Daily ETF Watch: Alt Fund Launches

AdvisorShares’ latest offering is taking on a larger and cheaper competitor.

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Reviewed by: Hung Tran
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Edited by: Hung Tran
AdvisorShares’ latest offering is taking on a larger and cheaper competitor.

AdvisorShares today is launching the AdvisorShares Sunrise Multi-Strategy ETF (MULT), taking on a successful fund from IndexIQ at a time when other alternative strategies are also going into registration.

The actively managed MULT tactically will invest both in long and short positions across a variety of asset classes by using ETFs, futures, foreign currencies and U.S. Treasurys, and may be invested in up to 50 different markets, the company said in a prepared statement.

The fund has an expense ratio of 1.75 percent, or $175 for every $10,000 invested, for at least the first year of trading.

Alternative investments, especially hedge funds, are vehicles that dampen volatility when markets are trading downward but that will trail broader markets in a surging market environment, such as in 2013 when the S&P 500 surged more than 30 percent but the average hedge fund gained 7.4 percent.

On the flip side, on average, hedge funds lost 18 percent in 2008 when the markets collapsed, while the S&P 500 fell some 37 percent.

While the S&P 500 hasn’t had a correction of 10 percentage points or more from its recent high-level mark since October 2011, market observers say a correction is in the cards, and alternative investments may be the buffer that investors need to withstand such volatility.

IndexIQ markets the IQ Hedge Multi-Strategy Tracker ETF (QAI | B-73), a similar hedge-fund-type vehicle, but in an indexed wrapper. QAI has an annual expense ratio of 0.94 percent, or $94 for each $10,000 invested.

Additionally, Index IQ has filed paperwork to offer other hedge fund and private equity strategies in an ETF wrapper to retail investors who want to invest like the pros.

 

Just Around The Corner

iShares on Thursday, July 10 is launching a pair of income-seeking and hedged ETFs at a time when investors are searching for income in all corners of the ETF market while looking to minimize currency risks.

First, the firm is launching the iShares Global REIT ETF (REET), which will track the FTSE EPRA/NAREIT Global REIT Index, composed of publicly listed real estate investment trusts across market caps in developed as well as emerging markets.

REIT and utility-focused ETFs have garnered significant attention this year for their income-producing strategies at a time when investors continue to search for yield in an environment of ultra-low interest rates spurred on by the Federal Reserve’s tapering of its bond-buying program.

The fund’s expense ratio is 0.14 percent, or $14 for every $10,000 invested, according to a regulatory filing.

 

Also, iShares is rolling out its iShares Currency Hedged MSCI EMU ETF (HEZU), which will give investors in eurozone countries currency protection by taking off the table exposure to fluctuations between the dollar and the euro.

The ETF will track the MSCI EMU 100% Hedged to USD Index, an equity benchmark for the European Monetary Union countries with the currency risk of the securities included in the index hedged against the U.S. dollar on a monthly basis.

The fund will invest its assets in another iShares ETF, the iShares MSCI EMU ETF (EZU | A-62). The new fund will have an annual expense ratio of 0.51 percent, or $51 for every $10,000 invested.

The past success of the $11 billion WisdomTree Japan Hedged Equity Fund (DXJ | B-61), which gathered almost $10 billion in fresh assets last year, has inspired fund sponsors like iShares to try to replicate DXJ’s past success.

At the end of the day, Japan’s “Abenomics” initiatives aimed to revitalize Japan’s economy may be the main reason for DXJ’s success, rather than some deeper appeal of currency-hedged strategies.

HEZU has an expense ratio of 0.51 percent, or $51 for every $10,000 invested, according to a regulatory filing.

Both funds’ imminent launches were announced via an NYSE communique.

Barclays ETN Launch

Also launching on Thursday, July 10 is the Barclays Women in Leadership ETN (WIL), according to an NYSE communique.

The ETN will track the Barclays Women in Leadership Total Return USD Index, designed to provide investors with exposure to U.S.-based listed companies that have gender-diverse leadership.

To be included in the Index, a company must have a female chief executive officer or have at least 25 percent female members on the board of directors, according to a regulatory filing.

The note appears to have annual fees of 0.45 percent, or $45 for every $10,000 invested.

 

Hung Tran is a former staff writer for etf.com.