The ETF industry picked up steam in November, with several highly-anticipated funds coming to market and multiple issuers disclosing new details on innovative products that could be launched in 2010. The biggest news for the month was the entrance of Charles Schwab into the industry with the launch of four ETFs in early November. Debuting with a competitive cost structure, Schwab has made big inroads in the ETF industry already, racking up almost $150 million in assets already.
But Schwab’s arrival was hardly the extent of the new developments in the ETF industry for November. Other highlights include:
- PIMCO continues to be extremely active, opening the month with the launch of two new Treasury ETFs (ZROZ and FIVZ) to complement existing products (TENZ and TUZ). In mid-November, the bond fund giant launched its first actively-managed short maturity ETF, MINT. The company closed out November with its second actively-managed ETF, MUNI.
- Geary Advisors launched the TXF Large Companies Exchange-Traded Fund (TXF), following the launch of the Oklahoma ETF (OOK) in October. Just weeks after the introduction of these funds, Geary announced that it was slashing the expense ratios from 0.85% to 0.20%, making these funds immediately competitive from a cost perspective.
- Jefferies introduced two new ETFs targeting equities of global commodities producers, the Jefferies TR/J CRB Global Industrial Metals Equity Index Fund (CRBI) and Jefferies TR/J CRB Global Agriculture Equity Index Fund (CRBA). These ETFs offer indirect exposure to commodity prices by investing in stocks rather than futures contracts or physical resources.
- Van Eck introduced its Junior Gold Miners ETF (GDXJ), an ETF focusing on small and mid cap companies engaged in the development of new sources of gold either through greenfields exploration or the use of new geological models to search for gold in overlooked and abandoned areas. As gold prices have jumped to new highs, GDXJ has delivered some stellar returns in its first few weeks.
- PowerShares debuted its Build America Bond Portfolio (BAB), the first ETF to focus exclusively on bonds issued under a new program under the American Recovery and Reinvestment Act of 2009.
- After a busy October, IndexIQ continued to expand its product line by launching the first Merger Arbitrage ETF (MNA). This fund purchases stocks of companies for which there has been an announcement of a takeover by an acquirer.
- First Trust made a splash with its NASDAQ CleanEdge Smart Grid Infrastructure Index Fund (GRID), an ETF that invests in stocks of companies classified as a smart grid, electric infrastructure, and/or other grid-related activities company.
- iShares launched the S&P India Nifty Fifty Index Fund (INDY), the fourth exchange-traded product focusing exclusively on Indian stocks. INDY will compete with existing products from WindomTree, PowerShares, and iPath.
- Van Eck brought to market the Market Vectors Poland ETF (PLND), which is surprisingly the first fund to focus exclusively on the world’s 18th largest economy.
The new product pipeline continues to fill with exciting products. Among the ETFs that could come to market in coming months:
- WisdomTree registered its Real Return Fund (RRF) with the SEC, taking a step towards launching another ETF designed to protect capital against inflation. RRF would be actively-managed and have the latitude to invest in a number of asset classes to “provide investors with total returns that exceed the rate of inflation over long-term investment horizons.”
- iShares announced plans for its first sector-specific emerging markets funds, the MSCI Emerging Markets Financial Sector Index Fund and MSCI Emerging Markets Material Sector Index Fund. These ETFs could compete closely with existing products from Emerging Global Advisors.
- Speaking of EGA, the New York-based issuer filed for seven additional ETFs, including funds focusing on the infrastructure sector and mid cap stocks in Brazil, China, and India.
- iShares announced that it has a Genocide-Free ETF in the works, setting the stage to launch an ETF that avoids companies linked to human rights abuses around the world.
- IndexIQ is planning a 130/30 ETF that could compete with an existing fund from ProShares’ CSM.
The only news on the fund closure side was relatively minor, as Claymore announced that it is closing four of its smaller funds effective mind-December. The four ETFs to be closed – MZG, MZN, MZO, and UEM – account for less than 1% of the firm’s ETF assets.
December is only a couple days old, but already the wave of ETF expansion continues, and next month promises to bring some exciting developments as well.
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Disclosure: No positions at time of writing.
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