Daily ETF Watch: New PutWrite Fund Debuts

WisdomTree rolled out an ETF today that uses an options strategy. To track its benchmark, the WisdomTree CBOE S&P 500 PutWrite Strategy Fund (PUTW) sells cash-secured put options on the S&P 500 index and invests the premium received in return in a portfolio of Treasury bills, the prospectus said.

The strategy tends to do best in a “sideways” market and usually outperforms the S&P 500 when the market is trending downward. It tends to underperform the S&P 500 when the market is going up. Essentially, the PutWrite strategy is a tool for protecting your portfolio in a flat or declining market.

The fund launched on the NYSE Arca and comes with an expense ratio of 0.38%.

Janus To Launch Small-Cap Funds

Tomorrow, Janus is set to roll out its first ETFs since the acquisition of VelocityShares in 2014. The Janus Small Cap Growth Alpha ETF (JSML) and Janus Small/Mid Cap Growth Alpha ETF (JSMD) will both track indexes designed to select companies that are likely to experience what the prospectus terms “smart growth.”

The smart-beta methodology for the ETFs evaluates potential components for growth, profitability and capital efficiency. They will launch on the Nasdaq stock market and come with an expense ratio of 0.50%.

MSCI Rethinks China Shares

In an index announcement earlier this month, MSCI acknowledged recent changes made by China’s government as positive moves. The index provider had been considering including the A-shares market on a partial basis in its MSCI Emerging Market Index last year, but said in June that further progress in China’s market structure still needed to be made.

The country is taking steps to address the issues MSCI cited. Most recently, China has revised its qualified foreign Institutional Investor program, doing away with the quotas in favor of a system based on assets under management (AUM). Instead of applying for quotas, firms will be able to invest between $200 million and $5 billion in China’s mainland markets depending on their assets under management, and only need to seek permission for amounts beyond that range.

Further, foreign open-ended mutual funds will be able to exit their investments daily, whereas previously they could only do so on a weekly basis. And investments, which were previously subjected to a capital lockup of one year, can now be withdrawn after just three months. A monthly cap on withdrawals is set at 20% of AUM.

These changes address two of the concerns MSCI outlined when it deferred the inclusion of the A-shares in its indexes last year. MSCI had specifically noted questions foreign investors had around being able to expand their quotas easily and also around being able to access daily liquidity.

MSCI also had concerns around the question of beneficial ownership relating to foreign-investor-owned separate accounts and China’s Shanghai-Hong Kong Stock Connect plan, which would allow investors to trade securities from the Shanghai exchange on the Hong Kong exchange and vice versa. The index provider indicated in the announcement that reforms that were already in place just needed to be proven effective over time.

In the past several months, China came under criticism for its actions during the stock volatility that has been seen throughout the last half of 2015 and into this year, the announcement noted. Trading freezes and other interventions caused foreign investors to raise questions about liquidity and trading. Nonetheless, MSCI has said that it will launch another consultation period in April 2016 around the topic of the A-shares inclusion, with a decision expected once again during the June review.

Contact Heather Bell at [email protected].