ETF Filings: Western Africa, Emerging Markets Energy, and “Smart Beta”

by on November 4, 2011 | Updated November 22, 2011

Equity markets have been heating up and developments on the ETF product development front has been quite active as well. A handful of new products hit the street this week, including several offerings from Invesco PowerShares in the Financials Equities space, as well as a first-to-market Australia Bond Fund from PIMCO. Behind the scenes, several industry leaders, as well as a newcomer, have filed with the SEC to lay down the groundwork for more than a handful of new products [see also October ETF Data: Surge In Inflows, Back Above $1 Trillion].

Direxion filed proposals for 11 new funds, with the majority based around a new “smart beta” indexing methodology. The proposed products include [see SEC filing]:

  • Direxion Large Cap Insider Sentiment Shares
  • The Direxion All Cap Insider Sentiment Shares
  • Direxion Primary Tactical Advantage Shares
  • Direxion S&P RC 1500 Volatility Response Shares
  • Direxion S&P RC 600 Volatility Response Shares
  • Direxion S&P RC 500 Volatility Response Shares
  • Direxion S&P Latin America 40 RC Volatility Response Shares
  • Direxion Nasdaq-100 Equal Weighted Index Shares (QQQE)
  • Direxion Nasdaq Volatility Response Shares (QVOL)
  • Direxion Wireless Communications Shares
  • Direxion Auto Shares (DRVE)

Van Eck plans to expand its lineup of international equity offerings with a second proposed Nigeria ETF [see SEC filing]:

  • Nigeria-Focused Western Africa ETF: The fund’s benchmark index is comprised of Western African companies with a heavy tilt towards Nigerian securities. The proposal explicitly states that exposure to Nigerian companies, predominantly in the energy sector, will be limited to 50%, given the political and economic instability that is associated with the oil-rich country.

iShares is planning to beef up its international equity line up as well with an intriguing emerging markets sector fund [see SEC filing]:

  • MSCI Emerging Markets Energy Sector Capped Index Fund: The underlying benchmark for this proposed ETF is a free float-adjusted market capitalization weighted index that designed to measure the performance of energy-related companies in emerging market countries. A capping methodology is applied which limits the weight of any single component to a maximum of 25% of the entire portfolio. As of October 11, 2011, the underlying index consisted of companies in the energy sector from: Brazil, China, Colombia, Hong Kong, Hungary, India, Indonesia, Malaysia, Poland, Russia, South Africa, South Korea, Taiwan, Thailand and Turkey.

Newcomer Arrow Investments filed for a global all-in-one ETF aimed at the yield-hungry crowd [see SEC filing]:

  • ArrowShares Global Yield ETF: The underlying index is comrpised of common stocks, preferred stocks, ADRs, corporate bonds, sovereign bonds, REITs, royalty trusts, and MLPs. This rules-based benchmark selects its holdings from the above mentioned asset classes, focusing on the highest yielding securities over the preceding month. The proposal states that the underlying index’s methodology may select securities for inclusion in the index from developed or emerging market countries, as well as from any credit quality, including junk bonds.

Disclosure: No positions at time of writing.