Global X has filed for three ETFs that offer the firm’s own take on spaces already covered by existing products. The funds include two niche ETFs and a multifactor ETF.
2 Thematic Funds
The Global X Genomics ETF will target companies that operate in the area of genomic science. That means they can be involved in fields such as gene-editing genomic sequencing, genetic medicine, therapy and computational genomics, among others, the prospectus says.
To be included, companies must meet minimum liquidity and size thresholds as well as be listed on a developed-market exchange or incorporated in a developed market. Components can be drawn from the small-, mid- and large-cap size classifications. The methodology uses natural language processing to evaluate a company’s exposure to the genomics space and ranks them based on that exposure. Components are selected from the highest-ranked stocks and then weighted using a modified-market-capitalization approach, the document notes.
The index is rebalanced and reconstituted every six months, according to the prospectus, which also notes that the holdings are expected to be concentrated in the health care sector.
The Global X E-commerce ETF essentially uses the same methodology but applies it to the online retail space, targeting companies that generate a large portion of their revenue via online sales or that support e-commerce through the provision of software or services or the operation of e-commerce platforms, the fund’s prospectus says. The document also notes the fund is expected to have holdings concentrated in the consumer discretionary sector.
Both of these niches are covered by existing funds. The $178 million ARK Genomic Revolution Multi-Sector ETF (ARKG) was launched in 2014, while the $361 million Amplify Online Retail (IBUY) launched in 2016. Both are the only funds covering their respective spaces, but neither of them relies on artificial intelligence as the Global X funds will. The two proposed ETFs from Global X represent the firm’s plans to further expand its offering of cutting-edge thematic funds driven by artificial intelligence.
Another Take On Dynamic Multifactor ETFs
The third filing, covering the Global X Adaptive U.S. Factor ETF, outlines plans for a multifactor ETF with dynamic factor exposures. The fund’s index will adjust weightings to three single-factor indexes derived from the Solactive U.S. Large & Mid Cap Index, with the factors targeted by the indexes including value, momentum and low volatility, respectively. Each of the subindexes represents the 100 stocks from the parent index exhibiting the highest exposure to the factor in question, according to the prospectus.
On a quarterly basis, the fund’s benchmark will allocate at least two of the factor subindexes based on their relative performance since the previous quarter. Although both PIMCO and OppenheimerFunds offer dynamic multifactor ETFs, the methodologies change their allocations based on economic regimes rather than the prior performance of the targeted factors. The existing fund families also each target five factors.
Contact Heather Bell at [email protected]