More than 100 new ETFs have come to market so far this year, but few stand out.
Issuers have brought to market 110 new ETFs so far this year, offering exposures that run the gamut—and few resemble what we would consider “plain vanilla” strategies. But only a handful of these new funds have gathered any traction with investors.
Among the most popular newcomers, there is no common denominator when it comes to a theme that is resonating with investors. Instead, there’s evidence of demand for minimal exposure to interest-rate risk, as well as appetite for value and momentum opportunities, and gold.
For context, roughly a third of the new ETFs that have come to market in 2014 focus on income in various forms—through bonds, dividends and master limited partnerships. In all, the ETF market today boasts 1,624 ETFs, for a total of $1.87 trillion in U.S.-listed assets.
Here we list the five most successful ETF launches to date in 2014, as measured by their asset-gathering performance.
Investors have now poured nearly $53 million into the newest physical gold trust, which launched May 16.
OUNZ came to market as the first ETF to allow even the smallest retail investors the option of redeeming their shares for gold. Physical gold ETFs have been around for almost 10 years, but none has ever allowed smaller investors to take delivery of the precious metal.
In a fund like GLD, that means redeeming a minimum block of 100,000 shares worth about $12.5 million at current prices.
OUNZ earlier this month completed its first small-retail redemption in a process that, while certainly costly, clearly works. OUNZ costs 0.40 percent in expense ratio, or $40 per $10,000 invested.
GVAL has attracted $55.92 million in net inflows since it came to market in mid-March. The fund, which sets out to invest in the most undervalued equities around the globe, carries a 0.69 percent expense ratio.
Currently, the portfolio includes value stocks from countries like Brazil, Ireland, Austria, Italy, Portugal, Spain, Israel, Greece and Russia. The strategy is designed around an index that picks the top 25 percent of countries from a list of 45 developed and emerging economies, then selects approximately 100 securities from those countries.
Pimco’s newest short-duration portfolio has gathered $111 million in net inflows inception-to-date. The fund came to market Jan. 22.
LDUR is an actively managed broad-market investment-grade bond fund with target duration between one to three years. The management team behind LDUR is the same one managing the Pimco Enhanced Short Maturity Strategy (MINT | A), Pimco’s largest bond ETF, and one that also targets the short end of the duration curve.
The $3.8 billion MINT strives for portfolio duration of less than one year. LDUR has a 0.55 percent expense ratio.
Investors have poured a net of $173 million into Vident’s second ETF. VUSE carries a 0.55 percent expense ratio.
VUSE is essentially a U.S. equity portfolio, but it applies a complex set of screens looking to pick stocks within each sector based on valuation, governance, earnings quality and momentum. These stocks are then weighted in a tiered structure by sector and by risk. These screens often result in an exposure that differs significantly from the broader market, to quote ETF.com’s ETF Analytics.
Launched in January, VUSE is the U.S.-focused counterpart to Vident’s other ETF, the international-in-scope Vident International Equity ETF (VIDI | D-50). One of the so-called “bespoke” ETFs—funds that are designed around a single client’s or clients’ needs—VIDI was one of the most successful launches last year, and has gathered more than $750 million since it came to market Oct. 29, 2013.
First Trust’s FV has attracted a significant $341 million since it came to market in March.
FV is a fund of funds that invests in five other First Trust ETFs. The strategy, which taps into U.S. and global themes alike, uses a Dorsey Wright relative strength model to pick five ETFs based on relative price momentum. The underlying ETFs are weighted equally.
The launch of this index-based alpha-seeking strategy was so successful that First Trust brought to market last week an international version of the fund, the First Trust Dorsey Wright International Focus 5 ETF (IFV).
FV has a 0.95 percent expense ratio.