Daily ETF Watch: Min-Vol ETFs Coming

May 19, 2014

iShares is betting that what’s good for institutional investors can be good for retail investors, too.

iShares has updated regulatory paperwork on three minimum-volatility ETFs at a time when investors are navigating choppy markets in anticipation of a possible pullback in the foreseeable future.

The S&P 500 Index has seesawed to a gain of 1.6 percent in 2014 after surging to more than 30 percent in 2013. Investors are currently taking a more defensive stance and eschewing momentum sectors as weak economic data from the U.S. and China continues to course through developed and emerging markets.

iShares is hoping that its latest trio of proposed minimum volatility ETFs, including the: iShares MSCI Japan Minimum Volatility ETF (JPMV); iShares MSCI Europe Minimum Volatility ETF (EUMV), iShares MSCI Asia ex Japan Minimum Volatility ETF (AXJV), can help take some of the volatility risks off the table.

All three ETFs will look to gain exposure to a broad range of securities within their respective markets with lower volatility characteristics relative to the broader markets.

“One of the things with min-vol we definitely talk to institutional and retail clients about is that both types of investors need to have it for the long-term horizon,” said Raman Suri in a recent interview with ETF.com. “If you look at 2013, min-vol underperformed market-cap indexes, but I think we can say it did what it was expected to do.”

JPMV has an expense ratio of 0.30 percent, or $30 for every $10,000 invested, while EUMV has an expense ratio of 0.25 percent, according to its regulatory filing. AXJV has an expense ratio of 0.35 percent.

Filings

  • Deutsche Bank has put into motion regulatory paperwork for an Italy-focused ETF, dubbed the db X-trackers MSCI Italy Hedged Equity Fund, which will also hedge out euro currency risks for U.S. investors.

Currency hedging was an important tool for investors in 2013 in various regions of the world, including Japan, where investors who were hedged against the yen’s slide versus the dollar outperformed those who weren’t.

For U.S. investors, international equity investments include two components of return: the return attributable to stock prices in the non-U.S. market; or markets in which an investment is made and the return is attributable to the value of non-U.S. currencies in these markets relative to the U.S. dollar.

The db X-trackers MSCI Italy Hedged Equity Fund will track the MSCI Italy 25/50 US Dollar Hedged Index while mitigating exposure to fluctuations between the value of the U.S. dollar and the euro, according to its regulatory filing.

Associated fees and tickers were not yet made available in the filing.

  • State Street Global Advisors has filed paperwork with regulators to market the SPDR MSCI China A Shares IMI ETF, which will look to gain exposure to a wide range of Chinese securities with A-share listings on the Shanghai or Shenzhen Stock Exchanges.

The mainland China equity market continues to attract issuers looking to give investors direct exposure to the world’s second-largest economy at a time when the Chinese economy is experiencing a slowdown of single-digit growth versus the more familiar double-digit growth in past years.

Associated fees and tickers were not made available in the filing.

  • Global X is making index changes to two single-country ETFs in July.

Effective July 15, the Global X FTSE Norway 30 ETF (NORW | C-68) will change its index from the Global X FTSE Norway 30 ETF FTSE Norway to the Global X MSCI Norway ETF MSCI Norway IMI 25/50 Index, according to a regulatory filing.

At the same time, the Global X FTSE Colombia 20 ETF (GXG | D-44) will move away from the FTSE Colombia 20 Index to the Global X MSCI Colombia ETF MSCI All Colombia Capped Index.

 

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