ETF Watch: iShares Rolls Out Ex-China Fund

Today iShares rolled out a fund with an interesting twist on emerging markets: It omits China, the largest market in almost every emerging market product. The iShares MSCI Emerging Markets ex-China ETF (EMXC) covers the remaining 22 of the 23 markets that MSCI defines as “emerging.”

EMXC comes with an expense ratio of 0.49% and lists on the Nasdaq exchange.

The fund’s index is weighted by market capitalization and covers mid- and large-cap stocks in its target markets, the prospectus notes.

The Columbia EM Core ex-China ETF (XCEM) launched in September 2015 and offers similar exposure. However, it has only gathered $9.5 million in assets under management.

3X Oil Funds Debut

Yet another firm is jumping on the 3X oil futures ETF bandwagon. Today United States Commodity Funds has launched the United States 3x Oil Fund (USOU) and the United States 3x Short Oil Fund (USOD) on the NYSE Arca.

The funds come with rather staggering expense ratios of 1.84% for USOU and 2.19% for USOD.

While USOU offers three times the daily performance of the short-term futures contract on light, sweet crude oil, USOD provides three times the inverse of the same contract. There are three other similar product pairings offered by VelocityShares, UBS and ProShares. The funds, their tickers and their expense ratios are below:

• VelocityShares 3x Long Crude Oil ETN (UWT), 1.50%

• VelocityShares 3x Inverse Crude Oil ETN (DWT), 1.50%

• UBS ETRACS - ProShares Daily 3x Long Crude ETN (WTIU), 1.45%

• UBS ETRACS - ProShares Daily 3x Inverse Crude ETN (WTID), 1.85%

• ProShares UltraPro 3x Crude Oil ETF (OILU), 1.03%

• ProShares UltraPro 3x Short Crude Oil ETF (OILD), 1.10%

Late last year, Credit Suisse caused quite a stir when it delisted its pair of triple-exposure oil futures ETNs, despite the fact that they had combined assets of roughly $1 billion. Since the delisting of the VelocityShares 3x Long Crude Oil ETN (UWTI) and the VelocityShares 3x Inverse Crude Oil ETN (DWTI), the above products have all sprung into being to fill the void.   

While USCF is the sponsor of the two products, REX Shares, another ETF issuer, partnered closely with the firm to help it develop and launch them.

ETF Watch: 'Iconic' Brands ETF In The Works

Global X Funds, an ETF issuer with some $5.6 billion in assets under management across 57 ETFs in the market today, is looking to add another unique portfolio to its lineup.

The firm has put in registration a consumption-focused ETF, the Global X Iconic U.S. Brands ETF.

The fund will own companies involved with business-to-consumer and business-to-business products and services, and will track an index developed by Accuvest Global Advisors. No ticker or fees were disclosed in the filing, but the ETF is set to list on the Bats exchange, which is owned by ETF.com’s parent company, CBOE Holdings.

$18 Trillion Consumption Economy

The ETF will focus exclusively on what the firm calls “iconic brands,” or the leading brands in various consumer subindustries. It’s a strategy designed to capitalize on the most popular brands driving and benefiting most from what Accuvest calls an $18 trillion consumption economy that’s still growing.

Security selection begins with a universe comprising the largest 1,500 U.S. companies by market capitalization, and looks for those with a minimum market capitalization of $2 billion that also meet minimum liquidity thresholds.

The securities then go through a ranking that looks at three metrics: market capitalization, three-year total sales and three-year sales growth rate, according to the filing. The “Iconic Brands Score” is then used to rank these companies, and pick the top 100.

Holdings are weighted using an “Iconic Brands Strength Score,” which ranks companies based on trailing one-year revenue growth and trailing one-year free cash flow, the prospectus said.

Sector Categorization Unclear

From the filing, it isn’t clear whether this new ETF would fall into the camp of consumer discretionary funds—there are 32 funds competing there—or consumer staples, where 20 funds currently compete.

It could be that this fund taps into both segments, and offers broad exposure to U.S. consumers in general, much like a fund like the Columbia Emerging Markets Consumer ETF (ECON) has done for emerging market consumers.

So far, 2017 has been a positive year for all these consumer-centric pockets of the market, as seen in the performance of ECON, and the largest discretionary and staples ETFs, the Consumer Discretionary Select Sector SPDR Fund (XLY) and the Consumer Staples Select Sector SPDR Fund (XLP):

Chart courtesy of StockCharts.com

Contact Cinthia Murphy at [email protected]