This week has seen plenty of activity on the ETF front, with issuers lining up to make a splash in 2014. Earlier, EGShares launched its first suite of EM bond ETFs (SEMF, IEMF, LEMF), while First Trust launched two actively managed income-focused funds, which both utilize option strategies, as well as a dividend achievers fund (FTHI, FTLB, RDVY) [see 7 ETFs To Be Excited For In 2014].
Several analysts have predicted that 2014 will be a great year for active ETFs, as more and more issuers make plans to roll out relatively inexpensive actively-managed products. On Thursday, industry veteran State Street introduced its three new actively-managed equity funds.
In partnership with MFS Investment Management, an active global asset manager, State Street’s new funds focus on beating some of the most popular benchmarks. To reach this objective, each of the funds will utilize a systematic combination of two independent stock selection processes: fundamental research and quantitative research. Each fund will charge a 0.60% expense ratio.
- SPDR MFS Systematic Growth Equity ETF (SYG): This actively-managed fund will seek to outperform the Russell 1000 Growth Index, which consists of large-cap stocks that possess strong growth characteristics.
- SPDR MFS Systematic Core Equity ETF (SYE): This fund attempts to beat the S&P 500 Index, one of the most well-known and most-followed indexes on the market.
- SPDR MFS Systematic Value Equity ETF (SYV): SYV’s objective is to outperform the Russell 1000 Value Index, which is comprised of large-cap stocks that possess strong value characteristics.
Meet the Competition
Given the relatively small number of actively-managed funds available, there are only a handful of active ETFs that focus on value and growth strategies, specifically targeting U.S. large cap equities [see The Most Successful New ETFs of 2013]:
- Enhanced U.S. Large-Cap ETF (IELG, A-): This fund seeks to provide competitive long-term risk-adjusted returns relative to broad U.S. large-cap stocks, particularly focusing on strong quality, value, and size factors.
- Madrona Forward Domestic ETF (FWDD, C+): This ETF tries to outperform the S&P 500 Index by selecting securities using a weighted allocation system based on consensus analyst estimates of the present value of future expected earnings relative to the share price of each security.
- Large-Cap Growth Equity Strategy Fund (RWG, C): This fund focuses on long-term capital appreciation by utilizing a creative selection methodology. The management team behind RWG combines fundamental and quantitative analysis to select large cap securities that are deemed to have above-average growth prospects.
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Disclosure: No positions at time of writing.