The number of new ETFs launched this week was light. However, what was launched could prove interesting for investors. With this week’s round of ETF launches, fund sponsors continue to cater to smaller and smaller niches/segments of the overall market. That included dicing up consumer stocks even further, courtesy of new fund sponsor Amplify Investments, and screening stocks based on religious grounds.
We also saw a new smart-beta offer tackling emerging markets from one of the largest providers of ETFs.
All in all, investors continue to have more and more choice when it comes to designing their portfolios.
An Industry Veteran’s New Venture
While the name Christian Magoon may not ring a bell with retail investors, Magoon has been on the forefront of some of the biggest ETF launches to date. Magoon was president of Claymore Securities when it was purchased by Guggenheim Investments and was responsible for the popular PureFunds ISE Cyber Security ETF (HACK ).
Magoon’s latest venture was to start his own firm, Amplify Investments, and launch his first ETF on April 20: the Amplify Online Retail ETF (IBUY ).
IBUY is a unique take on the consumer discretionary sector as its underlying index, the EQM Online Retail Index, seeks to hone in on the growing trend of online shopping and e-commerce. And while the death of physical retail may have been overstated, it’s no secret that more and more consumers are buying goods and services via their keyboards rather than setting foot in a store.
IBUY’s index screens for firms that receive more than 70% of revenues from online sources. That includes retailers, travel-focused websites and other service providers. IBUY’s index and focus skews heavily towards U.S. stocks, though there are some international firms in its initial asset mix. Surprisingly, the fund isn’t dominated by large-cap e-commerce names and features mostly small- and mid-cap consumer stocks.
The theme is certainly sound. The key for IBUY will be its relatively high expense ratio of 0.65%, or $65 per $10,000 invested. It’ll need to prove itself versus other consumer-focused ETFs to justify the higher cost.
Global X Finds Religion
Fund issuer Global X is known for pushing the boundaries of which sectors or regions can be found in an ETF. After all, these are the people who gave the market a fishing-focused fund and an ETF that owned Mongolian stocks. Global X’s latest fund seeks to allow investors to align their portfolios with their values. At least, if those values are Catholic.
The Global X S&P 500 Catholic Values ETF (CATH ), launched on April 18, will seek to remove any stocks from the broader S&P 500 that don’t meet certain qualifications as defined by the United States Conference of Catholic Bishops (U.S. CCB). This excludes firms that engage in weapons development, child labor practices and abortion-related activities.
This isn’t the first time that an ETF issuer has tried to add a dose of religion into its funds. The defunct FaithShares offered four different Christian-based ETFs back in 2009, while Javelin Investment Management offered a Shariah-focused ETF. None of these funds managed to attract any sort of assets and were closed. However, Global X may have an ace up its sleeve as it’s a very established player in the ETF industry and has a pretty decent marketing budget.
Expenses for CATH run a cheap 0.29%.
Deutsche Bank Expands Its Lineup
Investment bank Deutsche Bank’s X-Trackers lineup of funds is pretty much ignored by investors. However, the line of ETFs is actually pretty darn impressive with regards to its smart-beta and currency-hedged products. The latest launch on April 19, the Deutsche X-Trackers FTSE Emerging Comprehensive Factor ETF (DEMG ), expands upon that impressive lineup.
DEMG is designed to provide core exposure to emerging markets. Like most smart-beta products, the fund will use various screens to create a portfolio designed to outperform standard indexes. The ETF will look for the five factors of quality, value, momentum, low volatility and size to build a portfolio of emerging-market stocks that should beat the market. Those five factors basically give investors growth and value in one package. And as expected, DEMG’s makeup doesn’t look like many normal emerging-market funds.
That could prove to be a real advantage for investors in the ETF and actually could lead to outperformance.
Expenses for DEMG run 0.50%.
