Daily ETF Watch: New Eurozone Fund Nears

October 17, 2014

First Trust, the exchange-traded fund firm carving out a growing niche for itself with a stable of both active and quasi-active “smart beta” funds, appears to be very close to launching one of its AlphaDex “smart beta” ETFs focused on the eurozone.

The First Trust Eurozone AlphaDex ETF will trade under the symbol “FEUZ” and have an annual expense ratio of 80 basis points, or $80 for each $10,000 invested, according to the fund’s most recent registration statement.

The fund will join the firm’s First Trust Europe AlphaDex Fund (FEP | C-42), which canvasses European countries inside and outside of the eurozone—notably the United Kingdom. FEP also has an annual expense ratio of 80 basis points.

The launch will resonate in two important ways: Firstly, it will give clients who favor First Trust’s “AlphaDex” index methodology a tool with which to focus exclusively on the eurozone. The EU’s faltering growth is at the center of the latest volatility, and investors who want to play Europe’s rebound are likely to find attractive returns in a fund with concentrated exposure to the now-troubled area.

Secondly, the upcoming fund is the latest example of the “smart beta” trend that is resonating so much in the contemporary ETF market. As much as $380 billion in assets are said to be in such strategies—which amounts to about one-fifth of the $1.8 trillion now invested in U.S.-listed assets.

“Smart beta,” which seeks to isolate different factors such as such as size, value and momentum to improve returns, is a refinement of first-generation capitalization-weighted indexing.

The latest registration statement, which regulators have declared effective, suggest the launch is coming up soon, if not imminently.

 

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