Daily ETF Watch: 7 ‘Smart Beta’ Launches

June 05, 2014

A seven-fund launch focused on minimum-volatility and quality ETFs puts sharp focus on ‘smart beta.’

iShares and State Street Global Advisors today are collectively launching seven ETFs that focus on minimum volatility and quality stocks in the developed and emerging markets at a time when investors are fretting about where global growth will be as interest rates rise from their low post-crash levels.

The seven-fund rollout raises to 87 the number of ETFs that have launched this year. More than 1,580 ETFs now populate the universe of U.S.-listed ETFs, and total assets are now at a record $1.807 trillion, according to data compiled by ETF.com Analytics.

iShares is launching three minimum-volatility funds, while SSgA is launching four ETFs, three of them targeting the “quality” factor that seeks to isolate stocks of companies with consistently strong performance. These “smart beta” strategies are the latest examples of a growing trend in the world of ETFs. Assets in such strategies now total more than $200 billion.

The seven launches come at a time when China, the world’s second-largest economy, is slowing in 2014, after years of double-digit growth. China’s Finance Minister Lou Jiwei has publicly stated that a growth rate of 7.2 percent would be adequate, even if it does fall short of an official target of “about” 7.5 percent. The country is shifting its economy away from exports and investments to a more consumption-oriented economy.

Also, the Fed is continuing to taper its bond-buying program, signaling it is bullish on the current slow pace of the U.S. economic recovery, which many market observers say was thwarted in the first quarter due to severe winter weather conditions across much of the country.

iShares’ Min-Vol ETFs

iShares is hoping its latest trio of minimum volatility ETFs can help take some of the choppiness in equity markets off the table. The new funds include:

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.

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. AXJV has an expense ratio of 0.35.

iShares’ launches were announced via an NYSE communique.

SSgA’s Quality ETFs

State Street Global Advisors today is launching four smart-beta ETFs, which will screen for value, low volatility and quality stocks in developed and emerging markets. The newly proposed ETFs include:

  • SPDR MSCI EAFE Quality Mix ETF (QEFA)
  • SPDR MSCI Emerging Markets Quality Mix ETF (QEMM)
  • SPDR MSCI World Quality Mix ETF (QWLD)

As well, SSgA is rolling out the SPDR Euro Stoxx Small Cap ETF (SMEZ) to focus on European small-cap securities at a time when developed European markets have not only been recovering from the region’s debt crisis, but are near all-time highs.

Associated fees for the ETFs were not yet made available.

 

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