2016's Biggest ETF Launches To Date

June 08, 2016

Funds Of Funds
Two ETFs of ETFs can lay claim to spots in the top 10 in terms of assets, both relying on Dorsey Wright’s “relative strength” model, which focuses on momentum. The First Trust Dorsey Wright Dynamic Focus 5 ETF (FVC) has $65 million in assets, while the PowerShares DWA Tactical Multi-Asset Income Portfolio (DWIN) has roughly $46 million in assets. Both funds launched within a week or so of each other.

FVC is a sector rotation strategy based on momentum that is very similar to the $3.3 billion First Trust Dorsey Wright Focus 5 ETF (FV | C-48), which invests in other First Trust ETFs; however, FVC includes a cash component that can represent up to 95% of the portfolio.

DWIN similarly selects five ETFs from some two dozen other income-focused PowerShares ETFs, as well as a handful of ETFs from other issuers. Component ETFs can invest in Treasurys, bonds, dividend-paying equities, preferred stock, REITs and MLPs. The methodology essentially selects the five-highest-yielding ETFs from its selection universe after screening out the bottom half of the universe with the lowest relative strength rankings.

Two Attention-Getting Launches
Finally, there are two funds that really captured the imagination of investors when they launched, mainly because of the names behind them. The SPDR DoubleLine Short Duration Total Return Tactical ETF (STOT) has $50 million in assets, while the Vanguard International High Dividend Yield ETF (VYMI) currently has nearly $44 million.

STOT drew attention because it was launched a little less than a year after the groundbreaking $2.4 billion SPDR DoubleLine Total Return Tactical ETF (TOTL | C); both actively managed funds include DoubleLine founder and bond guru Jeffrey Gundlach among its managers. STOT was launched alongside the SPDR DoubleLine Emerging Markets Fixed Income ETF (EMTL), which currently has slightly less than $38 million in assets.

Neither STOT nor EMTL has accumulated assets at anywhere near the rate of TOTL.

Vanguard rolled out its first international dividend ETFs in February of this year, with VYMI joined by the Vanguard International Dividend Appreciation ETF (VIGI), which currently has $41 million in assets. The funds were the first new ETF offerings from the fund company for the better part of a year, and filled one of the few holes in Vanguard’s lineup of core-oriented funds.

The odds of VYMI and VIGI accumulating quite a bit more in assets are pretty high—perhaps higher than any of the other funds in the top 10. Vanguard ETFs tend to do a bit of a slow burn, but currently the firm has only one other ETF with less than $100 million in assets. And 47 of its 70 ETFs—about 67%—have more than $1 billion in AUM. What other ETF issuer can claim that kind of success rate?

Although none of the launches so far in 2016 have broken any records in terms of asset accumulation, the top rollouts come with some interesting implications. Among those are possibilities that socially responsible funds and funds with adjustable currency hedges could be more important themes going forward.

Meanwhile, the other rollouts suggest that ETNs, MLPs and smart-beta strategies are all at the top of investors’ minds.

Contact Heather Bell at [email protected].



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