Daily ETF Watch: Principal Debuts 2 Funds

Principal rolls out an ETF targeting yield and another targeting pricing power.

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Reviewed by: Heather Bell
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Edited by: Heather Bell
Principal rolled out two new ETFs today, one focusing on pricing power and the other focusing on yield. The Principal Price Setters Index ETF (PSET) and the Principal Shareholder Yield Index ETF (PY) both launched on the Nasdaq stock exchange with expense ratios of 0.40%.

PSET looks to invest in mid- and large-cap U.S. stocks that have the ability to raise the prices on their products and services without losing customers—or, rather, that have substantial pricing power. The fund’s underlying index selects its components from the Nasdaq U.S. Large Mid Cap Index.

Meanwhile, PY’s index uses the same selection universe but targets companies that return significant free cash flow to their investors via cash dividends, stock repurchases and debt reduction.

Momentum Fund With A Twist

ETF Series Solutions has put a fund into registration that relies on investor behavior and momentum to select and weight stocks. The Aptus Behavioral Momentum ETF (BEMO) is slated to list on the BATS Exchange, with an expense ratio of 0.79%.

The fund will track an index that is rebalanced on a monthly basis and allocates 100% of its weight to a list of equities or to ETFs covering 7-10 year Treasury notes, according to the prospectus. The equity component selects its 25 components from a pool of U.S. midcap and large-cap stocks ranked according to momentum and investor behavior; the latter is indicated by the price of the stock relative to its most recent high. Sectors are limited to a weight of 30% with any excess redistributed to other sectors.

New components added to the index are set at a weight of 4%, with the remaining components’ weights adjusted to accommodate for the additions.

The index switches to a Treasury allocation during its monthly reconstitution if there is a 10% drawdown in any of the major broad-market U.S. stock indexes. It switches back to an equity allocation if broad U.S. equities rise above its moving average for an unspecified number of days.

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.