October may have started off well in the markets, but after a series of poor earning reports major equity indexes went into a tail spin, landing much lower than many expected to be. Many of the new ETFs that were proposed earlier this year are now finally coming to market, offering unique and potentially profitable investment options; October saw the debut of the newest actively managed fund, as well as an interesting “core” lineup aimed towards long-term investors [for updates on all new ETFs, sign up for the free ETFdb newsletter].
Wall Street was hit by poor earnings and lackluster developments on the product front, with the closing of thirty funds by the end of the month, all from only two issuers. At the same time, filing activity remains strong; issuers of all shapes and sizes continue to stuff new ideas into the pipeline, and hopefully we will see more of these funds launch before the end of the year [see Free Member Report: How To Pick The Right ETF Every Time].
- IQ Hedge Market Neutral Tracker ETF (QMN): IndexIQ started the month of launches with its market nuetural ETF, which will seek to replicate an index of long and short positions in a number of asset classes while minimizing systematic risk.
- Ready Access Variable Income Fund (RAVI): FlexShares launched an actively-managed ETF that will deliver maximum current income by creating a portfolio of investment grade bonds.
- The Barclays ETN + Shiller CAPE (CAPE): Barclays iPath teamed up with Dr. Robert Shiller to find the perfect application for his cyclically adjusted price earnings ratio, which is at the heart of this new fund. The underlying index aims to provide long exposure to the top four undervalued U.S. equity sectors.
- Short-Term Inflation-Protected Securities Index Fund (VTIP): Vanguard made a new addition earlier this month with the introduction of VTIP, which will target inflation protected U.S. securities with five or less years to maturity.
- Emerging Markets Core ETF (EMCR): EG Shares, looking to expand its international funds, has brought this ETF of over 100 equally weighted companies that the S&P Dow Jones have determined to be representative of all industries in emerging market economies.
- ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN (MORL): UBS added to its ETN portfolio a product designed to offer monthly exposure to the Market Vectors Global Mortgage REITs Index which boasts a target yield of 25%.
- S&P 500 High Dividend Portfolio (SPHD): PowerShares announced the launch of yet another factor-based fund that will offer exposure to large cap dividend paying stock, seeking to replicate an index of equities that have historically high dividend yields and low volatility.
- Core Short-Term US Bond ETF (ISTB), Core MSCI EAFE ETF (IEFA), Core MSCI Emerging Markets ETF (IEMG), and Core MSCI Total International Stock ETF (IXUS): iShares launched its ‘core series’ in October, four ETFs that are designed to be the building blocks for long-term ETF portfolios. iShares also updated eight of its existing funds, changing expense ratios and names on several popular ETFs.
A number of filings for new products hit the wire in September, many of which could begin trading at some point in the fourth quarter:
- QuantShares and LocalShares jumped onto the scene early in October, with QuantShares filing for six new funds focused on ‘smart betas’, and LocalShares turning its attention to a Nashville only ETF
- ETC and Van Eck both filed with the SEC for new funds, ETC focusing on forensic accounting in its new fund while Van Eck works on non-agency mortgage backed securities.
- iShares and WisdomTree are both looking to introduce new corporate bond funds, with iShares using its existing bond fund, LQD, as a template, while WidomTree will look outside of the U.S. for current income.
- AdvisorShares was the last to file in October, with an intriguing international bear ETF focused on capital appreciation through short sales of securities.
Though there was tons of activity in the way of ETF creation, one company decided to close the doors on almost all of its ETFs while another cut some dead weight from its portfolio:
- Russell closed all but one of its 26 ETFs on October 24th: 1000 High Beta (HBTA), 1000 Low Beta (LBTA), 1000 High Volatility (HVOL), 1000 Low Volatility (LVOL), 1000 High Momentum (HMTM), 2000 High Beta (SHBT), 2000 Low Beta (SLBT), 2000 High Volatility (SHVY), 2000 Low Volatility (SLVY), 2000 High Momentum (SHMO), Developed ex-US Low Beta (XLBT), Developed ex-US Low Volatility (XLVO), Developed ex-US High Momentum (XHMO), Aggressive Growth (AGRG), Consistent Growth (CONG), Contrarian (CNTR), Equity Income (EQIN), Growth at a Reasonable Price (GRPC), Low P/E (LWPE), Small Cap Aggressive Growth (SGGG), Small Cap Consistent Growth (SCOG), Small Cap Contrarian (SCLP), High Dividend Yield (HDIV), and Small Cap High Dividend Yield (DIVS)
- Global X liquidated four of its most unhealthy ETFs on October 26th: Aluminum (ALUM), Auto (VROM), NASDAQ 400 Mid Cap (QQQM), and NASDAQ 500 (QQQV).
Disclosure: No positions at time of writing.
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