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5 Successful ETF Launches of Q2 - ETF News And Commentary

Zacks Equity Research

The ETF industry has gained immense popularity within just over 20 years. Total market cap hit a record of over $3 trillion at the end of May 2015, though it recently slipped to over $2.12 trillion (up 6.10% year to date), with contribution from about 1,745 ETFs.

To make the most of this appeal, issuers have lately been extremely proactive in launching products. In the second quarter itself, 61 ETFs entered the market. While existing issuers are diversifying their ETF offerings on varied themes, others are joining the league hoping to capitalize on the opportunities.

Among the new products, active funds, smart-beta ETFs, high yield options and hedged international products were appreciated by investors. Below, we have highlighted five ETFs launched in Q2 that scooped up assets within a short time span on the market, and look to be big winners for their issuers down the road:

Pacer Trendpilot 750 ETF (PTLC)

This ETF seeks to track the Pacer Wilshire US Large Cap Trendpilot Index. Currently, the fund offers pure equity exposure with a basket of 748 securities that are widely spread out across components. The fund has generated about $125 million within just one month of its launch.

The strategy makes it a winner as the product follows a rules-based methodology to apply a systematic trend that directs exposure (i) 100% to Wilshire US Large-Cap Index, (ii) 50% to Wilshire Large-Cap & 50% to 3-Month US T-Bills or (iii) 100% to 3-Month US T-Bills, depending on relative performance of the Wilshire US Large-Cap TR Index & its 200-business day historical simple moving average.

Each security holds less than 3.9% share, and information technology, financials and health care are the top three sectors with a nice mix. The fund charges 60 bps in annual fees and expenses.

Innovator IBD 50 Fund (FFTY)

Having debuted in April, this active product has managed to secure about $68 million so far. The new fund looks to be a comprehensive route to invest in the top 50 growth names based on the IBD (Investor’s Business Daily) proprietary estimation (read: New Innovator IBD 50 ETF Makes Strong Debut).

This estimation is focused on the ‘CAN SLIM’ method clubbing the top fundamentals with relative price strength. The IBD 50 targets companies with exceptional bottom-line growth, outsized revenue gains and superior return on equity.

This approach provides exposure to the small cap segment of the broad U.S. stock market and results in a diversified portfolio with none of the securities accounting for more than 3.61% of assets. From a sector look, technology takes the top spot at 40% while health care and consumer discretionary round off the top three with double-digit exposure. Its active management forces the issuer to charge a higher expense ratio of 0.80%.

PowerShares Europe Currency Hedged Low Volatility Portfolio (FXEU)

What can be a better way to invest in a foreign land than trying out a currency-hedged low volatile Europe ETF? Having entered the market in May, the fund has amassed about $58 million in assets (read: 2 Top-Ranked Eurozone ETFs to Buy Now).

Europe has been hitting headlines the world over since the beginning of this year on the launch of the QE measure to ward off deflationary fears. While the measure proved great as evident by 0.4% growth recorded by the Euro zone in the first quarter, quandaries are refusing to leave the continent. The latest round of crisis caused by ‘Grexit’ worries made the case for a low volatility play (on Europe) stronger.

The fund looks to track the S&P Eurozone Low Volatility USD Hedged Index. The index has exposure to at least 80 least volatile stocks that obey a definite liquidity bar. The fund charges 25 bps in fees.

Pacer Trendpilot 450 ETF (PTMC)

Pacer Financial has also seen success for PTMC which targets the mid cap segment of the broad U.S. equity market but revolves around the same rule-based methodology, discussed earlier. The fund looks to track the Pacer Wilshire US Mid-Cap Trendpilot Index. The fund has accumulated over $50 million in assets within such a short span (read: Pacer Enters ETF World with 3 'Trendpilot' ETFs).

Currently, it holds a basket of 450 securities with none holding more than 0.61% of assets. Consumer discretionary and industrials take the top two spots with 16% share each. The ETF has annual expense ratio of 0.60%.

PowerShares S&P 500 ex-Rate Sensitive Low Volatility Portfolio (XRLV)

This three-month old ETF has already amassed over $50 million in assets. The rising rate concerns have caused some upheaval in the market and are expected to make things pretty volatile once the Fed actually hikes rates. This is why PowerShares’ low volatility ex-Rate sensitive product is already a hit (read: Hedge Your Portfolio with Low Volatility ETFs).

The product is pretty spread-out among its 100 holdings. No stock takes more than 1.46% of the basket. The fund charges 25 bps in fees. Financials is the top sector holding one-third of the basket.   

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PACR-TRDP 750 (PTLC): ETF Research Reports
INNOVATOR IBD (FFTY): ETF Research Reports
PWRSH-EUR CH LV (FXEU): ETF Research Reports
PACR-TRDP 450 (PTMC): ETF Research Reports
PWRSH-SP5 XRATE (XRLV): ETF Research Reports
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