ETF Watch: Water Fund Launches

August 09, 2016

For the first time in a while, a new water ETF has been introduced to U.S. investors, and this one has a smart-beta twist. The Summit Water Infrastructure Multifactor ETF (WTRX) is listed on the NYSE Arca and comes with an expense ratio of 0.80%.

There are four global water ETFs already trading, but they are mostly cap-weighted products. WTRX’s underlying index has a proprietary methodology for evaluating water companies that is designed select companies based on their yield and risk/return profile. Geographic diversification is also taken into account. The fund invests in companies that are primarily involved in water-related equipment and water purification, storage and delivery, among other business lines.

The underlying index targets U.S., developed-market and emerging market companies that have at least $200 million in market capitalization.

Citi Debuts New MLP ETN
Citigroup has rolled out an ETN that is a clone of one of its existing products. The C-Tracks ETNs on the Miller/Howard MLP Fundamental Index, Series B, Due July 13, 2026 (MLPE) tracks the same index as the $115 million C-Tracks Miller/Howard MLP Fundamental ETN (MLPC).

The index screens its universe to include MLPs with market caps greater than $500 million, that meet minimum liquidity requirements and that show positive distribution growth. From there it evaluates the MLPs based on distribution growth, capital expenditures and distribution coverage, and applies a two-tiered modified equal-weighting scheme.

The investor fee is 0.85% for MLPE, while MLPC, the existing ETN, charges 0.95%. 

USCF Takes New Direction

USCF Advisers, the equity ETF issuer that is affiliated with United States Commodity Funds, an issuer of futures-based commodity funds, has filed for another ETF. The firm is planning to go head-to-head with ETF Managers Group’s $2.5 million Restaurant ETF (BITE) with its USCF Restaurant Leaders Fund.

The fund will track an index provided by Indxx that tracks “branded store front companies that serve food direct to customers.” Component firms can be U.S. or foreign companies and must have a market capitalization of at least $300 million. The prospectus notes that the index will likely include between 30 and 40 companies.

The fund is slated to list on the NYSE Arca and charges an expense ratio of 0.65%. The filing did not include a ticker.

Meanwhile, BITE’s equal-weighted index covers 42 U.S. restaurant companies. The fund launched in late 2015, and carries an expense ratio of 0.75%.

It’s unclear why an issuer would target this space with a me-too fund. The broader-based PowerShares Dynamic Food & Beverage Portfolio (PBJ) goes far beyond restaurants to track the broader food industry, and while its assets under management are a perfectly respectable amount at $183 million, the food and restaurant spaces are not ones that investors are flooding into.

USCF Advisers rolled out the Stock Split Index Fund (TOFR) in 2014; the fund covers recently split stocks via an equal-weighted index.

Contact Heather Bell at [email protected].

 

 

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