Daily ETF Watch: 6 ETFs Go Live

May 28, 2015

WisdomTree launched an unhedged version of its WisdomTree Japan Hedged Dividend Growth Fund (JHDG) on Thursday, and Global X rolled out the first-ever yieldco ETF. Meanwhile, Direxion debuted four more triple-exposure geared funds, in addition to a flurry of other fund-related activity from the company.

 

The WisdomTree Japan Dividend Growth Fund (JDG) does not include a currency hedge in its index, but like JHDG, it targets dividend-paying Japanese stocks that are components of WisdomTree’s DEFA index and also exhibit growth characteristics. The two funds essentially track the same index except for the currency hedge.

 

Like JHDG, JDG comes with an expense ratio of 0.43 percent. Conceivably, JHDG could invest in the new fund and simply apply a currency hedge on top of it—similar to what iShares notes it has the ability to do with its hedged/unhedged ETF pairs in its prospectuses.

 

And despite the strong currency-hedged trend in the ETF space, not everyone is enamored with the idea or has the same expectations regarding the strength of the Japanese yen. The launch of JDG means that those who pooh-pooh currency hedging can get exposure to the same equities at the same weightings as the hedging fans, while still getting that exposure to the Japanese yen’s movements. It also means that more active investors can switch between the two funds as they feel is warranted.

 

WisdomTree has not made this choice possible with its other currency-hedged funds. It will be interesting to see if JDG is successful and WisdomTree rolls out additional unhedged counterparts to its other currency-hedged funds.

 

Global X Launches First-Of-Its-Kind Fund
Global X debuted the first of the three yieldco ETFs it has in registration. Yieldcos are publicly listed individual securities that are spun off from a parent company and hold assets that produce “defined cash flows,” usually in the energy space. They are, as the prospectus notes, “dividend growth-oriented.”

 

The Global X YieldCo Index ETF (YLCO) holds 20 companies, though not necessarily all of them are yieldcos. The fund can also hold the securities of companies that have announced that they will be spinning off a yieldco in the near future.

 

With its lineup of five SuperDividend and three MLP-focused ETFs, Global X has really focused on building out its offering of income-oriented products, and the launch of YLCO just continues that trend.

 

The new fund comes with an expense ratio of 0.65 percent.

 

Direxion Gets Busy

Direxion is putting the Direxion Daily Gold Bull 3X Shares (BAR) to rest, with the fund’s last day of trading taking place on June 19 and liquidation occurring on June 26.

 

The fund’s complementary inverse ETF, the Direxion Daily Gold Bear 3X Shares (BARS) was liquidated at the end of last year due to failure to accumulate assets under management. Similarly, BAR currently has less than $3 million in AUM.

 

ProShares has had better luck with its double exposure gold ETFs, the ProShares Ultra Gold ETF (UGL) and the ProShares UltraShort Gold ETF (GLL), which have $96 million and $69 million in AUM, respectively. It looks like 3X leveraged and inverse exposure was just a step too far for investors.

 

The closure of BAR is the 23rd announced fund closure year-to-date.

 

3X Oil, Biotech Funds Launching              

While BAR is taking its final bow, Direxion is rolling out four more triple-exposure funds, in the form of two bull-and-bear pairs.

 

The funds, their tickers and their annual expense ratios are as follows:

  • Direxion Daily S&P Biotech Bull 3X Shares (LABU), 1.04 percent, or $95 for each $10,000 invested
  • Direxion Daily S&P Biotech Bear 3X Shares (LABD), 0.95 percent
  • Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 3X Shares (GUSH), 1.04 percent    
  • Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares (DRIP), 0.95 percent

 

Both pairs of funds represent areas that are of a great deal of interest to investors and subject to a significant diversity of opinions; both pairs track “Select” industry indexes provided by S&P Dow Jones Indices.

 

More Homebuilders ETFs Planned
Direxion has also put two more funds into registration targeting the homebuilders industry. Several years ago, the firm filed for the Direxion Daily S&P Homebuilders Bull 3X Shares and the Direxion Daily S&P Homebuilders Bear 3X Shares, which have yet to launch.

 

The updated filing includes the Direxion Daily S&P Homebuilders Bull 2X Shares and the Direxion Daily S&P Homebuilders Bear 2X Shares, which, like the 3X funds, are slated to track the S&P Homebuilders Select Industry Index.

 

Homebuilders have been getting some attention from geared fund providers lately. ProShares filed for double and triple exposure ETFs tracking a Dow Jones-branded homebuilders index just last month. Those funds include the following:

 

  • ProShares Ultra Homebuilders, 200 percent
  • ProShares UltraShort Homebuilders, -200 percent
  • ProShares UltraPro Homebuilders, 300 percent
  • ProShares UltraPro Short Homebuilders, -300 percent

 

The Direxion filing did not include tickers, but the “Bull” funds will come with an expense ratio of 1.04 percent, while the “Bear” funds will charge 0.95 percent.

 

 

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