Daily ETF Watch: Twist On Sectors Launches

ProShares debuts sectors funds that exclude an individual sector.

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Reviewed by: Cinthia Murphy
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Edited by: Cinthia Murphy

ProShares, the ETF provider behind various widely known alternative strategies, is launching today four S&P 500 ETFs, but each excludes an individual sector.

The funds are a new twist on sector investing. The idea is that investors might want broad exposure to the S&P 500 but would like to underweight a specific sector they don’t want.

Yes, they could obtain that exposure by owning eight out of nine S&P 500 sectors through individual sector ETFs, but ProShares says a one-stop-solution would minimize fees and commission, as well as rebalancing individual allocations.

The funds are:

  • S&P 500 Ex-Energy ETF (SPXE)
  • S&P 500 Ex-Financial ETF (SPXN)
  • S&P 500 Ex-Health Care ETF (SPXV)
  • S&P 500 Ex-Technology ETF (SPXT)

“We've taken a strategy that has been used by institutional investors for a long time; namely, buying a segment of the market or an index, leaving out a sector,” ProShares CEO Michael Sapir told ETF.com. “These products turn sector funds on their head.”

There’s no question sector investing is popular. The SPDR suite of S&P 500 sector ETFs, alone, has more than $85 billion in combined assets.

ProShares’ new funds will each cost 0.27 percent in expense ratio, or $27 per $10,000 invested. That’s roughly two times the cost of an individual SPDR sector ETF.

ProShares has some $26 billion in ETF assets, making it the 9th-largest ETF issuer in the U.S.

New ETF Issuer Debuts Utility ETF

Reaves Asset Management is the latest fund manager to enter the ETF space with the launch today of its first actively managed ETF, the Reaves Utilities ETF (UTES).

UTES, which is managed by Reaves and brought to market via Virtus, invests solely in utilities “without regard to market cap or dividend yield,” according to a press release. The fund is the first actively managed utilities ETF to come to market.

The sector is widely covered by a dozen or so passive funds, none bigger than the Utilities Select SPDR (XLU | A-89), with $6.1 billion in assets.

The company is hoping its active pursuit of relative value—and its 50-plus years of experience in the utility segment—will allow UTES to deliver outperformance relative to other utility funds.

UTES comes to market with a 0.95 percent expense ratio—a price akin to leverage and inverse strategies in the space. XLU costs 0.15 percent.

FlexShares Adds Two ETFs To Lineup

FlexShares is bringing to market today two additions to its ETF lineup.

The first is a fixed-income fund comprising long-dated bonds with a keen focus on credit quality and long-term solvency, the company said. The idea is to offer investors a new way of “optimizing” credit risk.

The other is a large-cap U.S. equity ETF that looks at quality, value and momentum factors to create a portfolio that delivers “dividend income while controlling for market risk,” the company said.

They are:

  • FlexShares’ Credit Scored U.S. Long Corporate Bond Index Fund (LKOR)
  • FlexShares’ U.S. Quality Large Cap Index Fund (QLC)

Contact Cinthia Murphy at [email protected].

Cinthia Murphy is head of digital experience, advocating for the user in all that etf.com does. She previously served as managing editor and writer for etf.com, specializing in ETF content and multimedia. Cinthia’s experience includes time at Dow Jones and former BridgeNews, covering commodity futures markets in Chicago and Brazil equities in Sao Paulo. She has a bachelor’s degree in journalism from the University of Missouri-Columbia.