Five new ETFs launched in the last couple of weeks, three of which are smart-beta ETFs, including one with a socially responsible philosophy. We take a closer look at these below.
Socially Responsible ETF
Etho Climate Leadership US ETF (ETHO ) is a smart-beta ETF that invests in U.S. socially responsible equities. This is the first ETF that is a diversified way to gain exposure to socially and environmentally responsible companies that avoid the energy sector. The ETF is based on the Etho Climate Leadership Index, which tracks companies with the least amounts of carbon emissions within their industry. Each equity is equally weighted in the index and ETF. The ETF and index ignore energy, tobacco, aerospace and defense, gambling, gold and silver sub-industries. As investors continue to seek more investments in line with their social, environmental and responsible values, this ETF will provide the desired exposure.
ETHO began trading on November 19, 2015, with an expense ratio of 0.75%.
ETHO Top 5 Sectors:
- Technology: 23.2%
- Industrials: 18.7%
- Consumer Discretionary: 16.9%
- Financials: 12.8%
- Health Care: 10.9%
Global Real Assets
FlexShares Real Assets Allocation Index Fund (ASET ) tracks the North Trust Real Assets Allocation Index, which seeks to track the performances of global infrastructure, real estate and natural resources. A huge chunk of the exposure is from U.S. large-cap equities and the financials sector. The ETF has exposure to other developed countries, including the UK, Japan and Canada, and Hong Kong.
ASET has an inception date of November 23, 2015, and an expense ratio of 0.57%.
ASET Holdings Include Just Three ETFs:
Two Smart-Beta ETFs With and Without U.S. Exposure
Deutsche X-trackers launched two new ETFs November 24, 2015; Deutsche X-trackers Russell 1000 Enhanced Beta (DEUS ) and Deutsche X-trackers FTSE Developed ex US Enhanced Beta (DEEF ). Both of these are smart-beta ETFs.
DEUS holds U.S. equities and tracks the Russell 1000 Comprehensive Factor Index, which selects equities from the Russell 1000 based on high value, momentum and quality as well as low volatility and size factors. These five factors also determine the weights of the companies in the index and ETF. DEUS has an expense ratio of 0.25%.
DEUS Top 5 Sectors:
- Consumer Discretionary: 18.75%
- Industrials: 16.01%
- Financials: 15.39%
- Information Technology: 12.54%
- Health Care: 10.64%
DEEF holds developed equities while excluding the U.S. This ETF tracks the FTSE Developed ex US Comprehensive Factor Net Tax (US RIC) Index. DEEF has a similar equity selection process as DEUS, since it selects equities based on high value, momentum and quality as well as low volatility and size factors. It has a higher expense ratio of 0.35%.
DEEF Top 5 Sectors:
- Financials: 20.90%
- Industrials: 19.30%
- Consumer Discretionary: 15.61%
- Consumer Staples: 11.22%
- Materials: 10.39%
Real Estate in Latin America
Tierra XP Latin America Real Estate ETF (LARE ) tracks the Solactive Latin America Real Estate Index. The ETF invests in real estate operating companies and REITs from Latin America. The main country exposures are Brazil and Mexico, with a small exposure portion to Chile. A large chunk of the assets are micro cap. The higher the security dividend yield and share liquidity, the more weight the index and ETF will have for the underlying security.
LARE began trading on December 3, 2015, with an expense ratio of 0.79%.