AROUND THE WORLD OF ETFs

April 21, 2011

High-Yield BulletShares Debut
In late January, Guggenheim Funds rolled out four target-maturity fixed-income ETFs focused on the high-yield corporate bond markets, adding to its preexisting lineup of investment-grade corporate bond target-date bond ETFs.

The new funds have maturity dates ranging from the end of 2012 and extending through to the end of 2016. Each will close upon maturity at the end of each respective year, with investors receiving the net asset value of all the bonds in the portfolio. That effectively offers investors something similar, though not identical, to holding an individual bond to maturity. The four ETFs have annual expense ratios of 0.42 percent and include:

  • The Guggenheim BulletShares 2012 High Yield Corporate Bond ETF (NYSE Arca: BSJC)
  • The Guggenheim BulletShares 2013 High Yield Corporate Bond ETF (NYSE Arca: BSJD)
  • The Guggenheim BulletShares 2014 High Yield Corporate Bond ETF (NYSE Arca: BSJE)
  • The Guggenheim BulletShares 2015 High Yield Corporate Bond ETF (NYSE Arca: BSJF)

Van Eck Suspends EGPT Creations Temporarily
Van Eck Global, the exchange-traded fund sponsor behind the Market Vectors Egypt Index ETF (NYSE Arca: EGPT), halted creations in the fund as of Jan. 31 due to the political upheaval in Egypt that shut down Egypt’s stock exchange a few days before. The fund had lost more than 18 percent of its value during the month, but bounced almost 9 percent higher the day the creations were suspended.

Van Eck said in a press release that it is the firm’s policy to halt creations when a fund’s underlying market is closed for an unusually long time; it added that the suspension will continue for an “undetermined” period.

The firm resumed creations of EGPT on March 23, with the reopening of the Egyptian stock exchange.

New PowerShares ETF Tracks Senior Loans
Invesco PowerShares kicked off March with the launch of the market’s first senior loan ETF to hold below-investment-grade, floating-rate loans.

The PowerShares Senior Loan Portfolio (NYSE Arca: BKLN), which comes with a price tag of 0.83 percent that includes acquired fund fees, is a floating-rate income portfolio that invests primarily in senior loans, defined for the purposes of the fund as leveraged, bank or floating-rate loans.

BKLN tracks through representative sampling the S&P/LSTA U.S. Leveraged Loan 100 Index. The benchmark measures the market-weighted performance of the largest institutional leveraged loans based on market weightings, spreads and interest payments. The rules-based index, which has 100 loans, is a subset of a larger benchmark, the S&P/LSTA Leveraged Loan Index.

BKLN may also allocate part of the portfolio to closed-end funds that invest in senior loans and in junk bonds. While the portfolio is global in scope, all loans must be dollar-denominated.

Vanguard Rolls Out Lowest-Cost Int’l ETF
In late January, Vanguard launched the market’s least expensive international, non-U.S. equity ETF. The fund is almost identical to another ETF the firm already offers.

The launch of the Vanguard Total International Stock ETF (NYSE Arca: VXUS) also brings Vanguard into direct competition with iShares, which offers an identical product to VXUS that uses the same index, the MSCI All Country World Index ex USA.

Vanguard’s VXUS has an annual expense ratio of 0.20 percent, less than both the 0.35 percent BlackRock charges on its iShares MSCI ACWI ex US Index Fund (Nasdaq GM: ACWX) and the 0.25 percent cost of the Vanguard FTSE All World ex-U.S. ETF (NYSE Arca: VEU).

The new ETF is designed to be a separate share class of Vanguard’s Total International Stock Index Fund, the company’s second-largest international index fund, with $51.4 billion in net assets.

 

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