ETF Watch: iShares Debuts Socially Responsible Funds

June 30, 2016

iShares has rolled out two new funds on the Nasdaq exchange to complement its existing, U.S.-focused ESG (environmental, social and governance) ETF. The iShares MSCI USA ESG Select ETF (KLD | B-86) has been joined by the  iShares MSCI EAFE ESG Select ETF (ESGD) and the iShares MSCI EM ESG Select ETF (ESGE), which come with expense ratios of 0.40% and 0.45%, respectively.

The two funds track indexes derived from MSCI benchmarks that screen out companies involved in the tobacco and weapons industries as well as business controversies. The companies are rated based on their positive ESG characteristics relative to their industry peers, and weighted in such a way that those with the highest ratings get the most exposure, but also so that the resulting index reflects the risk/return profile of the parent MSCI index, the prospectus said.

ESGD’s index covers developed-market companies outside of North America, while ESGE covers 23 emerging markets.

Guggenheim Launches Equal-Weighted Mega-Cap Fund
Guggenheim Investments, which is known for the $9 billion Guggenheim S&P 500 Equal Weight ETF (RSP | A-80), has launched on the NYSE Arca an ETF tied to an equal-weighted version of the mega-cap S&P 100. The Guggenheim S&P 100 Equal Weight ETF (OEW) tracks an equal-weighted version of an index that includes the largest and most stable components from the S&P 500. Components must also have listed options, and sector representation is taken into account when selecting the index constituents. Like RSP, OEW comes with an expense ratio of 0.40%.

‘Biothreat’ Fund Planned

Strategy Shares, the firm formerly known as Huntington Strategy Shares, has filed for a new ETF that will invest in companies that are involved in products or services designed to warn of, combat or detect biological threats, including diseases, environmental issues, biological warfare, and food and water safety issues. The BioShares Biothreat ETF will track an index from LifeSci Index Partners and list on the NYSE Arca exchange.

According to the prospectus, the index can include U.S.-listed companies with at least $1 billion in market capitalization and an average daily turnover of at least $2 million during the preceding six months. The index implements a modified market-cap-weighting approach, with individual companies capped at 4.9% of the index during semiannual rebalancings.

Component companies tend to fall into six different buckets in terms of their products and services: those that research and seek to eliminate diseases such as Zika and Ebola; those that seek to prevent and combat biological warfare agents, including anthrax and sarin gas; those that warn of biological threats; those that help with border and homeland security; those that help with the storage of necessary resources during disasters, such as first-aid kits, power sources, canned foods and health care supplies; and those that are concerned with ensuring food and water safety and purity.

The filing harkens back to the launch of the PureFunds ISE Cyber Security ETF (HACK | C-33), a fund that rolled out after several well-publicized cybersecurity hacks in 2014 and quickly accumulated a few hundred million dollars in assets under management. Today, HACK is a $645.5 million fund. With the Zika virus in the news daily and global terrorism remaining a threat, the proposed BioShares ETF could find an eager audience. 

Currently, two other funds carry the “BioShares” brand name: the BioShares Biotechnology Clinical Trials Fund (BBC) and the BioShares Biotechnology Products Fund (BBP), which both track LifeSci indexes and launched under the exemptive relief of Virtus. The ETFs rolled out in late 2014 and currently have less than $20 million in assets under management each.

Bitcoin To List On Bats
A recent filing from the Winklevoss Bitcoin Trust shows that the organization has switched the listing exchange for the Winklevoss Bitcoin Shares (COIN) from the Nasdaq to the Bats Exchange, which owns ETF.com. The filing is on its sixth amendment and the fund has been in registration for roughly three years.

The filing also listed the Gemini Trust company as the ETF’s custodian. Gemini is owned by Cameron and Tyler Winklevoss and serves as a bitcoin trading platform. 

Contact Heather Bell at [email protected].

 

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