Top Performing ETF Launches

June 04, 2018

There have been more than 100 new ETF/ETN launches so far in 2018, some introducing new market access in exchange-traded wrappers, others improving on existing ideas.

These 10 launches of the year are delivering the strongest total returns since their inception:

  1. iPath Series B S&P 500 VIX Short-Futures ETN (VXXB): 24% since Jan. 17
  2. KraneShares MSCI All China Health Care Index ETF (KURE): 19% since Feb. 1
  3. iPath Series B Bloomberg Nickel Subindex Total Return ETN (BJJN): 16% since Jan. 17
  4. Large Cap Growth Index-Linked ETN (FRLG): 14% since March 29
  5. iPath Series B S&P 500 VIX Mid-Term Futures ETN (VXZB): 13% since Jan. 17
  6. iPath Series B Bloomberg Cotton Subindex Total Return ETN (BALB): 13% since Jan. 18
  7. BMO REX MicroSectors FANG+ Index 3x Leveraged ETN (FNGU): 13% since Jan. 22
  8. NYSE Pickens Oil Response ETF (BOON): 10% since Feb. 28
  9. Barclays ETN+ FI Enhanced Europe 50 ETN Series C (FFEU): 7% since March 15
  10. iPath Series B Bloomberg Grains Subindex Total Return ETN (JJGB): 6% since Jan. 17

ETNs Dominating Top List

The roundup of the top 10 performers shows a diverse mix, where eight of the top 10 best-performing new launches this year are not exchange-traded funds but exchange-traded notes. ETNs are debt securities issued by a bank, offering a certain pattern of return in exchange for your investment.

Of those eight, five are part of Barclays’ family of 17 ETNs launched earlier as part of an extensive revamp of the company’s iPath ETNs.

These new ETNs replaced several first-generation ETNs Barclays later delisted in April, making them not as much new ideas coming to market as merely a revamp of older strategies. A crucial difference in the new lineup is that the new commodity ETNs are now callable, so Barclays can redeem them from investors. They also cost about half what they used to, coming to market with a price tag of just 0.45%.

Still, with a debut under the “Series B” branding in January, they are technically new products, and some are among this year’s best performers. 

Leading in gains are ETNs focused on volatility and commodities futures—two segments of the market that have stood out this year.   

  • VXXB tracks an index of VIX futures with average one-month maturity
  • BJJN tracks an index of one nickel futures contract at a time, with two months left to maturity
  • VXZB tracks an index of VIX futures with average five-month maturity
  • BALB tracks one cotton futures contract at a time with one to five months to maturity
  • JJGB tracks an index of corn, soybeans and wheat futures contracts with one to five months to maturity

Leveraged Strategies Working As Well

Another Barclays ETN on this list, but this one a “Series C” strategy, is FFEU, which is built with variable leveraged exposure to the STOXX Europe 50 Index—an index of 50 blue chip companies. FFEU is one of six strategies on the ETF market today built around this index.

Also leveraged among the ETNs are FNGU and FRLG.

FNGU is a 3x leveraged Bank of Montreal-issued strategy that bets on FANG stocks. FNGU tracks the NYSE FANG+ Index in an equal-weighted portfolio that should always include Facebook, Apple, Amazon, Netflix and Alphabet, as well as other technology and consumer discretionary names.

FRLG is a Goldman Sachs-issued ETN that delivers 2x the performance of U.S. large-cap growth stocks from the Russell 1000.

China & Oil Launches Well-Timed

The two ETFs on this list are each focused on China and oil, respectively: KURE and BOON.

KURE is a China sector fund from China-focused issuer KraneShares that focuses on health care—a segment of the market not all that traveled given that single-country sector ETFs (outside the U.S.) remain relatively rare.

The portfolio, which blends large- and midcap names, offers diverse exposure to various types of China stocks, including A-shares, H-shares, N-shares, etc., in a mix that’s market-cap-weighted and typically tilted toward pharmaceuticals, according to FactSet data. KURE has $22 million in assets, and costs 0.79% in expense ratio.

 

 

BOON, meanwhile, is an oil fund that tracks an equally weighted index of U.S. large-cap companies highly correlated to the price of Brent crude oil. Stocks in this portfolio move in tandem with oil price movements and came to market with the stamp of approval of T. Boone Pickens.

By looking at companies that are correlated to oil prices, BOON delivers exposure to energy stocks that go beyond traditional energy names, according to FactSet data.

 

BOON has $6.7 million in assets under management and costs a hefty-for-an-equity-ETF price tag of 0.85%.

Contact Cinthia Murphy at [email protected]

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