Freedom ETF Challenger Among Latest Fund Proposals

November 17, 2022

A challenger to one of the more novel and successful small exchange-traded funds may soon reach the market. 

The First Trust Bloomberg Emerging Market Democracies ETF (EMDM), which is similar to the $253 million Freedom 100 Emerging Market ETF (FRDM), was among the latest batch of ETF proposals submitted to the Securities and Exchange Commission.  

EMDM tracks an index of equities from emerging market countries offering citizens political rights and civil liberties. Such nations would be considered electoral democracies by the U.S. government-backed nonprofit Freedom House. That’s similar to FRDM, an emerging market fund that is “freedom-weighted” and the brainchild of Perth Tolle of Life + Liberty Indexes.  

Calamos Investments, which left the ETF market in 2016 when it closed its only ETF, has resurfaced with a filing for the Calamos Antetokounmpo Global Sustainable Equities ETF. The actively managed fund will invest in global equities and apply an ESG overlay based on Calamos’ own ratings. 

Alliance Bernstein has proposed another three actively managed ETFs. The firm issued its first ETFs in September—a pair of fixed income funds. The latest proposed funds include the AB US Low Volatility Equity ETF, the AB US High Dividend ETF and the AB Disruptors ETF. The first two focus on U.S. equities while the disruptive innovation ETF will have a global perspective.  

iShares 

BlackRock’s iShares unit may launch the iShares Breakthrough Environmental Solutions ETF, offering exposure to companies developing products and technologies that facilitate the transition to a low-carbon economy. The fund will track the Morningstar Global Emerging Green Technologies Select Index.  

Derivatives Strategies 

Amplify has filed for the Amplify Volatility Income Strategy ETF (IVIX), which will track the Defined Risk Volatility Income Index. The strategy will allocate between U.S. Treasury securities and covered short VIX options, with the fixed income portion of the portfolio serving to preserve capital, and the VIX options strategy designed to offer upside performance when markets are flat or on a downward trend. The options will be held by a Cayman Islands subsidiary. 

Commodities 

With commodities on a tear relative to the equity market, VanEck plans the VanEck Commodity Index ETF, which will track the UBS Constant Maturity Commodity Total Return Index. The index represents 29 commodities represented by futures contracts of varying maturities. The commodities and their weights in the index are determined by a variety of data linked to their economic significance and liquidity.  

USCF is also looking to launch a commodity futures ETF. The USCF Metals Commodity Strategy Fund (MTLX) will be actively managed and mainly invest in futures contracts representing precious and industrial metals. Those metals can include gold, silver, platinum, palladium, copper, aluminum, lead, nickel, tin, zinc and iron ore. As with the VanEck fund, the USCF product will hold futures contracts mainly via a Cayman Islands subsidiary. 

KraneShares has the first ETF to combine exposure to China’s tech sector with a covered call strategy. The actively managed KraneShares China Internet and Covered Call Strategy ETF will hold components of the CSI Overseas China Internet Index while writing flexible exchange covered call options on the index, which is the same one that underlies the $5 billion KraneShares CSI China Internet ETF (KWEB)

The existing ETF was hit hard when the Chinese government cracked down on internet companies last year, but has seen strong inflows. The proposed fund could provide investors with hedged exposure to a space many are eager to enter but may hesitate to do so due to the potential volatility.  

 

Contact Heather Bell at [email protected] 

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