Daily ETF Watch: Int’l ‘Focus 5’ Planned

July 17, 2014

First Trust has put into registration an international-focused ETF that uses Dorsey Wright relative strength technical indicators. The plan is a follow-up to the successful launch of its First Trust Dorsey Wright Focus 5 ETF (FV) in March, the latest example of the “smart beta” wave that’s building in the world of ETFs.

The First Trust Dorsey Wright International Focus 5 ETF (IFV) will invest most of its assets in other First Trust ETFs screened for their relative strength, which measures the price performance of a security versus a market average, another security or universe of securities, according to the regulatory filing.

The proposed fund’s index, like the existing ETF “FV,” uses relative strength to evaluate the momentum of different First Trust country/region-based ETFs to determine the five ETFs that have the highest level of momentum. The new fund’s expense ratio is 1.10 percent, or $110 for every $10,000 invested. FV has an annual expense ratio of 95 basis points.

The popularity of “smart beta” these days is mostly focused on equity funds, though there are early signs that issuers are probing such next-generation indexing in the realm of fixed income as well. So far, ETF investors have shown an appetite for ways to access markets beyond traditional cap-weighted indexes through indexes focused on factors such as momentum and volatility.

Since its March launch, FV has gathered $342 million in assets, according to data compiled by ETF.com.

Fee Drop

Global X cut the annual expense ratio on its Global X MSCI Colombia ETF (GXG | C-43) by more than 10 percent to 0.61 percent, or $61 for every $10,000 invested, from 68 basis points, according to a regulatory filing.

The fund’s new expense ratio matches that of the iShares MSCI Colombia Capped ETF (ICOL | F-60), making the Market Vectors Colombia ETF (COLX | F-40) the most expensive Colombia-focused ETF in the group, at 0.75 percent.

ETF Data

U.S. investors have overwhelmingly favored non-U.S. equities this year, plowing $84 billion in new assets in various vehicles into global equity mutual funds and ETFs. That compares with just $12.6 billion in fresh flows to U.S. equities, according to a new report by TrimTabs Investment Research.

In a research note, TrimTabs explained that this year’s flows are a big shift from last year’s. In 2013, U.S. equity funds pulled in $150.5 billion, or more than 75 percent of total inflows of $193.1 billion into global equity funds.

The firm also noted that the financial crisis helped spark outflows of $547.8 billion from U.S. equity mutual funds from 2008 through 2012.

Inflows finally resumed in 2013, totaling $12.4 billion, as the S&P 500 Index shot up 30 percent. Despite this year’s string of record highs on the S&P 500, U.S. equity mutual funds have lost $10.5 billion.

 

 

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