The debut of PIMCO’s highly-anticipated Total Return ETF (TRXT) earlier this month has been hailed as a pivotal moment for the active ETF industry, potentially opening up the floodgates to significant future inflows. There seems to be an opinion that the active ETF movement has been something of a failure to date, failing to bring in significant amounts of assets and gain much in the way of traction. The momentum has certainly been lacking for equities; the dozen or so actively managed stock ETFs have little to show in terms of AUM. But in other asset classes such as fixed income and alternatives, a number of active ETFs have taken off and accumulated in excess of $100 million. Below, we profile ten of the largest active ETFs on the market [see also The Guide To The Biggest Companies In Every Major Commodity Sector]:
PIMCO Enhanced Short Maturity Strategy Fund (MINT): $1.4 billion
This PIMCO ETF has attracted significant amounts of money in a relatively short period of time, perhaps reflecting investor interest in safe haven products that exhibit very low volatility. MINT strives to deliver returns that exceed money market funds, but takes on very little in the way of credit or interest rate risk. MINT has an effective duration of just under one year, and offers a 30-day SEC yield in the neighborhood of 1.1%. For investors looking to temporarily park cash or to ride out a storm in equity markets, it could be an interesting option.
WisdomTree Emerging Markets Local Debt Fund (ELD): $1.2 billion
This ETF is one of a handful of products that offers exposure to emerging markets debt denominated in the local currencies of issuers. The flexibility provided by active management allows for the portfolio to be tilted towards or away from certain markets depending on the current environment, and also allows the fund to sidestep potential liquidity concerns [see also Bond ETFs For Every Objective].
WisdomTree Asia Local Debt Fund (ALD): $414 million
This ETF is similar to ELD in structure, but maintains a slightly different geographic focus. ALD’s portfolio consists of a mix of developed and emerging markets; component countries are South Korea, Malaysia, Indonesia, Philippines, Thailand, India, China, Hong Kong, Singapore, Taiwan, Australia and New Zealand.
WisdomTree Dreyfus Chinese Yuan Fund (CYB): $406 million
This ETF represents a way for U.S. investors to access the Chinese currency; CYB is designed to deliver returns reflective of both money market rates in China available to foreign investors and to appreciation in the yuan relative to the U.S. dollar [see also Tax Efficiency Report Card].
WisdomTree Dreyfus Emerging Currency Fund (CEW): $344 million
This active currency fund maintains a structure very similar to CEW, and a slightly broader focus. In addition to the Chinese yuan, CEW includes the Mexican Peso, Brazilian Real, Chilean Peso, South African Rand, Polish Zloty, Russian Ruble, Turkish New Lira, South Korean Won, Indonesian Rupiah, Indian Rupee, and Malaysian Ringgit.
WisdomTree Managed Futures Fund (WDTI): $246 million
This ETF offers exposure to a portfolio of managed futures, giving investors access to a strategy that has been popular for decades in a flexible, liquid vehicle. WDTI’s portfolio consists of various futures contracts and other securities linked to commodities, exchange rates, and interest rates, based on a trend following technique [see also 12 High-Yielding Commodities For 2012].
WDTI is a bit unique in that it strives to replicate the performance of a specified benchmark: the Diversified Trends Indicator. As an active ETF, however, the fund has the flexibility to utilize different types of securities (forwards, futures, etc.) to achieve that goal.
Guggenheim Enhanced Short Duration Bond ETF (GSY): $150 million
This ETF, from Guggenheim, can also be thought of as a safe haven ETF; GSY focuses on high quality fixed income securities that are approaching maturity. With an average duration of only a few months, GSY features considerably less interest rate risk than the aforementioned MINT. GSY is also one of the cheapest active ETFs on the market, with expenses capped at just 0.27%.
Active Bear ETF (HDGE): $142 million
This active ETF is yet another unique product; HDGE features a portfolio comprised entirely of short positions in stocks expected to underperform. Based on forensic accounting methodologies, HDGE aims to short stocks that are using aggressive accounting principles to hide the deterioration of their business and cash flows [see also The 18 Most Successful New ETFs Of 2011].
PIMCO Intermediate Municipal Bond Strategy Fund (MUNI): $126 million
This bond fund offers a way for investors to access municipal bonds, an asset class that can feature attractive tax equivalent yields. With an expense ratio of 0.35%, MUNI comes in very close to the average for the National Munis ETFdb Category.
AdvisorShares Cambria Global Tactical ETF (GTAA): $112 million
This ETF offers access to a broad portfolio that includes multiple asset classes in a single ticker. Utilizing quantitative methodologies, GTAA seeks to achieve absolute returns with reduced volatility and downside risk relative to more traditional investing techniques.
Disclosure: Long ELD