Today Global X rolled out two ETFs that are very different and provide complementary exposure to existing ETFs in the issuer’s offering. The Global X S&P Catholic Values Developed ex-U.S. ETF (CEFA) is an international version of its $341 million Global X S&P 500 Catholic Values ETF (CATH), while the Global X Variable Rate Preferred ETF (PFFV) fills out the issuer’s lineup of preferred securities ETFs.
CEFA comes with an expense ratio of 0.35% and lists on the Nasdaq, while PFFV has an expense ratio of 0.25% and lists on the NYSE Arca.
PFFV is a complement to Global X’s $735 million Global X U.S. Preferred ETF (PFFD), which takes a broader view. PFFV’s index targets preferred securities with variable or floating dividends or coupons that meet size requirements and other criteria.
“The Fed is doing as much as it can to rein in corporate credit spreads, so the yield that investors get from very traditional fixed income asset classes is next to nothing. If you’re a current retiree, you’re really being forced into other corners of the income generating market, whether that’s high yield bonds, emerging market bonds, dividends, covered calls or preferreds to try to find that additional yield,” said Jay Jacobs, Global X’s head of research and strategy.
“There’s not a lot of asset classes that can generate income and provide some level of protection against rising interest rates,” he added. “We think it makes sense for portfolios to be diversified across asset classes that may have different sensitivities to that rising rate environment.”
The Invesco Variable Rate Preferred ETF (VRP) is the most direct competitor to PFFV and currently has $1.4 billion in assets under management. However, it comes with an expense ratio of 0.50%, twice that of PFFV.
The Catholic values ETF selects its components from the S&P EPAC ex-Korea Large Cap Index based on Catholic principles detailed in the Socially Responsible Investment Guidelines of the United States Conference of Catholic Bishops. CEFA’s underlying index uses the same sector weightings as its parent index, and as of the start of May included 481 components, according to its prospectus.
The launch of CEFA expands the opportunity set for Catholic values investors looking to invest according to their beliefs. Jacobs notes that while larger institutions have access to more vehicles, smaller institutions and individual investors may have a harder time finding that exposure, which is where ETFs like CATH and CEFA come in.
Contact Heather Bell at [email protected]