Daily ETF Watch: 10 New Funds Launch

New ‘quality’ and ‘core’ ETFs flood the market today.

A total of 10 new ETFs are launching today that are focused on equities in a number of pockets of the developed world. They include six ETFs from State Street Global Advisors focused on the “quality” factor and four from iShares that are part of an expansion of its “Core” lineup of ETFs.

Year-to-date, 93 ETFs have launched or will launch, compared with 62 for the same period last year. All told, as of June 10, exactly 1,600 ETFs are now listed in the U.S., with total assets under management just shy of an all-time high at $1.836 trillion, according to data compiled by ETF.com Analytics.

SSgA’s Quality ETFs

Among the launches today are six from SSgA that focus on “quality” stocks in various developed markets. These ETFs, which seek to isolate companies that have performed well over time and in different market conditions, come at a time when investors are wondering where growth will come from as interest rates rise from their low post-crash levels.

The new smart-beta ETFs will screen for value, low-volatility and quality stocks in developed markets, and include:

• SPDR MSCI Australia Quality Mix ETF (QAUS)
• SPDR MSCI Canada Quality Mix ETF (QCAN)
• SPDR MSCI Germany Quality Mix ETF (QDEU)
• SPDR MSCI Japan Quality Mix ETF (QJPN)
• SPDR MSCI Spain Quality Mix ETF (QESP)
• SPDR MSCI United Kingdom Quality Mix ETF (QGBR)

Fees were not yet available for the new offerings.

iShares ‘Core’ Four

Today’s launches also include iShares’ rollouts of four brand new “Core”-type ETFs that will be part of a 10-fund expansion of the “Core” lineup of cheap ETFs that it introduced in October 2012.

The expansion of iShares’ “Core” brand, effective today, will also involve the repurposing of six existing funds. Those existing funds will mostly have lower expense ratios than previously, and together those six existing ETFs have about $5.6 billion in assets.

The 10 new Core funds—and, where applicable, their new tickers, new expense ratios and names (amended with the word “Core”)—are as follows:

U.S. Equities

• iShares Core Dividend Growth ETF, a new fund that will begin trading on Thursday, June 12 under the symbol “DGRO” with an annual expense ratio of 12 basis points
• iShares Core MSCI Europe ETF, a new fund that will begin trading on Thursday, June 12 under the symbol “IEUR” with an annual expense ratio of 14 basis points
• iShares Core MSCI Pacific ETF, a new fund that will begin trading on Thursday, June 12 under the symbol “IPAC” with an annual expense ratio of 14 basis points
• iShares Core U.S. Growth ETF (IWZ | A-90), an existing fund that will assume the new trading symbol “IUSG” on Thursday, June 12. Its expense ratio will drop at that time from 25 basis points a year currently to 9 basis points, or $9 for each $10,000 invested
• iShares Core U.S. Value ETF (IWW | A-91), an existing fund that will assume the new trading symbol “IUSV” on Thursday, June 12. Its expense ratio will drop at that time from 26 basis points a year currently to 9 basis points
• iShares Core High Dividend ETF (HDV | A-67), an existing fund that will continue to trade with the symbol “HDV,” but with a lower annual expense ratio of 12 basis points from 40 basis points currently

U.S. Fixed Income

• Shares Core Total USD Bond Market ETF, a new fund that will begin trading on Thursday, June 12 under the symbol “IUSB” and with an annual expense ratio of 15 basis points
• iShares Core U.S. Credit Bond ETF (CFT | B-89), an existing fund that will assume the new trading symbol “CRED” on Thursday, June 12. Its expense ratio will drop at that time from 20 basis points a year currently to 15 basis points
• iShares Core U.S. Treasury Bond ETF (GOVT | A-97), an existing fund that will continue to trade with the symbol “GOVT,” but with the same annual expense ratio of 15 basis points.
• iShares Core GNMA Bond ETF (GNMA | C-84), an existing fund that will continue to trade with the symbol “GNMA,” but with a lower annual expense ratio of 15 basis points from 25 basis points previously

Filing

ETF Series Solutions, an ETF trust backed by U.S. Bancorp and Exchange Traded Concepts, has put into registration its own brand of smart-beta ETF that will sift through the equity universe and exclude companies engaged in basic human vices using Islamic Shariah law as a filter.

“Smart beta” continues to be a buzzword used by issuers marketing ETFs that slice and dice market-cap-weighted indexes such as the S&P 500 Index into factors such as value, momentum and volatility, among other factors.

To that end, the Falah Russell-IdealRatings U.S. Large Cap ETF will track the Russell-IdealRatings Islamic U.S. Large Cap Index, composed of the common stock of Shariah-compliant large-capitalization U.S. companies, according to the regulatory filing.

The list of prohibited activities that are not Shariah compliant includes:

1. Banks and insurance companies that finance the interest of or financial instruments that violate Shariah rules
2. Production and distribution of alcohol
3. Production and distribution of tobacco
4. Production and distribution of pork and its derivatives
5. Management of casinos and gambling halls and production of games such as slot machines
6. Houses of prostitution
7. Adult entertainment such as pornographic films and services
8. Production and distribution of magazines, advertising, music, satellite channels and cinemas that violate Shariah rules, including violent or mature games
9. Trading of gold and silver as cash on deferred basis
10. Manufacturing of weapons
11. Stem cell, human embryo and genetic cloning (research firms, therapy clinics, etc.)

The fund has a proposed expense ratio of 0.70 percent, or $70 for every $10,000 invested.