securities.

ETFS Rolls Out ‘White Metals’ ETF
In early December, ETF Securities rolled out the first ETF that wraps the so-called white metals—silver, platinum and palladium.

The ETFS Physical ETFS Physical White Metals Basket Shares Basket Shares (NYSE Arca: WITE) has an annual expense ratio of 0.60 percent. Each share represents 1.0 oz. of silver, 0.01 oz. of platinum and 0.008 oz. of palladium.

These white metals are a bit different than gold because their allure goes beyond “safe haven” investing into industrial demand. For this reason, some analysts believe investors will quickly dump their gold holdings when the economy begins to recover strongly, and that they are more likely to hold on to their white metal holdings.

 

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