Van Eck and AdvisorShares Debut Bond Funds; PowerShares Launches First “Century” ETF

by on January 16, 2014 | ETFs Mentioned:

Activity on the ETF front continued to rise this week as investors welcomed three new funds. So far in 2014, nine new funds have hit the streets; EGShares launched its first suite of EM bond ETFs (SEMFIEMFLEMF), while First Trust launched two actively managed income-focused funds that both utilize option strategies, as well as a dividend achievers fund (FTHIFTLBRDVY). Last week, industry veteran State Street teamed up with MFS Investment Management to launch three three new actively-managed equity funds – a developing trend in the ETF market [see 7 ETFs To Be Excited For In 2014].

This week, Van Eck rolled out its new municipal bond ETF:

  • Market Vectors Short High-Yield Municipal Bond Index ETF (SHYD): This fund tracks the Barclays Municipal High Yield Short Duration Index, which offers exposure to high-yield municipal bonds. The portfolio consists of both non-investment grade munis, as well as Baa/BBB-rated investment grade munis. Currently, munis from Puerto Rico account for roughly 12% of the portfolio, though exposure is nicely spread out across multiple states. 

The fund charges a 0.35% expense ratio, which is just below the average fees charged by funds in the National Munis ETFdb Category. Currently, there is only one other fund that specifically focuses on the high-yield segment of municipal bonds: the Market Vectors High Yield Municipal Index ETF (HYD, A-), which also charges 0.35%.

AdvisorShares also debuted its new actively-managed fund this week:ETFs

  • Sage Core Reserves ETF (HOLD): This fund’s objective is to preserve capital while maximizing income. To do this, fund managers will invest in a broad range of fixed-income securities, U.S. dollar-denominated investment grade debt, and mortgage- or asset-backed securities rated Baa- or higher. The average duration of the fund will vary, but will not exceed one year.

HOLD is managed by Sage Advisory Services, an Austin, Texas-based asset manager, and charges 0.35%.

Invesco PowerShares also introduced its new equity ETF:

  • NYSE Century Portfolio (NYCC): This fund tracks the NYSE Century Index, which is comprised of the largest and oldest public companies in the U.S. To be eligible for inclusion in the Index, a company must have been incorporated in the U.S. for at least 100 years, listed on a major U.S. exchange, and have a market capitalization of at least $1 billion. Currently, the top holdings include Beam Inc (BEAM), USG Corp (USG), and NCR Corp.

NYCC is the first fund based on the NYSE Century Index, and according to Martin L. Flanagan, CEO of Invesco, “The PowerShares NYSE Century Portfolio invests in household names that have defined the American economy for more than a century.” The fund charges 0.50%.

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Disclosure: No positions at time of writing.