Daily ETF Watch: JPM Launches US Fund

Three firms launched three funds this morning covering very different areas of the market. J.P. Morgan added a U.S. fund to its growing lineup of smart-beta ETFs, while IndexIQ launched a global tactical asset allocation fund. Finally, Credit Suisse rolled out an income-focused ETN that invests in publicly traded securities offering high yields.

J.P. Morgan

The JPMorgan Diversified Return US Equity ETF (JPUS) is the latest addition to the issuer’s family of smart-beta ETFs. The firm already had funds covering the emerging markets, developed markets and global spaces.

JPUS’ underlying index is derived from the Russell 1000 and targets relative valuation, price momentum and quality, according to its prospectus, with additional measures in place to ensure diversification across sectors.

The fund comes with a net expense ratio of 0.29 percent; it listed on the NYSE Arca.

IndexIQ

IndexIQ launched a fund that seeks to mimic a popular actively managed investment approach via an index of other exchange-traded products. The IQ Leaders GTAA Tracker ETF (QGTA) is based on an index that selects the top 10 global tactical asset allocation mutual funds based on their size and performance and then seeks to replicate their “beta return characteristics” by investing in ETFs and ETNs, according to the prospectus. The index can include both short and long positions.

QGTA is expected to provide exposure to U.S. equities and fixed income, as well as emerging market and foreign developed-market equities.

The fund comes with a net expense ratio of 0.60 percent.

Credit Suisse

Credit Suisse added to its lineup of X-Links ETNs with the launch of the Credit Suisse X-Links Multi-Asset High Income ETN (MLTI), a product designed to appeal to investors searching for yield in the current low-rate environment. The ETN’s underlying index is provided by the NYSE and tracks publicly traded securities that have histories of providing high dividend yields.

MLTI’s index can include up to 120 securities, selected based not only on their yield, but on their asset class and sector representation. Minimum liquidity thresholds are also in place for liquidity and free-float market capitalization, according to a press release.

The index’s 12-month yield as of Sept. 23 was 7.93 percent. Its top four holdings were all fixed-income ETFs, but its roster of top 10 holdings also included business development companies and REITs as well as an international equity ETF.

MLTI comes with a total expense ratio of 0.84 percent.

Pacer Plans 4 Funds

Pacer Funds, which launched three ETFs earlier this year, has filed for four more funds that fit into all of the latest trends. The proposed funds, their tickers and their expense ratios are as follows:

• Pacer Trendpilot European Index ETF (PTEU), 0.65 percent
• Pacer Autopilot Hedged European Index ETF (PAEU), 0.65 percent
• Pacer Global High Dividend ETF (PGHD), 0.60 percent
• Pacer International Export Leaders ETF (PIEL), 0.60 percent

PTEU, like the other Trendpilot ETFs, will switch its portfolio according to the 200-day moving average of the FTSE Eurobloc Index. The portfolio can be configured to hold a long position in the equities of the FTSE Eurobloc Index or a long position in three-month Treasury bills, or a 50/50 split between the two.

Meanwhile, PAEU will use the 20-day moving average of the euro to determine whether it should apply a currency hedge to a portfolio of the equities in the FTSE Eurobloc Index. When the 20-day moving average is lower than the euro's 130-day moving average, the fund will implement a currency contract hedge, but when the 20-day moving average of the euro is higher than the 130-day moving average, the hedge will be removed.

PGHD will be based on a benchmark derived from the FTSE All World Developed Large Cap Index. The underlying index will screen out all equities with negative free cash flow or earnings as well as all financial companies that are not real estate investment trusts. From there, the index selects the 300 companies with the highest free cash flow yield and then ranks them by dividend yield. The final index consists of the top 100 of those components, weighted by annual dividend distribution.

Meanwhile, PIEL selects the 200 companies in the FTSE Developed Ex US Index with the highest percentage of foreign sales relative to total sales. From there it ranks the companies by their free cash flow yield, selecting the top 100, which it then equally weights.

All of the funds have at least some smart-beta element to them, but PAEU seems to be the truly unique proposition of the four. While IndexIQ recently launched 50-percent-hedged foreign equity ETFs, this would be the first fund to switch back and forth between applying and removing a currency hedge.

Contact Heather Bell at [email protected].