Top 10 Most Exotic ETFs

March 13, 2013


5.  Credit Suisse Gold Shares Covered Call ETN (NasdaqGM: GLDI)

A newbie that just launched in January 2013, GLDI holds the SPDR Gold Trust ETF (NYSEArca: GLD), while writing covered calls on those shares. It sells about 3 percent out-of-the-money calls each month. This is an income-generating strategy that could work well unless the price of gold plummets since GLDI has downside exposure to GLD.

4.  Guggenheim Spin-Off ETF (NYSEArca: CSD)

CSD holds roughly 25 U.S.-listed companies that have been spun off through an IPO or an equity carve-out in the past 30 months. The fund naturally has a small- to micro-cap tilt and has a global reach. CSD rebalances semiannually. Recent top holdings include Fiesta Restaurant Group, Marathon Petroleum, Phillips 66 and TripAdvisor.

3.  Etracs Daily Long-Short VIX ETN (NYSEArca: XVIX)

XVIX attempts to capture the spread between the S&P 500 VIX Mid-Term and Short-Term Futures, based on the steepness of the VIX futures curve. The ETN takes a 100 percent long position in midterm futures while taking a 50 percent short position in short-term futures in an attempt to capitalize on the contango that’s often seen with short-term VIX futures. The ETN is rebalanced daily.

2.  iPath Global Carbon ETN (NYSEArca: GRN)

GRN tracks an index of liquid-carbon-related credit plans. The problem is that this market is barely developed and 95 percent of the ETN is exposed to the emissions reduction unit (ERU), which is a type of emissions unit that represents 1 tonne of CO2. GRN has been trading since June 2008, but it’s looking to be a race between the further development of carbon credit markets and the ETN being forced to liquidate due to low assets. It’s a great idea, but GRN may have launched ahead of its time.

1.  ALPS U.S. Equity High Volatility Put Write Index Fund (NYSEArca: HVPW)

Only a few weeks old, HVPW’s strategy is truly mind-boggling. The fund’s strategy is to generate income by selling naked put options on 20 of the largest-capitalization stocks that exhibit the highest volatility. It sells 60-day puts at a time and distributes cash equivalent of 1.5 percent of the fund’s net asset value every two months. While options on volatile stocks could generate more income, the downside risk is that HVPW is writing naked puts, so losses could be substantial if the underlying shares tank.

Ticker Fund Name Launch Date Expense Ratio (bps) AUM ($M) Underlying Index 1-Year TR Returns (%)
SPY SPDR S&P 500 1/22/1993 10 133,008 S&P 500 16.13
FLAG Forensic Accounting 1/30/2013 85 5 Del Vecchio Earnings Quality N/A
ALFA AlphaClone Alternative Alpha 5/30/2012 95 11 AlphaClone Hedge Fund Long/Short N/A
ONN Etracs Fisher-Gartman Risk On ETN 11/29/2011 85 11 The Fisher-Gartman Risk 1.33
OFF Etracs Fisher-Gartman Risk Off ETN 11/29/2011 115 12 The Fisher-Gartman Risk -7.46
NFO Guggenheim Insider Sentiment 9/21/2006 114 107 Sabrient Insider Sentiment 14.44
CSMA Credit Suisse Merger Arbitrage Liquid ETN 10/1/2010 55 72 CS Merger Arbitrage Liquid 0.62
GLDI Credit Suisse Gold Shares Covered Call ETN 1/28/2013 65 25 CS Nasdaq Gold FLOWS 103 N/A
CSD Guggenheim Spin-Off 12/15/2016 60 98 Beacon Spin-off 31.03
XVIX Etracs Daily Long-Short VIX ETN 11/30/2010 85 13 S&P 500 VIX Futures Term-Structure -23.76
GRN iPath Global Carbon ETN 6/24/2008 75 0.6 Barclays Global Carbon -58.28
HVPW ALPS U.S. Equity High Volatility Put Write 2/27/2013 95 3 NYSE Arca US Equity High Volatility Put Write N/A

Source: Bloomberg; as of 3/12/2013

At the time this article was written, the author had no positions in the securities mentioned. Contact Dennis Hudachek at [email protected].

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