The impressive pace of expansion in the ETF industry slowed a bit in May, as issuers introduced fewer new funds than in previous months. Still, more than a dozen new ETFs began trading last month, including some first-to-market products, a few ETFs that will go head-to-head with established products, and the second coming of an ETF offering exposure to the Emerald Isle. May also saw the completion of some previously announced ETF closings, resulting in a net decline in the overall ETF product roster for the month. But that trend seems unlikely to continue, as issuers continued to fill the new product pipeline with some interesting ideas. Below, we profile ETF launches, filings, and closures from the month of May.
Highlights from ETFs which entered the market in May include:
- iShares debuted its MSCI Poland Investable Market Index Fund (EPOL). This ETF tracks the MSCI Poland Investable Market Index and is the second ETF to offer exposure to Poland, going head-to-head with PLND.
- State Street launched the SPDR Barclays Capital International Corporate Bond ETF (IBND), becoming the first ETF to offer global exposure to corporate debt markets. IBND tracks the performance of the Barclays Capital Global Aggregate ex-USD > $1B: Corporate Bond Index.
- Pax World launched the ESG Shares North America Sustainability Index ETF (NASI), an ETF offering investors exposure to sustainable investment strategies. Pax also has plans for two other ETFs: the FTSE Environmental Technology (ET50) Index ETF (ETFY) and ESG Shares Europe Asia Pacific Sustainability Index ETF (EAPS).
- The IndexIQ introduced its IQ Taiwan Small Cap ETF (TWON), offering exposure to the small capitalization sector of public traded companies listed on an exchange in Taiwan. TWON is heavily weighted in the technology sector, which makes up 30% of the fund, and seeks to replicate the performance of the IQ Taiwan Small Cap Index.
- State Street partnered with Nuveen to launch the SPDR Nuveen Barclays Capital Build America Bond ETF (BABS), which tracks the performance of the Barclays Capital Build America Bond Index. BABS offers exposure to fixed income securities created by the American Recovery and Reinvestment Act that allow state and local government to raise capital.
- U.S. One has introduced its first ETF, the One Fund (ONEF). ONEF does not have a defined benchmark, but is rather constructed as an “ETF of ETFs” that seeks to offer diversified equity market exposure through a single security. At inception, ONEF consisted of five ETFs: VV, VB, VEA, VWO, and SCZ. The One Fund provides exposure to over 5,000 companies.
- iShares debuted the MSCI USA Index Fund (EUSA), MSCI Ireland Capped Investable Market Index Fund (EIRL), and MSCI Indonesia Investable Market Index Fund (EIDO). EUSA tracks the MSCI USA Index and measures the performance of equity securities in the top 85% by market capitalization listed in the U.S. EIRL measures the performance of stocks in the top 99% by market capitalization of equity securities listed on stock exchanges in Ireland and tracks the MSCI Ireland Investable Market Index 25/50 Index. EIDO follows the MSCI Indonesia Investable Market Index, a benchmark representing 99% of the market capitalization in the emerging economy.
May also saw a number of unique ETF filings, including:
- Claymore has proposed seven BulletShares ETFs which would be comprised of investment grade corporate bonds maturing within a certain time frame. These ETFs maintain a “bullet” investment strategy and pay out cash to shareholders at the termination of the fund, at or around December 31 of said year.
- PowerShares has filed to issue the International Corporate Bond Portfolio (PICB). This ETF would track the performance of the S&P International Corporate Bond Index, targeting investment grade corporate bond issued by non-U.S. issuers.
- Exchange-Traded Spreads Trust has filed with the SEC to create a TIPS ETF which would follow the Market iBoxx TIPS Inflation-Linked 5-10 Index. TIPS have gained interest with increased concerns of inflation due to the unprecedented amount of liquidity injected into the global economy.
- Van Eck plans to launch Market Vectors GDP International Equity Index ETF and the Market Vectors GDP Emerging Markets Equity Index ETF, products linked to indexes that weight countries based on gross domestic product.
- Northern Trust filed for SEC approval of multiple equity and fixed income ETFs, though they have not stated specific funds.
Rydex eliminated 12 of its inverse and leveraged ETFs, keeping just its 2x and -2x S&P 500 ETFs alive. The closed ETFs include:
- Rydex 2x Russell 2000 ETF (RRY)
- Rydex 2x S&P MidCap 400 ETF (RMM)
- Rydex Inverse 2x Russell 2000 ETF (RRZ)
- Rydex Inverse 2x S&P MidCap 400 ETF (RMS)
- Rydex 2x S&P Select Sector Energy ETF (REA)
- Rydex 2x S&P Select Sector Financial ETF (RFL)
- Rydex 2x S&P Select Sector Health Care ETF (RHM)
- Rydex 2x S&P Select Sector Technology ETF (RTG)
- Rydex Inverse 2x Select Sector Energy ETF (REC)
- Rydex Inverse 2x Select Sector Financial ETF (RFN)
- Rydex Inverse 2x Select Sector Health Care ETF (RHO)
- Rydex Inverse 2x Select Sector Technology ETF (RTW)
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Disclosure: No positions at time of writing.
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