By Michael Johnston:
By Daniela Pylypczak
The coming of the new year hasn’t slowed down the rapid pace of the ETF industry, with January showing high levels of activity on the product development front. The first month of the year witnessed the debut of a number of first-to-market products as well as several long-anticipated funds from both large and small issuers:
New exchange-traded products that began trading in January include:
- Direxion introduced three new volatility ETFs that offer dynamic exposure to U.S. and Latin American equity markets by shifting allocations between stocks and cash based on market volatility. The Direxion S&P 500 RC Volatility Response Shares (NYSEArca:VSPY - News) consists of exposure to T-bills and large cap U.S. stocks. The second U.S. ETF, [[VSPR]], offers exposure to small, mid, and large cap stocks which make up the S&P Composite 1500 Dynamic Rebalancing Risk Control Index. The Latin American ETF, [[VLAT]], is designed to respond to the volatility of 40 of the largest Latin American equities.
- AdvisorShares debuted its new actively-managed sector rotation ETF, Rockledge SectorSAM ETF (NYSEArca:SSAM - News), which is designed to generate stable and consistent returns from a dollar neutral portfolio comprised of sector ETFs. The fund’s strategy is to establish long positions in sector ETFs that are expected to outperform the S&P 500 and short positions in those that are expected to underperform that benchmark.
- ProShares introduced the first inflation breakeven ETFs with the launch of their 30 Year TIPS/TSY Spread (NYSEArca:RINF - News) and the Short 30 Year TIPS/TSY Spread (NYSEArca:FINF - News). The two funds are designed to offer exposure to “break even inflation” or the spread difference in yield between Treasuries and TIPS, which is one measure of the rate of inflation that is expected in the market.
- iShares debuted the first ETF to offer targeted exposure to small cap equities in Singapore with its new MSCI Singapore Small Cap Index Fund (NYSEArca:EWSS - News). The company also made two more additions to their line up with a small cap Hong Kong ETF (NYSEArca:EWHS - News) and an ETF that is linked to the MSCI World Index (NYSEArca:URTH - News), which offers broad-based exposure to stock markets in the developed world.
- State Street rolled out the first fund to focus exclusively on small cap stocks in Asia Pacific economies. The new SPDR S&P Small Cap Emerging Asia Pacific ETF (NYSEArca:GMFS - News) tracks a comprehensive, float-adjusted market capitalization weighted index that invests in small cap equities from Asia Pacific.
- PowerShares added to the low volatility ETF lineup with the launch of two new products that offer investors exposure to both emerging and international developed equity markets. [[EELV]] is designed to invest in 200 emerging market stocks that have shown the least volatility over the past 12 months. [[IDLV]] uses this same methodology but applies it to international developed markets.
- iShares debuted two new emerging markets ETFs that focus on equities from the EMEA region and from Latin America. The MSCI Emerging Markets EMEA Index Fund (NasdaqGM:EEME - News) is designed to measure the performance of securities in emerging market countries from Europe, the Middle East, and Africa. The second fund, [[EEML]], offers investors exposure to equities from seven emerging Latin American markets.
- iShares introduced the second pureplay Norway ETF with the launch of their MSCI Norway Capped Investable Market Index Fund, [[ENOR]]. The fund utilizes a capping methodology that limits the allocation to any one component to 25% and the total of individual companies representing 5% or more to 50%.
- AdvisorShares rolled out their new Accuvest Global Opportunities ETF (NYSEArca:ACCU - News), which utilizes country-specific ETFs with the goal of generating excess returns relative to benchmarks such as the MSCI All Country World Index. The fund is actively managed and utilizes a proprietary country ranking model that selects five or six country ETFs that represent the most attractive markets on a monthly basis.
- iShares introduced two new first-to-market products with the launch of their Denmark (AMEX:EDEN - News) and Finland (AMEX:EFNL - News) ETFs. The company also introduced the first fund to offer exposure to small cap equities from the United Kingdom, [[EWUS]]. Additionaly, iShares launched three small cap funds focusing on equities from Australia (AMEX:EWAS - News), Canada (AMEX:EWCS - News), and Germany (AMEX:EWGS - News).
- ProShares launched its new German Sovereign/Sub-Sovereign ETF, [[GGOV]], which offers investors exposure to one of the world’s largest bond markets. The fund is designed to track the performance of fixed rate debt securities of Germany as well as local governments and entities or agencies guaranteed by various German government issuers.
January saw a flurry of activity on the filing front, with dozens of proposed products hitting the SEC’s desk. The highlights include:
- Russell plans to launch a lineup of dividend-focused ETFs, while State Street outlined a short term junk bond ETF and a fund to target the largest stocks in Chile, Colombia, and Peru.
- PIMCO shed a bit more light on its highly-anticipated Total Return ETF, an exchange-traded version of the world’s largest bond fund. According to the company, TRXT will begin trading March 1.
- First Trust has plans to dramatically increase its AlphaDEX lineup, filing paperwork on a suite of company-specific products that use the alpha-seeking methodology.
- PowerShares sketched out a couple more actively-managed ETFs, including a “commodity rotation” portfolio and a “equity allocation” product that would include exposure to stocks, cash, and VIX futures.
- FlexShares has plans to take its “factor tilt” strategy, already on display in [[TILT]], to international markets with a proposed Morningstar Developed ex-U.S. Markets Factor Tilt Index Fund (:TLTD).
- EGShares has filed details on a “Beyond BRICs” emerging markets ETF as well as a Emerging Markets Consumer Demand ETF that would target the consumer services, health care, telecommunications, and utilities sectors.