ETF Launches Ramping Up

May 20, 2020

After a lull, ETF launches are slowly ramping up again. We cover some of the recent launch and filing news below.

Global AI Fund Debuts

On May 11, ROBO Global, the boutique issuer behind the $1.1 billion ROBO Global Robotics And Automation Index ETF (ROBO), launched its third fund, the ROBO Global Artificial Intelligence ETF (THNQ).

THNQ tracks global companies that either heavily use artificial intelligence (AI) in their business operations or develop engines and solutions for others. Its benchmark is based on a proprietary ranking system that takes into account how much revenue a company derives from AI, how heavily it has invested, and its technology and market leadership. That leads to a portfolio of cloud computing, big data analysts, network/security providers, ecommerce giants, health care companies and more.

THNQ's benchmark may have anywhere from 50 to 100 equities in it, subject to minimum capitalization and liquidity restraints; currently, the fund holds 73 names, the top three of which are iRobot (IRBT) at 2.2%, Veeva Systems (VEEV) at 2.0% and Twilio (TWLO) at 1.9%.

(Use our stock finder tool to find an ETF’s allocation to a certain stock.)

At least 25% of the index will track international equities; China A-shares are specifically called out in the prospectus as a potential holding.

THNQ, which lists on the NYSE Arca, costs 0.75%, but a fee waiver in place until Aug. 31, 2021, brings the total expense ratio down to 0.68%.

First Trust Launches New Buffer ETFs

On May 18, First Trust added two new ETFs to its target outcome fund lineup, the FT Cboe Vest U.S. Equity Buffer ETF—May (FMAY) and the FT Cboe Vest U.S. Equity Deep Buffer ETF—May (DMAY).

These funds function much the same as the company's existing target outcome funds, just with a different start/end date of May 18, 2020 to May 21, 2021. (Read: "First Trust Debuts February ETF Family")

The objective of FMAY and DMAY is to track the price return of the SPDR S&P 500 ETF Trust (SPY) via FLEX options, but with upside and downside potential capped.

FMAY will allow investors to participate in SPY's returns up to 17.07% before expenses (16.21% after expenses), while providing a buffer against the first 10% of losses.

Meanwhile, DMAY will cap upside potential at 9.95% before expenses (9.09% after expenses) and provide a buffer against losses in SPY greater than 5% but less than 30%, before expenses.

The funds, which list on Cboe Global Markets (the parent company of ETF.com), each have an expense ratio of 0.85%.

Innovator Plans Portfolio Of Buffer ETFs

Elsewhere in target outcome ETFs, Innovator, the issuer behind the Innovator defined outcome series of ETFs, announced plans to change its Innovator Lunt Low Vol/High Beta Tactical ETF (LVHB) into another buffer ETF product.

Named the Innovator S&P 500 Diversified Power Buffer ETF (BUFF), the ETF will hold a "set and forget it" portfolio of all 12 of the firm's monthly S&P 500 Power Buffer ETFs, which are designed to cap upside returns and potential losses in S&P 500 options over a year-long period.

BUFF, which launches on or around July 15, will still list on Cboe Global Markets. Its expense ratio will fall from 0.49% to 0.20%.

Contact Lara Crigger at [email protected]

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