Daily ETF Watch: 5 Funds Launch

May 10, 2016

Today Global X has added two more thematic ETFs to its lineup after launching the Global X Millennials Thematic ETF (MILN) last week. The Global X Health & Wellness Thematic ETF (BFIT) and Global X Longevity Thematic ETF (LNGR) rolled out on the Nasdaq stock market and charge expense ratios of 0.68%.

BFIT tracks an index that looks to capture the performance of companies that provide products or services that support healthy lifestyles. Targeted business lines must represent the majority of the component firms’ revenues or business.

Generally, components fall into five major buckets, the prospectus said:

  • Healthy Food, Nutrition and Weight Loss
  • Fitness and Fitness Apparel
  • Nutritional Supplements and Preventive Health Care
  • Anti-Aging
  • Wellness

Components are drawn mainly from the consumer discretionary, consumer staples, health care and information technology sectors.

LNGR similarly has a health-related focus, targeting companies that contribute to global trends of increasing life span. Companies generally fall into the following buckets:

  • Health Care Products
  • Health Care Services
  • Medical Devices
  • Senior Homes

LNGR’s portfolio will mainly draw its holdings from the health care, biotechnology and medical device sectors, the prospectus said.

For both funds’ underlying indexes, companies must be listed in developed markets and must have market capitalizations of at least $500 million, while having an average daily turnover of at least $2 million during the preceding six months. The components are weighted by modified market capitalization and can represent the small-, mid- and large-cap segments.

Index IQ Launches Bond Funds

IndexIQ has rolled out a pair of bond ETFs on the NYSE that use momentum to overweight and underweight different bond sectors. The IQ Enhanced Core Bond U.S. ETF (AGGE) charges an expense ratio of 0.34%, while the IQ Enhanced Core Plus Bond U.S. ETF (AGGP) charges 0.35%.

Both ETFs are “funds of funds” that, according to the prospectus, are designed to outperform the broad U.S. dollar-denominated taxable fixed-income space. The two funds will invest primarily in other ETFs.

Their methodology relies on short-term and long-term momentum, overweighting high-momentum sectors and underweighting low-momentum sectors.

AGGE covers investment-grade debt and defines its sectors as follows:

  • Short-term U.S. Treasurys (one- to three-year maturities)
  • Intermediate-term U.S. Treasurys (three- to 10-year maturities)
  • Long-term U.S. Treasurys (greater than 10-year maturities)
  • Investment-grade corporate bonds
  • Investment-grade mortgage-backed securities

AGGP covers investment-grade and high-yield debt, divided into the following sectors:

  • Short-term U.S. Treasuyes (one- to three-year maturities)
  • Intermediate-term U.S. Treasurys (three- to 10-year maturities)
  • Long-term U.S. Treasurys (greater than 10-year maturities)
  • U.S. investment-grade corporate bonds
  • U.S. investment-grade mortgage-backed securities
  • U.S. high yield (or “junk”) debt
  • U.S.-dollar-denominated debt of emerging market issuers

As of April 1, AGGE’s underlying index included 16 components, while AGGP’s included 20.

Guggenheim Unveils Optimized Volatility ETF

Guggenheim Investments today launched its answer to the low-volatility ETF trend. The Guggenheim U.S. Large Cap Optimized Volatility ETF (OVLC) uses a dynamic volatility strategy, meaning it will adjust its volatility level according to whether or not the market is rewarding volatility. It comes with an expense ratio of 0.30%.

OVLC tracks an index derived from the S&P 500 that selects its components based on their “reward to risk,” which is calculated based on share price volatility and correlations to the other components of the S&P 500. The prospectus notes that as of May 1, OVLC’s underlying index had 120 components.

Contact Heather Bell at [email protected].

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