ETF Odds & Ends: Innovator Kicks Off 2022

Plus, a roundup of other developments around the turn of the year.

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Reviewed by: Heather Bell & Dan Mika
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Edited by: Heather Bell & Dan Mika

2021 was a landmark year one for ETFs, with total launch numbers shattering all previous records to see 477 ETFs launch during the 12-month period. That said, 2022 started off strong, with six ETFs—mostly offering defined outcome strategies—rolling out on the first trading day of the year.

Innovator alone accounted for four of the ETFs with the release of a quartet of funds under its Accelerated line, which tracks the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ) with double or triple exposure of the underlying fund, with a cap of between 10.58% and 20.28% of gains.

The ETFs generally have downside risks that are the same as their tracked funds. All of the funds charge 0.79% in expenses and list on Cboe Global Markets.

 

NameFundUnderlyingUpside to CapDownsideGains Cap
XDJAInnovator U.S. Equity Accelerated ETF – JanuarySPY2X1X16.88%
XBJAInnovator U.S. Equity Accelerated 9 Buffer ETF – JanuarySPY2X1X, Buffer against first 9% of losses10.58%
XTJAInnovator U.S. Equity Accelerated Plus ETF – JanuarySPY3X1X15.48%
QTJAInnovator Growth Accelerated Plus ETF – JanuaryQQQ3X1X20.28%

 

At the same time, Pimco released its latest iteration of the strategy with the AllianzIM U.S. Large Cap 6 Month Buffer10 Jan/Jul ETF (SIXJ), which caps gains from following SPY at 10% while reducing downside risk. The fund resets its exposures in July and carries an expense ratio of 0.74%. It lists on the NYSE Arca.

Additional Launches

The RiverNorth Volition America Patriot ETF (FLDZ) debuted on the NYSE Arca on Dec. 31 with an expense ratio of 0.70%. The fund is actively managed and invests in companies with more than $5 billion in market capitalization that generate at least 90% of its revenues in the U.S.

The fund will donate a majority of its subadvisory fee or 100% of profits from its management fee to Folds of Honor, a charity that gives scholarships to children of U.S. service members who were disabled or killed on duty.

RiverNorth had just over $5.27 billion in assets under management at the start of 2022, according to the firm’s most recent disclosure to the SEC.

Just a day later, on Jan. 4, Toroso Investments launched the UPAR Ultra Risk Parity ETF (UPAR) on the NYSE Arca, carrying an initial expense ratio of 0.65% before a waiver of 3 basis points expires at the end of April 2023.

UPAR is a leveraged clone of the $1.59 billion RPAR Risk Parity ETF (RPAR), an actively managed fund of ETFs that moves assets between equities, Treasurys, commodities and inflation-protected bonds to balance risk between the asset classes. UPAR aims to produce 1.6x to 1.8x of the returns of RPAR’s net asset value.

GAMCO Investors launched its third ETF on Wednesday with the goal of drawing in value investors by charging no fees for the first year.

The Gabelli Asset ETF (GAST) debuted on the NYSE Arca Wednesday as the third in GAMCO’s line of active, nontransparent funds. GAST focuses on buying into companies that GAMCO’s portfolio managers believe have market valuations below what a private investor would pay to acquire the company.

GAST will not charge management fees on the first $25 million in assets within the first 12 months of trading;  it then hikes to a 0.90% expense ratio. The same strategy was used while launching the Gabelli Love Our Planet & People ETF (LOPP) last February. However, that fund has only garnered $11.9 million in assets.

On Thursday, first-time issuer NextGen ETFs debuted its NextGen Trend and Defend ETF (TRDF) on the Cboe Global Markets. The new fund carries an initial expense ratio of 1%, but that figure will rise to 1.11% once a temporary fee waiver expires at the end of April 2023.

TRDF is an actively managed fund of other ETFs that track the S&P 500, the inverse of the S&P 500 or short-term Treasury bonds. The movement into different asset classes is based on the firm’s quantitative strategy that tracks market trend directions.

First-time issuer Rareview Capital also launched on Thursday the Rareview Inflation/Deflation ETF (FLTN) on the Cboe Global Markets. The fund carries a 0.92% expense ratio, but has a waiver of 1 basis point until the end of January 2023.

FLTN is an actively managed fund that primarily invests in inflation-protected Treasury bonds in times of inflation, and invests in normal Treasurys, cash and derivatives in times of deflation.

Finally, the Wahed Dow Jones Islamic World ETF (UMMA) debuted on the Nasdaq Friday, carrying an expense ratio of 0.65%.

The actively managed fund invests in companies that are compliant with Islamic law, and aims to return near or above the Dow Jones Islamic Market International Titans 100 Index. The fund will not use its cash reserves to buy interest-bearing products.

It is the second ETF from Wahed Invest, a New York-based financial services firm that caters to Muslim investors. The firm debuted with its Wahed FTSE USA Shariah ETF (HLAL) in 2019.

Closures

There were several closures around the end of 2021 and the start of 2022. Most recently, The Active Dividend Stock ETF (TADS) and the Trend Aggregation ESG ETF (TEGS) both were set to have their last day of trading on Friday. They represent the first completed closures of the new year.

Just a few days prior, on Jan. 5, the Legg Mason Global Infrastructure ETF (INFR) ceased to accept new creation orders, and its last day of trading is set for Jan. 27.

Expense Ratio Changes

A selection of iShares funds effected expense ratio changes during the first week of the year.

On Thursday, four iShares ETFs lowered their expense ratios by 1 basis point:

Meanwhile, on Jan. 5, the iShares 0-5 Year TIPS Bond ETF (STIP) lowered its expense ratio from 0.05% to 0.03%, and the iShares MBS ETF (MBB) lowered its expense ratio from 0.06% to 0.04%.

Other Changes

Effective Jan. 3, some funds made changes to their names, tickers or expense ratios.

The SmartETFs Sustainable Energy II ETF (SULR) changed its ticker to SOLR, while the WisdomTree U.S. Quality Shareholder Yield Fund (QSY) changed its name to the WisdomTree U.S. Value Fund and adopted the ticker WTV.

And on Jan. 5, the KraneShares Bosera MSCI China A Share ETF (KBA) changed its name to the KraneShares Bosera MSCI China A 50 Connect Index ETF and its index from the MSCI China A Index to the MSCI China A 50 Connect Index.

 Also during the week, a bevy of changes were announced for four Direxion ETFs that are scheduled to become effective as of Feb. 28.

The Direxion Daily Financial Bull 3X Shares (FAS) and the Direxion Daily Financial Bear 3X Shares (FAZ) both will change their index from the Russell 1000 Index – Financials to the Russell 1000 Financials 40 Act 15/22.5 Daily Capped Index.

At the same time, the Direxion Daily MSCI Real Estate Bull 3X Shares (DRV) and the Direxion Daily MSCI Real Estate Bear 3X Shares (DRN) will swap their underlying index, the MSCI US IMI Real Estate 25/50 Index, for the Real Estate Select Sector Index. Their names will also change to the Direxion Daily Real Estate Bull 3X Shares and the Direxion Daily Real Estate Bear 3X Shares, respectively.

Contact Heather Bell at [email protected]