ETF Pipeline: Emerging Markets And Money Markets

by on May 18, 2010 | ETFs Mentioned:

After more than 100 new ETFs were brought to market last year, many wondered just how long the industry could keep up the breakneck pace. With more than 60 new ETFs hitting the market already this year (and another scheduled to begin trading tomorrow), 2010 is on pace to shatter the product development record set last year. And there’s no signs of a let-up any time soon. The pipeline continues to fill with interesting filings; some of the most recent additions include an active money market ETF from Grail Advisors and an emerging markets ETF from Van Eck.

Grail recently filed details on the Grail Western Asset Enhanced Liquidity ETF, an actively-managed fund that would invest in short-term fixed income securities, including U.S. Treasuries and agencies, corporate and bank obligations, asset-backed securities, and commercial paper. Western Asset, a fixed income money manager, is slated to serve as the fund’s sub-adviser.

The proposed Grail fund would compete with a number of money market ETFs, lining up most directly with the PIMCO Enhanced Short Maturity Strategy Fund (MINT). PIMCO’s short-term money market-like ETF has been a hit with investors, accumulating nearly $180 million in assets since its inception in November 2009. According to the SEC filing, the proposed Grail ETF would charge an expense ratio of 0.30%, slightly less than MINT’s 0.35%. Grail currently offers two actively-managed fixed income ETFs, in addition to five active equity ETFs.

Van Eck’s Next Play

Few ETF issuers have had the success Van Eck has enjoyed in launching new ETF products in recent years. The New York-based issuer’s innovations include the Brazil Small Cap ETF (BRF, assets of $600 million) and Junior Gold Miners ETF (GDXJ, $1.2 billion in assets). The company’s latest SEC filing outlines plans for the Market Vectors GDP International Equity Index ETF and the Market Vectors GDP Emerging Markets Equity Index ETF. These products would be linked to indexes that weight countries by gross domestic product.

While there are dozens of ETFs offering exposure to the global equity market, there is often a significant disconnect between the relative GDP of a country and the weighting afforded within a certain benchmark (see How Global Is Your Global ETF? for a closer look at this issue).

No expense ratios were included in the Van Eck filing.

Disclosure: Michael is long BRF.