New International IPO And Eurozone ETFs
First Trust will be introducing two new ETFs this week as the lineup at the sixth-largest ETF issuer continues to grow. Both ETFs were set to begin trading October 22.
The First Trust International IPO ETF (NYSE: FPXI) will attempt to dovetail the success of the $496 million First Trust IPOX 100 Index Fund (ETF) (NYSE: FPX) that launched in 2006. The new ETF will have direct competition from the Renaissance International IPO ETF (NYSE: IPOS) that hit the markets October 7. In the two weeks since IPOs has been trading, it has attracted just under $2 million in assets.
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The ETF will be made up of 50 of the largest and typically most liquid companies domiciled outside of the United States that are part of the IPOX Global Composite Index. Both developed and emerging markets will be included in the new ETF and can be added after their sixth trading day. The stocks will remain in the portfolio for 1,000 trading days. The strategy is almost identical to that of FPX, for the exception of where the company is located.
The second ETF to launch this week is the First Trust Eurozone AlphaDEX ETF (NYSE: FEUZ). The ETF will be the 40th product using the AlphaDEX selection methodology that attempts to base the weightings on investment merit, rather than size. According to the First Trust website, the AlphaDEX methodology is an investment process that seeks to produce similar correlation and risk characteristics as broad market indexes, while seeking out performance due to stock selection and weighting. The ETF company already has Europe offerings using the AlphaDEX strategy, but this will be the first to concentrate solely on the eurozone.
While Europe is dealing with some major issues at this time, there could be long-term opportunity investing in the region. On the other end, the IPO market has been hot for a few years and FPXI could be well positioned if it can out-duel its competitor.
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