Daily ETF Watch: ‘Dorsey’ Fund Launches

July 23, 2014

First Trust today is launching its international-focused ETF that uses Dorsey Wright relative strength technical indicators. The launch 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 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.

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.

Since its March launch, FV has gathered $350 million in assets, according to data compiled by ETF.com.

The fund’s launch was made public via a Nasdaq communique.

China Fund Launch Set

 

Van Eck plans to launch its mainland China-focused Market Vectors ChinaAMC SME-ChiNext ETF (CNXT) on Thursday, July 24, according to an electronic communique from NYSE Arca.

The fund has a net annual expense ratio of 68 basis points, or $68 for each $10,000 invested, according to the latest prospectus detailing the fund. The ETF is organized around a free-float-adjusted index that tracks the 100 largest and most liquid stocks listed and trading on the “Small and Medium Enterprise Board” and the ChiNext Market of the Shenzhen Stock Exchange.

The fund is part of a growing trend to tap into China’s mainland companies that are listed in either Shanghai or Shenzhen. The trend began accelerating last year with the launch of the db X-trackers Harvest CSI 300 China A-Shares Fund (ASHR | D-52). The ETF now has $205 million.

Fund sponsors have since been heavily focused on the so-called A-share market in hopes it will be the focal point of China’s resurgence as the world’s most populous country shifts its economic focus to developing domestic markets instead of emphasizing exports.

Filing

 

Effective Aug. 15, 2014, the name of the Global X FTSE ASEAN 40 ETF (ASEA | D-78) will change to the Global X Southeast Asia ETF, according to a regulatory filing, which didn’t specify if there are additional changes in ticker symbols and/or strategy.

ASEA launched in February 2011 and currently manages about $31 million in assets. The fund currently tracks a market-cap-weighted and -selected index of the 40 largest and most liquid stocks from Singapore, Malaysia, Indonesia, Thailand and the Philippines.

Year-to-date, the fund is up almost 13 percent but has had $9 million in outflows since January, according to ETF.ccom’s data screener.

 

 

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