Recapping A Wild Week In The ETF World

by on December 5, 2010

As the ETF industry has exploded on to the scene in recent years, the size of the product lineup has consistently grown. Many of the new funds to begin trading have been first-to-market products, highlighting impressive innovation among issuers seeking to present investors with options for accessing increasingly exotic asset classes and investment strategies. Some new ETFs have been more duplicative in nature, seeking to compete with existing offerings on the basis of cost, efficiency, or other metrics.

What was once a handful of funds focusing on plain vanilla equity indexes has blossomed to an ETP lineup with more than 1,000 ETFs, ETNs, and other variations of the exchange-traded structure. And for the last several years, this number has been growing steadily, with each week seemingly bringing a new product or two to market. But the flurry of new product launches over the last week may be a product development record for the industry. Below, we take a quick look back at one of the busiest weeks ever for the ETF industry, highlighting more than two dozen new products from seven different issuers that began trading over the last few days [for news on all new ETFs, sign up for our free ETF newsletter]:

iPath leveraged ETNs: iPath debuted 11 leveraged ETNs on the last day of November. The numerous funds will feature 3x and 2x leverage, but instead of a daily reset mechanism will attempt to amplify exposure to the underlying indexes over the term of the notes (about ten years). “The leveraged iPath ETNs offer a new way to manage capital across the equity markets and we believe these investment tools will be useful for investors wishing to tailor the risk/return profile of a global equities portfolio,” said said Philippe El-Asmar, Managing Director, Head of Investor Solutions at Barclays Capital [see iPath Debuts New Breed Of Leveraged ETNs].

VelocityShares: New to the ETF space this week is VelocityShares, a firm that is run by former iPath executives. The company made its debut with six ETP’s linked to VIX-related indexes. Among the offerings are both first-to-market products and those that will compete with existing ETNs from iPath. The new funds offered include leveraged short term, medium term, and inverse VIX ETNs, giving investors a multitude of options to play volatility using exchange traded products [see VelocityShares Debuts Its Lineup Of VIX ETNs].

UBS Long/Short VIX ETN: Following the surging popularity in VIX-based funds, UBS threw its hat into the ring by offering a unique twist on a VIX ETF. Wednesday marked the launch of the E-TRACS Daily Long-Short VIX ETN (XVIX). The new exchange-traded note, which is linked to the S&P 500 VIX Futures Term-Structure Index Excess Return, is the first U.S.-listed ETP to offer investors exposure to a strategy that includes both long and short exposure to VIX benchmarks [see UBS Debuts Long-Short VIX ETN].

AdvisorShares High Yield Debt: AdvisorShares, one of the leading issuers of actively-managed ETFs, recently teamed up with Peritus Asset Management to launch the fourth junk bond ETF available to U.S. investors. The Peritus High Yield ETF (HYLD) began trading on Wednesday, and offers investors an actively managed fund in the fixed income space, specifically dealing with high yield bonds. Peritus brings a unique strategy to the high yield space, generally ignoring credit ratings [see AdvisorShares, Peritus Team Up On Active High Yield ETF].

PowerShares Financial ETF: Joining in on the wave of new products, PowerShares launched four financials ETFs. These funds will focus on REITs, high dividend yield, international financials, and property & casualty insurance firms [see PowerShares Launches Four Financial ETFs].

iShares TIP ETF: iShares, which accounts for about 45% of U.S. ETF assets, continued to grow its lineup this week by offering another inflation-protected bond ETF; on Friday, iShares released its Barclays 0-5 Year TIPS Bond Fund (STIP). STIP will track an index that measures the performance of the inflation-protected public organizations in the U.S. Treasury that have a remaining maturity of less than five years [see iShares Launches Short-Term TIPS Bond Fund (STIP)].

ETFS White Metals: European ETF giant ETFS debuted its sixth physically-backed precious metals ETF this week, launching the White Metals Basket Trust Fund (WITE) on Friday. This new fund will invest in only ‘white’ precious metals (silver, platinum, and palladium), making it attractive for investors looking to complement exposure to gold bullion in a portfolio [see ETFS Debuts Physically-Backed White Metal ETF (WITE)].

Disclosure: No positions at time of writing.