2013's biggest launches tell us droves about how the ETF industry is changing.
The number of ETF rollouts so far this year, 144, looks to be on pace to match 2012's 168 launches, but, more to the point, the top 10 launches list by assets gathered is truly a reflection of where the ETF industry finds itself in terms of diversity of products and even the growing importance of distribution.
These days, all the product-development trends that ETF pundits talk about are right there on the list—from enhanced beta; leverage; relatively expensive active funds; the quest for decent and dependable yield; as well as the ongoing success of low-cost provider Vanguard; and even a trio of ETNs.
"It's not so much of a list of pioneering strategies as it is a list that's about filling in the cracks," said Paul Baiocchi, a senior ETF analyst at IndexUniverse, referring to how this year's top 10 list shows that a blockbuster in 2013 isn't the same as a blockbuster in 2012 in terms of assets gathered and specific strategies.
Before diving in, it's worth noting that looking at assets under management as the qualifier may not be totally fair, as an attractive strategy that launched early in the year would make it onto the list more readily than a fund that launched two weeks ago.
That said, the No. 5 security on the list literally launched two weeks ago—which is related to why the Nos. 1 and 2 securities are even on the list as well.
We'll start by laying out all of the Top 10 funds in the table below.
Biggest 2013 Launches By AUM And Dates
|Fund Name||Symbol||Issuer||Expense Ratio||AUM||Launch|
|Barclays ETN+ FI Enhanced Global High Yield ETN||FIGY||Barclays Capital||0.80%||$1,337,311,816||22/05/2013|
|Barclays ETN+ FI Enhanced Europe 50 ETN||FEEU||Barclays Capital||1.00%||$970,455,243||23/05/2013|
|Vanguard Total International Bond||BNDX||Vanguard||0.20%||$676,083,233||04/06/2013|
|SPDR Blackstone/GSO Senior Loan||SRLN||SSgA||0.90%||$559,660,035||03/04/2013|
|Vident International Equity||VIDI||Exchange Traded Concepts||0.75%||$260,164,159||29/10/2013|
|iShares MSCI USA Quality Factor||QUAL||BlackRock||0.15%||$187,981,998||18/07/2013|
|iShares MSCI USA Momentum Factor||MTUM||BlackRock||0.15%||$172,644,755||16/04/2013|
|iSharesBondTM 2018 Corporate ex-Financials Term||IBCC||BlackRock||0.10%||$171,049,769||17/04/2013|
|Barclays ETN+ Select MLP ETN||ATMP||Barclays Capital||0.95%||$167,703,679||13/03/2013|
|Cambria Shareholder Yield||SYLD||Cambria||0.59%||$165,126,000||14/05/2013|
Again, the top two securities aren't even funds; rather, they're ETNs, which are debt obligations packaged in shares and traded like ETFs, on an exchange. The two ETNs are:
- No. 1: Barclays ETN+ FI Enhanced Global High Yield ETN (FIGY), launched on May 22, now with $1.26 billion in assets
- No. 2: Barclays ETN+ FI Enhanced Europe 50 ETN (FEEU), launched on May 23, now with $926 million in assets
These top two launches are "bespoken," meaning they are securities that are designed with a specific client in mind. In this case, the client is San Mateo, Calif.-based money manager Ken Fisher, who, it seems, is allocating shares of these double-exposure ETNs to client portfolios. This ETN was distributed even before the first share changed hands.
"What's becoming more important than the mousetrap is where you put the mousetrap," Dave Nadig, president of ETF Analytics at IndexUniverse, said in a recent podcast about the growing importance of distribution in the ETF industry.
It's worth noting that the creation of bespoken securities definitely seems to be a trend now, but so too are the underlying strategies Fisher asked the ETN backer Barclays Bank Plc to isolate—namely, leverage; the quest for yield; and the slow resurgence of Europe after its debt crisis.