Daily ETF Watch: New iShares Floater ETF

January 21, 2014

The world’s biggest ETF company plans to join crowding field of still-forming T-note floaters.

iShares is looking to roll out a first-to-market floating-rate Treasury bond ETF in an attempt to replicate the success of its $3.4 billion iShares Floating Rate Fund ETF (FLOT | A-96) at a time when investors are scouring the ETF landscape for yields in a rising-interest-rate environment.

State Street Global Advisors and WisdomTree have already filed registration statements for ETFs investing in these Treasury floaters. Those proposed funds are likely to offer the lowest credit risk in the space.

Floating-rate bond ETFs were very popular in 2013, partly because of the yields they deliver, but also for the interest-rate-risk protection they provide. This year, these ETFs should only become more popular as investors brace for the Federal Reserve to begin pushing interest rates higher.

To that end, iShares is banking on investors’ interest in its proposed iShares Treasury Floating Rate Bond ETF (TFLO), which will track the Barclays U.S. Treasury Floating Rate Index, a market-capitalization-weighted index that measures the performance of floating-rate public obligations of the U.S. Treasury, according to a regulatory filing.

The filing did not include associated fees for the new offering.

The most popular ETF in this group is the first-to-market, high-yielding $5.8 billion PowerShares Senior Loan ETF (BKLN), which attracted more than $4.97 billion in net new assets last year. BKLN tracks a market-value-weighted index of senior loans, including leveraged, bank and floating-rate loans.

Filings

 

  • Global X has filed regulatory paperwork for a country-specific fund that focuses on Saudi Arabia, dubbed the Global X MSCI Saudi Arabia ETF, which will invest in companies that are listed on the Saudi Stock Exchange (Tadawul) as well as cash and cash equivalents, according to a filing.

The fund will access the Saudi Arabian market via an investment vehicle managed by local investment bank Falcom Financial Services in which it will be the sole unit holder.

  • Van Eck Global has updated filed regulatory paperwork detailing tickers and fees for two enhanced-beta ETFs that screen securities in international and emerging markets for “quality”—a term in the investment world that refers to stocks with high returns on equity, stable year-over-year earnings growth and low financial leverage.

The Market Vectors MSCI International Quality ETF (QXUS) and the Market Vectors MSCI International Quality Dividend ETF (QDXU) will both track the MSCI ACWI ex USA Index, which includes large and midcap stocks across 42 countries. The funds both charge 0.45 percent per year, or $45 for every $10,000 invested.

Also, the Market Vectors MSCI Emerging Markets Quality ETF (QEM) and the Market Vectors MSCI Emerging Markets Quality Dividend ETF (QDEM) will both track the MSCI Emerging Markets High Dividend Yield Index, which includes large and midcap stocks across 19 emerging market countries, according to a regulatory filing.

Both funds charge 0.50 percent per year, or $50 for every $10,000 invested

 

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