2011: A Year Of ETF Firsts

by on December 6, 2011 | ETFs Mentioned:

2011 has been arguably one the busiest ever for the ETF industry, as we are on pace to break through 300 new launches for the year. As we rapidly approach 1,400 total funds in the space, it can be a daunting task to try and keep up with the tidal wave of new products that seem to hit the market each week. For those who have been overwhelmed by this year’s debuts, they may be missing out on a number of new and innovative products. Below, we outline the ETF firsts that 2011 brought to better educate investors on the options that currently exist.

First VIX ETFs: ProShares introduced the first true ETFs offering exposure to the VIX, rolling out VIXY and VIXM at the beginning of 2011. Previous ETPs in the Volatility ETFdb Category had all been structured at ETNs.

Managed Futures: WisdomTree rolled out its Managed Futures Strategy Fund (WDTI) which takes an active approach to futures contracts. The fund charges 0.95% and has been holding its own compared to other futures-based funds.

Target Date High Yield Bonds: After discovering that traditional fixed income ETFs have some exposure flaws, Guggenheim took it upon themselves to offer four new high-yield products with clear cut maturities for its investors; BSJC, BSJD, BSJE, BSJF.

Active Bear ETF: A new AdvisorShares product, Active Bear ETF (HDGE), features an actively managed strategy to maintain short positions through out the market. The fund has performed well since its inception but charges 185 basis points to do so.

Leveraged Spread ETFs: 2011 saw the first-ever leveraged spread funds from FactorShares. These products seek to return the spread between two asset classes or indexes with a 2X leverage to make things a bit more interesting. See FSU, FSG, FSE, FSA, and FOL.

Argentina ETF: This year saw Global X release the first product to dedicate itself to the Argentinian economy, the FTSE Argentina 20 ETF (ARGT). The popular South American emerging market features high volatility but also the potential for massive gains for investors.

Asia Bond Fund: One of the most popular new products came from the Asia Local Debt Fund (ALD) which invests in Asian debt using local currencies from countries like South Korea, China, Hong Kong, and many others.

Italian Bonds: With such a volatile year in Europe, the Italian bond ETFs make for an extremely dangerous but potentially very rewarding play on the euro-zone. See ITLY, ITLT.

German Bonds: This year also saw the first bond products focused on Germany hit the market with two from PowerShares in March (BUNT, BUNL), and a third from PIMCO towards the end of the year (BUND).

Japanese Bonds: Keeping kosher with the international bond strategy, PowerShares also released the first fixed income funds to dedicated themselves wholly to the Japanese bond market. See JGBL, JGBT.

Small Cap Germany: The first product to focus itself on the small cap sector of Europe’s most powerful economy came in the form of the Market Vectors Germany Small-Cap ETF (GERJ).

BDC ETNs: Business Development Companies have long been popular among investors, but had never made their mark on teh ETF space. That changed mid-way through the year when UBS launched the E-TRACS Linked to the Wells Fargo Business Development Company Index (BDCS).

Fishing ETF: Global X continued their reputation for innovative products when they launched the Fishing Industry ETF (FISN).

Mexico Small Caps: Another Global X fund, the Mexico Small-Cap ETF (MEXS) offers unique exposure to our neighbors to the south. But with less than $1 million in assets, this fund doesn’t have a good chance of making it to this time next year.

Auto ETFs: After patiently waiting, investors were treated to not one, but two new funds that were focused on the automobile industry. First Trust’s CARZ and Global X’s VROM.

Latin America Bond: Van Eck rolled out the first fund to offer exposure to Latin American debts with the LatAm Aggregate Bond ETF (BONO).

Hong Kong Small Cap: Exposure to the Hong Kong market was hard to come by as far as ETFs were concerned, and small cap allocations were non-existent. That changed with IndexIQ’s IQ Hong Kong Small Cap ETF (HKK).

Investment Disciplines: One of the more intriguing firsts of the year came in the form of investment discipline ETFs, which focus on strategies like low P/E ratios, contrarian investing, and more. See LWPE, GRPC, EQIN, CONG, CNTR, and AGRG.

International Preferred Stock: Preferred stocks have been investor favorites for years as they often have juicy yields. This year saw two international preferred funds launch, Global X’s CNPF and iShares’ IPFF.

Leveraged ETF Firsts: While leveraged funds have been around for quite some time now, 2011 saw new additions that had never entered the levered ETF space. Direxion launched two Russia products (RUSL and RUSS) along with two agribusiness funds (COWL, COWS).

ABC ETF: ABC is an acronym that stands for the three of the biggest commodity-producing nations in the world, Australia, Brazil, and Canada [see Easy-As-ABC ETFdb Portfolio] . 2011 saw the first ETF dedicated to these nations with the launch of ABC High Dividend ETF (ABCS).

Hedged Equity Exposure: Though hedged equity exposure had previously been offered by WisdomTree, it was limited to Japan and EAFE. This year saw three more ETF additions to brand new regions, with the Brazil (DBBR), Canada (DBCN), and Emerging Markets (DBEM) products.

Natural Gas & Oil “Contango” ETNs: Natural Gas and Oil ETFs have long been under fire for the contango issues that often came handcuffed to their exposure. This year saw two funds debut that aimed to combat contango for a unique futures strategy: UBS’s GASZ and OILZ.

Emerging Markets Sectors: Sector investing was one of the very first innovations that the ETF industry offered, but it wasn’t until this year that the exposure was offered for emerging markets. EG Shares changed all of that when they rolled out eight sector-based funds that were all focused on emerging markets: VGEM, UGEM, TGEM, QGEM, LGEM, IGEM, HGEM, and GGEM.

Cloud Computing: The tech industry has long been though of as the last remaining growth segment in the U.S., as investors have grown impatient with our economy as of late. The introduction of the very first cloud computing ETF, the First Trust ISE Cloud Computing Index Fund (SKYY) is a play on what many feel to be our next big growth segment. Later in the year, UBS released a leveraged cloud fund with LSKY.

Muni Bond CEF: Closed-ended funds, while different from ETPs, come with their own list of benefits that investors seem to enjoy. This year saw the first-ever muni bond CEF with the launch of Van Eck’s XMPT.

Nikkei 225: Exposure to the Japanese Nikkei 225 Index didn’t exist in the ETF world through the end of 2010. This year saw Precidian debuted NKY, allowing for investors to gain exposure to this ultra-popular equity benchmark.

Merging Markets Mid Cap: With ETFs now being dedicated to countries like Argentina and Colombia, it seemed like only a natural evolution to expand the varying kinds of market cap exposure into emerging markets. The fund that broke the ice was IndexIQ’s EMER.

India Consumer ETF: India is one of the fastest-growing countries in the world and likewise, it has one of the most important economies. This year saw an expansion on exposure to this up-an-coming nation with INCO, the first India consumer fund.

Targeted VIX ETNs: While VIX-based funds have been immensely popular over the last two years, the exposure typically consisted of broad based strategies. 2011, however, saw UBS roll out a long list of targeted VIX funds that focused on a specific maturity date for VIX contracts. See AAVX.

Solid State Drives:  Solid state drives (SDDs) utilize microchips to store data, and feature no moving parts, making them much more secure and sturdy than other drives. 2011 saw two products debut to hone in on this niche market with the introduction of SSDD, SSDL.

Wheat Fund: Wheat is one of the most popular agricultural commodities in the world, so it is a wonder that it took so long for an ETF to offer direct exposure. 2011 saw the introduction of Teucrium’s WEAT to give investors the much needed wheat addition to their portfolio.

Soybeans Fund: Another popular agriculture product which is one of the most traded contracts on the CME Group comes form soybeans. Teucrium also broke ground when it released SOYB.

Chinese Bonds: One of the biggest “gold ruses” of the year was the race to offer exposure to Chinese bonds. RMB, from Guggenheim won the first to market crown, followed by DSUM and CHLC from Powershares and Van Eck respectively.

3X Leveraged Gold and Silver: Gold and silver have long been two of the most popular commodity products on the market. So the news of 3X leveraged funds for each metal had investors chomping at the bit before their release this year. See DGLD, UGLD, DSLV, and USLV.

2X Leveraged Platinum and Palladium: Another set of firsts was 2X exposure to the other two precious metals, platinum and palladium. See IPAL, LPAL, IPLT, and LPLT.

Australia Bonds: 2011 was definitely a major year for fixed income firsts as it also saw the launch of the first ever product to offer exposure to the Australian debt market. AUD from PIMCO launched and WisdomTree converted BNZ to AUNZ, turning focus on the land down under.

Canada Bonds: Yet another exposure gap that was filled in came from our neighbors to the north. The very first Canadian bond fund was debuted as CAD.

Disclosure: No positions at time of writing.