There’s little in common between the 160 new ETFs that have launched so far this year when it comes to the access each provides. But among them, there’s a handful of funds that stand out by the pace in which they’ve been gathering a following.
Six new launches already boast more than $100 million in assets, and one of them is nearing its first $1 billion after only five months.
In today’s market, that’s densely populated by more than 1,700 ETFs that slice and dice asset classes in every way imaginable, these ETFs prove it’s still possible to carve a new niche.
Consider these new funds and their assets under management:
- SPDR DoubleLine Total Return Tactical ETF (TOTL) – total AUM: $923 million; launched in February.
- iShares Exponential Technologies ETF (XT) – total AUM: $688 million; launched in March.
- Direxion Daily CSI 300 China A Share Bear 1X Shares ETF (CHAD) – total AUM: $285 million; launched in June.
- WisdomTree Europe Hedged SmallCap Equity ETF (EUSC) – total AUM: $216 million; launched in March.
- Pacer Trendpilot 750 ETF (PTLC) – total AUM: $212 million; launched in June.
- PowerShares Europe Currency Hedged Low Volatility ETF (FXEU) – total assets: $135 million; launched in May.
There are several reasons that set these funds apart from the crowd.
The Power Of The Name Brand
The two biggest asset-gathering success stories of 2015—TOTL and XT—share the benefit of having a strong name attached to them.
In the case of TOTL, we are talking about DoubleLine and Jeffrey Gundlach—one of the most respected fixed-income investors today. In a way, TOTL’s resonance with bond investors is reminiscent of the wild success Pimco had with the launch of the Pimco Total Return Fund (BOND | B) in 2012.
BOND, which brought Bill Gross’ name and his multibillion flagship mutual fund into the ETF fold, went on to be the second-fastest-growing ETF ever launched, reaching its first $1 billion in about three months. TOTL is nearing that mark in just over five.
XT, meanwhile, is the result of a partnership between iShares, Morningstar and well-known advisor Ric Edelman. Edelman’s shop manages some $14 billion in assets, and if his name isn’t enough appeal, his concept might be. XT is seen as the “new economy” in an ETF wrapper, as Edelman puts it.
In other words, it’s thematic-equity investing that focuses on what he see as the companies of tomorrow. That’s easy for investors to understand. What’s worth noting here is that XT hit $600 million in assets by week two, in great part thanks to Edelman’s investing of 4 percent of his firm’s $14 billion in assets under management into the new fund.
Perfectly Timed China Play
The No. 3 on our list, CHAD, is an interesting success story to the extent that it’s an inverse fund. Often, these types of leveraged strategies are reserved for the more professional, trading-type of investor.
But CHAD was masterful at timing. The ETF came to market in the same month the massive 30-percent-plus correction began to take shape in China’s mainland stock market, which had rallied more than 100 percent in 12 months.
Many had been saying a correction in China was just a matter of time, and when it hit, there was CHAD ready to offer ETF investors an easy way to play the downside.
CHAD is also a first-to-market. Prior to it, there was no inverse play on China’s A-shares market.
Currency Hedging & Europe Still Hot
If 2015 has proven to be anything, it’s the year of currency hedging. Thanks in great part to WisdomTree’s leadership in offering currency-hedged international equity funds, ETF investors today are more aware then ever of the impact of currency exposure in their foreign stock portfolios.
EUSC is WisdomTree’s newest member of a growing roster of ETFs designed to mitigate the impact of currency on international stock holdings. FXEU, from PowerShares, is riding that same wave.
Both funds offer access to European equities, and not only deal with the currency factor, but in FXEU’s case, it adds factor investing—low volatility—to the strategy. These are timely themes made popular by the ongoing economic renaissance taking shape in Europe and a strong dollar that is showing no signs of weakening.
Riding Markets For A Lower Price
Finally, there’s PTLC. The ETF is one of three ETFs that Pacer Financial brought to market in June, each designed to toggle between equity coverage in rising markets, short-dated Treasurys exposure when markets pull back and a 50/50 blend when markets are in between. In PTLC, the changes in allocation are determined by technical analysis.
Perhaps what has made PTLC so popular is the fact that it’s cheaper than other similar products in the market today. It comes with a 60 percent expense ratio, or $60 per $10,000 invested.