By Ron Rowland:
Eleven new exchange traded products (“ETPs”) came to market in November, below this year’s monthly average of 13 and far below last month’s frantic surge of 30. Five closures took place during the month, resulting in a net increase of only six. November came to a close with 1,531 ETPs listed for trading, consisting of 1,324 ETFs and 207 ETNs.
New introductions total 147 for the year-to-date period along with 61 closures. Launches are behind last year’s pace of 178 new products, and 2013 could end up being only the 6th or 7th most prolific year. However, 2013 has already clinched the 2nd Highest Year for Closings title behind 2012’s record 102 delistings.
The termination and liquidation of the five FactorShares ETFs was a blessing to the ETF industry. Although the marketing literature for these funds claimed a 0.75% management fee, the footnotes said to see “the prospectus for more information.” Anyone who did so found that FactorShares 2X: S&P500 Bull/TBond Bear (:FSE) “is subject to fees and expenses in the aggregate amount of approximately 33.76% per annum.” Actual fees were 45x what the marketing literature states. The truly sad part is that industry regulators let FactorShares get away with it.
ETP assets climbed to $1.67 trillion, a 1.7% increase from October. The “average” ETP has $1.1 billion in assets, but only 13% of the 1,531 ETPs have above average asset levels while the remaining 87% are below average. Just 36 funds have more than $10 billion in assets, and although they represent less than 2.4% of the ETP quantity, they hold more than 54% of industry assets.
The 20 trading days of November represents a 13% decline from the 23 of October. However, total trading activity dropped 26% due primarily to light holiday trading. Total dollar volume came in at $1.1 trillion for the month. Just five ETFs averaged more than $1 billion a day in trading, yet these five grabbed an incredible 49.7% market share.
|November 2013 Month End||ETFs||ETNs||Total|
|Currently Listed U.S.||1,324||207||1,531|
|Listed as of 12/31/2012||1,239||206||1,445|
|New Introductions for Month||10||1||11|
|Delistings/Closures for Month||5||0||5|
|Net Change for Month||+5||+1||+6|
|New Introductions 6 Months||85||8||93|
|New Introductions YTD||133||14||147|
|Net Change YTD||+85||+1||+86|
|Actively-Managed Listings||67 (+1)||n/a||67 (+1)|
|Assets Under Mgmt ($ billion)||$1,643||$22.4||$1,666|
|% Change in Assets for Month||+1.7%||+0.8%||+1.7%|
|Qty AUM > $10 Billion||36||0||36|
|Qty AUM > $1 Billion||208||7||215|
|Qty AUM > $100 Million||654||31||685|
|% with AUM > $100 Million||49.4%||15.0%||44.7%|
|Monthly $ Volume ($ billion)||$1,073||$25.8||$1,099|
|% Change in Monthly $ Volume||-25.8%||-31.9%||-26.0%|
|Avg Daily $ Volume > $1 Billion||5||0||5|
|Avg Daily $ Volume > $100 Million||67||2||69|
|Avg Daily $ Volume > $10 Million||236||7||243|
Data sources: Daily prices and volume of individual ETPs from Norgate Premium Data. Fund counts and all other information compiled by Invest With An Edge.
New products launched in November (sorted by launch date):
- Alerian Energy Infrastructure ETF (ENFR - News), launched 11/1/13, provides exposure to a set of 30 North American energy infrastructure companies that are in the business of transportation, storage, and processing of energy commodities. The fund limits itself to 25% MLPs in order to operate as a Regulated Investment Company and not a C-corporation subject to state and federal income taxes. The rest of the constituents are categorized as US MLP affiliates (30%), Canadian energy infrastructure companies (20%), US energy infrastructure companies (15%), or Canadian MLP affiliates (10%). The ETF has an expense ratio of 0.65% (ENFR overview).
- Franklin Short Duration U.S. Government ETF (FTSD - News), launched 11/5/13, is actively managed and the first ETF from Franklin. It will focus on short-term securities, at least 80% of which are issued or guaranteed by the U.S. government, its agencies or instrumentalities. Investors can expect monthly dividends and annual capital gains distributions. The fund will operate with a 0.30% expense ratio (FTSD overview).
- db X-trackers Harvest CSI 300 China A-Shares Fund (ASHR - News), launched 11/6/13, is made up of the 300 largest and most liquid stocks in the China A-share market. Restrictions imposed by the Chinese government that limited investments directly in Chinese equities are finally being eased. ASHR is taking advantage and will be the first ETF to directly hold Chinese A-shares. Half of the top 10 holdings are in the banking sector. The index yield is 2.41%. After the expense ratio of 1.08%, the yield drops to 1.33% (ASHR overview).
- FlexShares Global Quality Real Estate Index Fund (GQRE - News), launched 11/6/13, will invest in listed, non-mortgage REITs and operating companies in order to provide global exposure to real estate equities. The Fund’s strategy is designed to maximize exposure to quality, value, and momentum factors. Investors can expect income dividends quarterly and capital gains annually. The total fees for the fund are 0.45% (GQRE overview).
- Global X Next Emerging & Frontier ETF (EMFM - News), launched 11/7/13, will invest in companies in the Next Emerging markets and Frontier markets, as defined by Solactive AG. The definition excludes the BRICs and the more developed emerging market economies of South Korea and Taiwan. Investments will be made in companies that are either domiciled, principally traded, have their main business operations, or that generate at least 50% of their revenues in these markets. Countries with a 10% or more allocation include Malaysia, South Africa, and Thailand. Investors will pay a 0.58% management fee (EMFM overview).
- ProShares Investment Grade-Interest Rate Hedged (IGHG - News), launched 11/7/13, will invest in a diversified portfolio of investment-grade bonds while hedging against rising interest rates by taking short positions in U.S. Treasury futures and sports a 0.30% expense ratio (IGHG overview).
- WisdomTree Korea Hedged Equity Fund (DXKW - News), launched 11/7/13, provides exposure to equity securities in Korea, while hedging out currency fluctuations against the Korean Won with a 0.58% expense ratio (DXKW overview).
- ETRACS Monthly Pay 2xLeveraged Diversified High Income ETN (DVHL - News), launched 11/13/13, will provide income as a variable monthly coupon linked to 2 times the net cash distributions of the NYSE Diversified High Income Index constituents. The Index is based on a portfolio of 138 income-producing securities. The ETN boasts a yield of 13.63%, which after a 0.85% expense ratio is down to 12.78%. Leverage will be reset monthly (DVHL overview).
- Global X FTSE Portugal 20 ETF (PGAL - News), launched 11/13/13, will hold the top 20 Portuguese companies who principally trade in, are domiciled in, or who produce revenues mainly from Portugal. Investors will pay a 0.61% management fee. PGAL is the only current Portugal ETF, but it was not the first. Northern Trust launched its NETS Portugal fund in 2008 and delisted it in 2009. Certainly, Global X is counting on a longer life span (PGAL overview).
- Horizons S&P Financial Select Sector Covered Call ETF (HFIN - News), launched 11/14/13, employs a covered call strategy based on the S&P Financial Select Sector Index. It will hold the securities of the Index and then in an attempt to generate additional monthly income the fund will sell (“write”) call options and collect the call option premiums. Total expenses of the fund are 0.70% (HFIN overview).
- ProShares Short Term USD Emerging Markets Bond ETF (EMSH - News), launched 11/21/13, provides exposure to the more liquid bonds in the short-term emerging market bond universe and will have a weighted average maturity under three years. Bonds will have a maximum remaining maturity of five years, will be U.S. dollar-denominated, must have $500 million outstanding, and can be either investment grade or high yield. The fund’s expense ratio is 0.50% (EMSH overview).
Product closures/delistings in November:
- FactorShares 2X: S&P500 Bull/TBond Bear (:FSE)
- FactorShares 2X: TBond Bull/S&P500 Bear (:FSA)
- FactorShares 2X: S&P500 Bull/USD Bear (:FSU)
- FactorShares 2X: Oil Bull/S&P500 Bear (:FOL)
- FactorShares 2X: Gold Bull/S&P500 Bear (:FSG)
Product changes in November:
- iPath S&P VIX Short-Term Futures ETN (VXX - News) underwent a 1-for-4 reverse split effective 11/8/13.
- iShares MSCI Ireland Capped ETF (EIRL - News) changed its underlying index from the MSCI Ireland Investable Market 25/50 Index to the MSCI All Ireland Capped Index effective November 27.
Announced Product Changes for Coming Months:
- AdvisorShares Global Alpha & Beta ETF (:RRGR) will undergo an extreme makeover, becoming the AdvisorShares EquityPro ETF (EPRO - News) effective December 2 (press release). The actively managed fund’s new manager, The Elements Financial Group, will use a unique quantitative approach, rendering this change an extreme makeover. EPRO will cap its 6.98% expense ratio at 1.48% for a year.
Previous monthly ETF statistics reports are available here.
Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.