Daily ETF Watch: 'Shark Tank' Host Launches Fund

July 14, 2015

Three funds are launching today from three different ETF providers, including newcomer O’Shares Investments. The raft of launches includes a U.S. fund from O’Shares, an alternatives-focused addition to Global X’s SuperDividend lineup, and an international version of the Market Vectors Morningstar Wide Moat ETF (MOAT | B-60).

O’Leary’s O’Shares

Kevin O’Leary is probably best-known to the American public as one of the “sharks” on ABC’s show “Shark Tank,” which offers deals to budding entrepreneurs. But he is also the chairman of a Canada-based mutual fund company and a mortgage company, among other business interests.

O’Leary’s firm, O’Shares Investments, is rolling out the O’Shares FTSE US Quality Dividend ETF (OUSA) today, the first in a family of ETFs based on the FTSE Quality Dividend indexes.

The fund’s underlying index is derived from one of FTSE’s standard, cap-weighted indexes, and selects and weights stocks based on three factors. Companies are evaluated for high quality, as determined by the strength of their balance sheet; and for low-volatility and high-dividend yield. According to the fund’s prospectus, the inclusion of high-quality and low-volatility measures helps to weed out high-yielding companies that may have seen price declines.

OUSA is not the only fund in the O’Shares hopper. In the future, the firm will be launching hedged and unhedged versions of Europe and Asia-Pacific “Quality Dividend” funds, including the following:

  • O’Shares FTSE Europe Quality Dividend ETF (OEUR)
  • O’Shares FTSE Europe Quality Dividend Hedged ETF (OEUH)
  • O’Shares FTSE Asia Pacific Quality Dividend ETF (OASI)
  • O’Shares FTSE Asia Pacific Quality Dividend Hedged ETF (OAPH)

OUSA comes with an expense ratio of 0.48 percent.

Global X Adds To SuperDividend Funds
Global X today is launching yet another addition to its small-but-growing family of “SuperDividend” ETFs. The Global X SuperDividend Alternatives ETF (ALTY) is rolling out on the Nasdaq stock exchange and joins five other SuperDividend funds covering everything from preferred securities to emerging markets.

The fund covers four categories that are weighted so that each category contributes the same level of volatility to the fund:

  • MLPs and infrastructure – This portion invests in MLP and infrastructure equities.
  • Real estate – This part of the portfolio holds the Global X SuperDividend REIT ETF (SRET).
  • Institutional managers – This portion invests in shares of BDCs and listed private equity companies.
  • Fixed income and derivative strategies – This part of the portfolio invests mainly in closed-end funds that provide exposure to options-writing strategies and various debt securities.

ALTY comes with a rather large expense ratio—3.03 percent—likely due to the fact that it invests in other funds.

Van Eck Debuts MOAT Companion
Van Eck’s Market Vectors arm is rolling out a fund that provides an international perspective on the strategy used by its domestically focused MOAT.

The Market Vectors Morningstar International Moat ETF (MOTI) targets companies in developed and emerging market countries other than the U.S. that have sustainable competitive advantages. The prospectus defines those companies with wide moats as those that can maintain that advantage over a 20-year period, while narrow-moat companies are expected to do so for a 10-year period.

MOTI’s underlying index selects the 50 companies from the Morningstar Global Markets ex-US Moat Focus Index that have wide or narrow moats and fall into the top 80 percent of components in terms of momentum; the index chooses the companies based on the ratio of stock price to estimated fair value.

While MOAT is equal-weighted, the prospectus didn’t describe how MOTI is weighted. MOTI comes with an expense ratio of 0.56 percent. MOAT charges 0.49 percent.

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