ETC Files For Forensic Accounting ETF, Van Eck Plans RMBS Fund

by on October 26, 2012

Profit-taking pressures remain the dominant theme on Wall Street as bellwether stocks continue to fall short of analyst expectations. Disappointing results from chemical-manufacturer DuPont and conglomerate 3M earlier in the week affirmed the rather pessimistic tone throughout this earnings season, as slowdowns in Asia and Europe have prompted many firms to revise their outlooks lower. Amid the choppy trading environment, iShares rolled out its “Core” ETF lineup while Exchange Traded Concepts and Van Eck filed the development pipeline [see also How To Pick The Right ETF Every Time].

Known for their “ETF-In-A-Box” solution, Exchange Traded Concepts drafted plans for a fund that will be the first and only one of its kind [try our Free ETF Screener]:

  • Forensic Accounting ETF: According to the SEC filing, this ETF will look to track the price and yield performance of the Del Vecchio Earnings Quality Index, a benchmark developed by forensic accountant John Del Vecchio. This fund will consist of approximately 380-400 individual securities, selected and ranked according to their “earnings quality”; starting with a universe of 500 U.S. large caps, this fund will exclude any companies determined to have overstated revenues, underestimated expenses or unsustainable sources of cash flow [see also 101 ETF Lessons Every Financial Advisor Should Learn].
Van Eck laid out plans for a new fund that will expand the firm’s reach in the real estate space, offering a creative way for investors to take advantage of the current low-rate environment:
  • Market Vectors Non-Agency RMBS ETF: According to the SEC filing, this fund will be comprised of non-agency mortgage-backed securities backed by pools of residential mortgage loans. Because this ETF will hold non-agency loans, it will effectively be investing in securities that won’t qualify as collateral for securities issued by Ginnie Mae, Fannie Mae or Freddie Mac. This ETF will look to take advantage of the Fed’s recent initiative to buy $40 billion in mortgage-backed securities every month indefinitely as the recovery picks up steam [see also 8% Yield ETFdb Portfolio].

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Disclosure: No positions at time of writing.