Top 12 New ETFs In 2012

January 03, 2013

Bill Gross' BOND was just the tip of a fixed-income iceberg of splashy launches in 2012.

With 2012 behind us, it's time to take a look at the new trends that resonated in the ETF market last year.

The best way to do that is to look at which newly launched ETFs garnered the most assets in 2012.

The methodology is inherently biased, as it disadvantages funds that launched later in the year, simply because they hadn't had enough time to gather assets.

Still, it notes a number of interesting trends. Moreover, even with the late start, a few late bloomers made the list, including two iShares ETFs—the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG) and the iShares Core MSCI EAFE ETF (NYSEArca: IEFA). And they were close to the top, too.

So here they are, in reverse order, based on total assets under management on Dec. 31, 2012.

No. 12: Market Vectors Morningstar Wide Moat Research ETF (NYSEArca: MOAT)
Ticker: MOAT

IndexUniverse Segment: Equity: U.S. - Alpha-Seeking
Launch Date: April 24, 2012
Year-End 2012 AUM: $115.4 Million

The Market Vectors Morningstar Wide Moat Research fund (NYSEArca: MOAT) selects companies using Morningstar's "Wide Moat" methodology, which aims to identify firms with real competitive advantages versus their peers.

It's similar in many ways to the Elements Morningstar Wide Moat Focus ETN (NYSEArca: WMW), which launched a number of years ago and, with just $19 million in assets, has clearly struggled to pull in assets. But investors seem to like the fact that MOAT has a considerably lower price tag than WMW—49 basis points vs. WMW's 75. Also, it doesn't carry the credit risk of an ETN.

With ETN issues swept aside, Morningstar's name, savvy marketing and strong performance combined here to create a winner, with almost $120 million in assets.

No. 11: First Trust North American Energy Infrastructure Fund (NYSEArca: EMLP)
Ticker: EMLP

IndexUniverse Segment: Equity: U.S. MLPs
Launch Date: June 20, 2012
Year-End 2012 AUM: $123.7 Million

Who says investors don't like active strategies? This fast-growing ETF offers an active slant on the popular MLP space, aiming to identify funds with strong yields and solid capital appreciation potential.

The fund is managed by Energy Income Partners LLC, which has about $1.6 billion in assets under management. The ETF does, however, have a hefty annual expense ratio—0.95 percent. That's much more than competing MLP ETPs.

That price tag may be worth it, however, given EMLP's total return of 5.15 percent since its inception June 20, versus the largest competing ETF, the Alerian MLP ETF AMLP (NYSEArca: AMLP), which returned 4.27 percent over the same time period.

No. 10: UBS AG FI Enhanced Big Cap Growth ETN (NYSEArca: FBG)
Ticker: FBG
IndexUniverse Segment: U.S. - Large Cap Growth
Launch Date: June 6, 2012
Year-End 2012 AUM: $139.8 Million

This UBS fund showed somewhat shocking growth for an isolated, leveraged ETF. The ETN operates on a somewhat unorthodox rebalancing strategy, aiming to produce double the returns of the large-cap Russell 1000 Index, but resetting whenever the index it tracks hits a certain level.

FBG is not part of the UBS E-Tracs family, but there appears to be internal demand for FBG from UBS clients. UBS charges a fee for FBG that varies with Libor. Still, for all the idiosyncrasies of FBG, it pulled in $139 million in just six months since its inception, which is surely noteworthy.


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