Most Interesting New ETFs Of 2014

December 11, 2014

While the fat lady hasn’t sung yet, these three ETFs strike me as the coolest launches of the year.

2014 has been a big year for ETF launches. As of Dec. 9, we had 113 new funds, pulling in nearly $7.5 billion in assets. But not all of these new funds are actually going to succeed, and not all of them are—to be honest—interesting or even useful.

Investors have voted strongly with their dollars regarding which funds they think are interesting and useful. Just two funds from First Trust—the First Trust Enhanced Short Maturity (FTSM) and the First Trust Dorsey Wright Focus 5 (FV | B-23)—have pulled in a total of $2.4 billion, showing that niche products targeted to specific audiences can get good traction. But I think there are some sleeper hits in this year’s launches that can provide real opportunities for some investors. My top three:

iShares Core MSCI Europe (IEUR | A-99)

Investors looking to play the continued European recovery—a theme I think is going to be dominant in 2015—now have an even better option than our current segment leader, Vanguard FTSE Europe (VGK | A-98). While VGK is currently 2 basis points cheaper, at 0.12 percent in total expenses, I think IEUR is just a better fund. Why?

It reaches down into the small-cap companies I think are likely to benefit most from a recovering European economy. While broadly speaking, the country and sector weights are similar, IEUR’s mid- and small-cap exposure also give it a bit more consumer weight, and that’s probably a good thing. Assets in IEUR have come in steadily, and since its launch in June, it now boasts almost $200 million and trades well.

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