By Michael Johnston:
By Daniela Pylypczak
Q1 of 2012 is officially on the books and the ETF industry is showing no signs of slowing down anytime soon. So far this year, investors have been introduced to some of the most intriguing products to have hit the markets, beefing up the list of more than 1,400 ETFs to chose from. As issuers continue to roll out new funds, investors now have access to even more ways to accomplish their investment objectives. Whether you’re looking to gain access to one of the world’s most followed mutual funds or want to establish a tactical tilt towards a specific sector of the corporate bond market, we outline 5 new, noteworthy ETFs of 2012′s first quarter [see also 4 sector ETFs Up Over 20% YTD]:
WisdomTree‘s new fund gives investors access to not one, but two potentially lucrative segments of the market: emerging markets and corporate debt. EMCB is the first fund that offers investors this unique opportunity to gain exposure to dollar-denominated corporate bonds from issuers in the developing world. With interest rates remaining at rock bottom, corporate debt presents yet another avenue for investors to tap into the alluring long-term growth potential of emerging markets. As socioeconomic levels continue to improve in the developing world, issuers of corporate debt will become more financially stable and less risky, resulting in a surge in demand for emerging market bonds. For investors looking to complement their emerging market equity and fixed income holdings, EMCB is a nice pick to round out exposure and to potentially enhance returns [see our Pure Growth ETFdb Portfolio].
PIMCO‘s BOND (formerly known as TRXT) is perhaps one of the most highly anticipated products to hit the markets, and its popularity has allowed it to rake in the second-most assets of any such fund during the first quarter. The Total Return ETF is an exchange-traded version of PIMCO’s famous mutual fund that has accumulated about $250 billion in assets since its debut in the 1980s. BOND will be actively-managed by the bond guru himself: Bill Gross, one of the most well-known and respected fixed income strategists. The fund will track the Barclays Capital U.S. Aggregate Bond Index, which is designed to measure the performance of investment-grade, U.S. dollar-denominated fixed-income securities of domestic issuers. BOND presents itself as an active ETF gamechanger, allowing investors to access the strategies of one of the most widely-followed mutual fund managers – and all at a mere expense of just 55 basis points.
Global X‘s new Permanent ETF provides investors with a unique one stop exposure to a number of different core asset classes. The theory behind the popular “permanent” asset allocation strategy is that regardless of the economic environment, at least one component of the portfolio should be expected to provide returns strong enough to offset any underperformance in the remaining classes. To accomplish this objective, the fund tracks the Solactive Permanent Index, a benchmark that includes four major asset class: stocks, long-term Treasuries, short-term Treasuries, and precious metals. Each of those classes are divided into different sub-categories: precious metals investments consist of gold and silver, while the equity portion includes both domestic and international stocks. When the fund is rebalanced, its underlying index allocates 25% to each of the four major asset classes.
iShares beefed up its bond ETF line up with its introduction of three new first-to-market products that provide U.S. investors a way to gain sector-specific exposure in the corporate bond market. One of these products is the Financial Sector Bond Fund, which is designed measure the performance of U.S. dollar-denominated, publicly-issued, investment-grade corporate debt securities in the financial sector. Along with MONY, iShares also introduced two other sector-specific corporate debt funds: the Industrials Sector Bond fund (NYSEArca:ENGN - News) and the Utilities Sector Bond Fund (NYSEArca:AMPS - News). These products provide investors with yet another way to successfully establish a tactical tilt in their fixed income exposure.
AdvisorShares’ Accuvest Global Opportunities ETF is the first fund to implement a “country rotation” strategy, which allows investors to tilt exposure to the most attractive markets on a monthly basis. To achieve this objective, the fund utilizes a proprietary multi-factor country ranking model that selects five or six country ETFs that are expected to outperform other world equity markets. Although the fund’s underlying portfolio is regularly changing, it currently has a tilt towards emerging market countries, including Thailand, South Korea, and China. ACCU’s unique country rotation strategy does, however, come at a relatively high price; the fund charges a net expenses ratio of 1.25%.