Daily ETF Watch: CapEx Fund Goes Live

May 27, 2015

Elkhorn Investments, a firm led by PowerShares’ former head of ETFs Ben Fulton, today launched its first ETF—a “smart beta” fund that targets companies within the S&P 500 Index that make the most efficient use of their capital expenditures.

 

The Elkhorn S&P 500 Capital Expenditures Portfolio will track the S&P 500 Capex Efficiency Index, which basically selects the top 100 stocks in the S&P 500 in terms of capital expenditure efficiency. According to the prospectus, companies eligible for inclusion “must have [their] most recent fiscal year capital expenditures scaled by sales lower than the historical three year average.” 

 

Companies are ranked based on the ratio of the current year to the three-year average, with the stocks with the lowest ratios chosen for the index, the prospectus said. 

 

The fund, which will list today on the Nasdaq exchange, has an annual expense ratio of 29 basis points, or $29 for each $10,000 invested.

 

iShares also recently filed for an ETF that will rely on capex, but in a different way. The iShares U.S. CapEx ETF will be based on an index from Morningstar that will target companies covered by Morningstar analysts that are deemed most sensitive to broad economic capex exposure. 

 

U.S. companies have been sitting on record amounts of cash reserves for a while now, and that may be one of the underlying reasons for filings for two capex-based ETFs within weeks of each other. 

 

ProShares Closing Aussie Dollar Fund

ProShares announced last week that it would be shuttering its ProShares Ultra Australian Dollar ETF (GDAY). The fund had about $2.6 million in assets under management at the time of the announcement and had been trading for nearly three years.

 

The currency has been on a mostly downward trend since the fund’s launch, which may have something to do with its failure to accumulate assets, although the ProShares UltraShort Australian Dollar ETF (CROC), which will continue trading, has exhibited pretty decent upside since its launch, and it still has less than $20 million in assets under management.

GDAY’s last day of trading will be June 18, with liquidation set to occur on or around June 29. It is the 22nd ETF to close this year.

 

Guggenheim Plans Equal-Weight Real Estate Fund
A recent filing from Guggenheim indicates the firm plans to roll out an equal-weighted ETF targeting the real estate sector of the S&P 500.

 

If you’ll recall, late last year S&P Dow Jones Indices and MSCI announced that they were adding an 11th sector to the Global Industry Classification System (GICS) that both index providers use. The real estate sector was basically broken out of the financial sector and includes real estate investment trusts (excluding mortgage REITs) as well as real estate activities, operating, development and services companies.

 

The Guggenheim Equal Weight Real Estate ETF will join nine other Guggenheim ETFs covering equal-weighted sectors of the S&P 500. So far, the only ETF currently trading that reflects the adjustment is the Fidelity MSCI Real Estate ETF (FREL), which launched in February. The Select Sector SPDRs have not yet added a real estate fund. However, it should be noted that GICS structure will not actually implement the change until Aug. 31, 2016.

 

The filing did not include an expense ratio or ticker, but all of Guggenheim’s other equal-weighted sector funds derived from the S&P 500 come with an expense ratio of 0.40 percent.

 

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