Daily ETF Watch: Elkhorn Debuts RAFI Fund

Elkhorn Investments is set to launch an ETF based on a FTSE RAFI index.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

Elkhorn Investments is set to roll out its second ETF today. The Elkhorn FTSE RAFI U.S. Equity Income ETF (ELKU) tracks the FTSE RAFI US Equity Income Index, which is derived from the FTSE US All Cap Index and targets the components of the parent benchmark based on high dividend yield and sustainable income, according to the prospectus.

The RAFI methodology developed by Research Affiliates uses a “Fundamental weight” that is based on sales, cash flow, book value and dividend distributions to calculate the weights of its components. As of Oct. 30, ELKU’s underlying benchmark had 158 components.

Elkhorn launched its first fund in May; the Elkhorn S&P 500 Capital Expenditures ETF (CAPX) currently has less than $2 million in assets under management. The firm has two more RAFI-based ETFs in registration that will cover developed markets other than the U.S. and emerging markets.

ELKU comes with an expense ratio of 0.39%.

New iShares FactorSelect ETF

BlackRock’s iShares launched another fund under the scope of its FactorSelect ETF family. The iShares FactorSelect MSCI Emerging ETF (BATS: EMGF) is tied to a multifactor index that targets the value, quality, momentum and low size factors.

The underlying benchmark is also designed to maintain a similar risk exposure to that of its parent index, the MSCI Emerging Markets Index. As of the end of September EMGF’s index included 180 companies selected from Brazil, Chile, China, Colombia, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, the Philippines, Poland, Qatar, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey and the United Arab Emirates, the prospectus said.

The iShares FactorSelect family already includes five other ETFs that have launched this year, covering the U.S., developed markets and global spaces.

EMGF comes with an expense ratio of 0.65%.

Contact Heather Bell at [email protected].

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.