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Tax Efficiency Report Card

Daniela Pylypczak — Tue, 10 Jan 2012 12:00:24 +0000

The year-end periods provides the ETF industry with a couple of opportunities to flex its collective muscle; performance comparisons generally tend to favor those products with lower expense ratios–a defining feature of exchange-traded funds. But early January also puts another benefit of exchange-traded products into focus: enhanced tax efficiency relative to traditional mutual funds. The nuances of the exchange-traded structure have the potential to bring additional tax efficiencies to investors thanks to the availability of an “in kind redemption” that ultimately gives investors more control over the timing of tax obligations. Mutual funds, on the other hand, have a nasty tendency to stick remaining shareholders with tax liabilities incurred as a result of redemptions by others–a development that can obviously be undesirable [see Tax Loss Harvesting With ETFs: 6 Ideas To Lower Client Liabilities]. ETFs won’t allow investors to skip out on their taxes, but this product structure can deliver [...]

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Six Noteworthy ETF Innovations

Michael Johnston — Wed, 16 Nov 2011 14:30:21 +0000

Since the ETF industry was conceived close to two decades ago, innovation has been a hallmark of this rapidly-expanding corner of the investing landscape. Thanks to a unique structure that allows for liquidity, transparency, and tax efficiency, ETFs have quickly and consistently taken market share from other types of securities, bringing newfound flexibility to all types of portfolios. If anything, the pace of innovation has accelerated dramatically in recent years; an aggressive product pipeline has produced hundreds of new products in the last several years, many of which are first-to-market ideas that tap in to new asset classes and investment strategies. Some of these innovations have benefited investors broadly, while others have been noteworthy primarily to more targeted groups [see 25 Things Every Financial Advisor Should Know About ETFs]. In case you haven’t been keeping up with all the latest developments in the ETF industry, here’s a quick recap of [...]

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ETF Misnomers: Why You Never Judge A Fund By Its Cover

Michael Johnston — Tue, 08 Nov 2011 14:00:10 +0000

The saying “never judge a book by its cover” is certainly applicable to a wide range of situations. That includes the business of investing; for advisors and individuals who use ETFs, the old adage can be very relevant, valuable advice. There are now more than 1,300 exchange-traded products now available to U.S. investors, and that number will only climb higher in coming months and years. For the vast majority of those funds, the product name provides a pretty good description of the underlying assets and investment objectives. The S&P 500 SPDR (SPY) invests in the stocks of the S&P 500 Index. The Gold SPDR (GLD) invests in gold bars [see also 25 Things Every Financial Advisor Should Know About ETFs]. But in some cases the name of an ETF only tells a part of the story, and a look under the hood can reveal that the actual exposure achieved can [...]

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25 Things Every Financial Advisor Should Know About ETFs

Michael Johnston — Wed, 02 Nov 2011 14:29:08 +0000

The rapid expansion of the ETF industry has been one of the most important developments of the last several decades to financial professionals; as the lineup of exchange-traded products has surged past 1,300, financial advisors now have more tools in their toolkits than ever before to help construct client portfolios. With these new financial products comes a responsibility to understand the various risk factors and nuances of exchange-traded products, and as the industry has expanded rapidly the amount of information to digest has swelled as well. While ETF education must be an ongoing process, there are a number of basics that can enhance overall understanding, identify opportunities and limitations, and generally promote a better experience with ETFs: 1. Volume ≠Liquidity Many advisors and investors like to implement what can best be described as “liquidity screens,” refusing to consider products that don’t have a certain average daily trading volume (25,000 shares [...]

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Three ETFs To Watch This Week: BRF, FXE, ENZL

Eric Dutram — Mon, 06 Jun 2011 08:00:56 +0000

A deluge of bad data conspired to sink markets in the Holiday-shortened week as most major benchmarks finished the period down significantly. The S&P 500 sank by 2.8% on the week while the ten year Treasury Bond was boosted by heavy amounts of safe haven buying and flirted with the 3.00% mark to close out Friday’s session. This was largely due to the horrendous data on the jobs front as far less jobs than expected were created both when looking at the ADP report and the government numbers. The ADP report showed that just 38,000 jobs were created during the month, well below analyst estimates of 175,000 and it was further confirmed on Friday when the non farm payrolls rose by just 83,000 and the unemployment rate jumped 0.2% to the 9.1% mark. “The jobless data was clearly a shock to the system today, as investors were reminded that the [...]

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IndexIQ Debuts Japan Mid Cap ETF (RSUN)

Michael Johnston — Thu, 02 Jun 2011 14:06:18 +0000

IndexIQ, the firm behind a suite of hedge fund replication ETFs and small cap country-specific funds, notched another first for the ETF industry on Thursday. The IQ Japan Mid Cap ETF (RSUN) will seek to replicate an index that consists of about 100 mid cap Japanese stocks. The weighted average market capitalization of the companies that make up the index will be approximately $3 billion. RSUN is the ninth ETF in the Japan Equities ETFdb Category, and the first to focus exclusively on mid cap stocks; RSUN will offer a tool for establishing complementary exposure to large cap Japan ETFs (such as EWJ) and small cap funds (including SCJ, JSC, and DFJ). In recent years, investors have embraced small-cap and mid-cap equities as a means of establishing more “pure play” exposure to international markets. Whereas funds dominated by large caps tend to include multi-national firms that generate revenue around the [...]

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Here’s An Idea: Small-Cap BRIC ETF

Michael Johnston — Fri, 20 May 2011 11:00:59 +0000

As the ETF industry has continued to expand at a breakneck pace, the introduction of first-to-market products has become somewhat commonplace. Well more than 100 ETFs have debuted this year, many of them targeting an asset class or investment strategy not previously accessible within the ETF wrapper. Recent weeks have seen the debut of the first car ETF, a pure play fishing ETF, and a bond ETF dedicated to debt of Latin America issuers. Unlike the reaction to hyper-targeted funds that have debuted in years past, investors have given many of these niche products a relatively warm reception. In addition to the hundreds of new launches, the ETF product pipeline has continued to fill as well. SEC filings have accelerated in recent weeks, with issuers planning a wide variety of additional funds that offer sector-specific exposure to international economies and tools for playing narrow investment themes withing the U.S. market. [...]

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Van Eck Slashes Fees On Five ETFs

Michael Johnston — Fri, 06 May 2011 12:30:15 +0000

Van Eck announced this week that it has reduced the expense caps for five of its exchange-traded funds, effective May first. The move represents the latest development in a string of fee reductions by ETF issuers, reflecting both increasing asset bases and economies of scale as well as efforts to lure cost-conscious investors. The ETFs affected by the latest round of fee cuts include the ultra-popular GDXJ, which currently has close to $2.5 billion in assets [see all the Gold Miner ETFs here]. The ETFs impacted by the price cuts, along with the annual savings generated based on assets at the end of April, include: Ticker ETF Old Cap New Cap Savings* AFK Market Vectors Africa Index ETF 0.83% 0.78% $57.7 BRF Market Vectors Brazil Small-Cap ETF 0.65% 0.62% $296.7 GDXJ Market Vectors Junior Gold Miners ETF 0.59% 0.56% $728.6 HAP Market Vectors RVE Hard Assets Producers ETF 0.65% 0.59% [...]

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BRIC ETF Investing: Small Cap Edition

Michael Johnston — Thu, 28 Apr 2011 14:00:52 +0000

In recent years interest in achieving exposure to emerging markets has intensified tremendously, as the developing economies of the world have established themselves as the clear leaders of GDP growth while advanced economies have struggled to regain their footing. While there are dozens of countries that fall under “emerging” status, exposure to this investment strategy has generally focused around the BRIC bloc that includes four economies expected to see their contribution to global GDP swell in coming decades. The BRIC economies–Brazil, Russia, India, and China–have very little in common in terms of geography, culture, or even the makeup of their respective economies. The term was originally coined by a Goldman Sachs economist who had never visited three of the four countries but believed that the collective economies would grow to eventually surpass the six largest western economies in terms of economic size and importance. What seemed like a ludicrously bold [...]

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Van Eck Debuts Small Cap Russia ETF (RSXJ)

Michael Johnston — Thu, 14 Apr 2011 10:55:50 +0000

Today marks the first day of trading for the Market Vectors Russia Small-Cap ETF (RSXJ), the first exchange-traded product offering U.S. investors exposure to small cap Russian stocks. The new fund from Van Eck will seek to replicate the performance of the Market Vectors Russia Small-Cap Index, a benchmark that includes about 35 small cap Russian stocks. The underlying components are unlikely to be familiar to many U.S. investors; the largest individual weightings are afforded to Pharmstandar, (8%), LSR Group (7.9%), and O’Key Group (6.8%). Small Cap Difference RSXJ joins three existing Russia ETFs, the most popular of which is a Market Vectors fund (RSX) with nearly $4 billion in AUM. The Market Vectors Russia ETF offers exposure primarily to large cap firms; about 95% of the underlying index is firms with a market capitalization in excess of $5 billion, with the remainder attributable to firms between $1 billion and [...]

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ETF Database » BRF

Tax Efficiency Report Card

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