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After a short hiatus, exchange-traded fund (ETF-s) issuers were back at it this week. Several products were launched, including a hefty dose of socially responsible funds. Building a portfolio around your conscience and ethics has become a popular theme for investors over the last few years as returns in the sector have caught up to expectations. And fund providers have been more than happy to oblige with new ways to do so. This week, investors added four new funds to do just that.
Meanwhile, the bulk of the week’s other launches came from another investor-favorite theme: income. With interest rates still low, finding new ways to gain a little yield have continued to prove popular for investors and fund sponsors alike. (For a list of all new ETF launches, take a look at our ETF Launch Center located here.)
| Ticker | Name | Issuer | ETFdb Category | Expense Ratio |
|---|---|---|---|---|
| (IMTB) | iShares Core 5-10 Year USD Bond ETF | iShares | Total Bond Market | 0.08% |
| (IGVT) | X-trackers Barclays International Treasury Bond Hedged ETF{% | Deutsche Bank | Government Bonds | 0.40% |
| (IFIX) | X-trackers Barclays International Corporate Bond Hedged ETF | Deutsche Bank | Corporate Bonds | 0.45% |
| (ESGL) | Oppenheimer ESG Revenue ETF | Oppenheimer | Large Cap Blend Equities | 0.40% |
| (ESGF) | Oppenheimer Global ESG Revenue ETF | Oppenheimer | Global Equities | 0.45% |
Oppenheimer Expands Its ESG Offerings
Like many actively managed mutual fund providers, Oppenheimer Funds has seen the writing on the wall and has expanded into ETFs in a big way. The initial push came from buying smart-beta sponsor RevenueShares. This week, they use a slightly different strategy of combining active management and ESG/Revenue screens into crafting its two latest products – the Oppenheimer Global ESG Revenue ETF (ESGF) and the Oppenheimer ESG Revenue ETF (ESGL).
Both ETFs start with the same premise. Using data from Sustainalytics and MSCI ESG Ratings, Oppenheimer will screen for firms with high environmental, social and governance (ESG) ratings. Stocks are ranked and the top half is chosen. From there, Oppenheimer will apply its proprietary revenue weighting schemes to come up with the final asset allocation of the respective ETFs.
The prime difference comes down to whether you want only U.S. stocks or a mixture of global equities. ESGL will only screen the U.S.-focused S&P 500 for its holdings, while ESGF will search through the MSCI ACWI Index. That index includes every country in the world in developed and emerging markets.
Expenses for the two funds are nearly the same. ESGL will cost you just 0.40%, or $40 per $10,000 invested. Wanting global exposure will be slightly higher at 0.45%.
Deutsche Bank Brings Currency Hedging to Fix Income
With the dollar going gangbusters over the last few years, international investors have felt the pinch of lower returns. As a result, currency hedging remains a popular tool for portfolios. However, the bulk of the products have been focused on equities. Deutsche Bank is looking to change that.
Building on its successful, but still ignored x-Trackers lineup, Deutsche Bank has launched the X-trackers Barclays International Treasury Bond Hedged ETF (IGVT) and X-trackers Barclays International Corporate Bond Hedged ETF (IFIX).
Like the previously mentioned pairing of ESGL and ESGF, Deutsche’s new ETFs are similar in structure at their core. They will hold international debt and bonds denominated in local currencies. The pair will then hedge those holdings against the U.S. dollar. The idea is that investors will get “pure” bond exposure absent of any losses or gains due to the changes in the dollar. Currency changes can be so strong that investors can actually have gains in local currencies but realize losses, thanks to the rising dollar. Deutsche Bank’s new products will seek to overcome those issues.
IFIX will bet solely on the corporate debt of international issuers; while IGVT will own international government-sponsored Treasury debt. (Despite there being hundreds of international bond ETFs, most investors have little-to-no exposure to them. Read International Bond ETFs: An ETFDb.com Guide to learn more about the different international bond ETF options available to investors and why you should add one to your portfolio.)
iShares Gets to the Core of Fixed Income
BlackRock’s iShares core lineup of ultra-low cost ETFs has been a smash success for the firm. Billions of dollars now sit in the various ETFs that make up the lineup. However, there was one fund missing from the suite. And that was a broad intermediate fixed income/bond ETF.
The iShares Core 5-10 Year USD Bond ETF (IMTB) will hold bonds from across the globe that denominated in U.S. dollars and have maturities between 5 and 10 years. IMTB is essentially the middle child between its shorter-duration sister iShares Core 1-5 Year USD Bond ETF (ISTB ) and its longer-duration sibling iShares Core Long-Term US Bond ETF (ILTB ).
So-called intermediate bonds offer a sweet spot of current yield and rising interest rate protection. That makes them a hot commodity for investors seeking income. And with expenses of only 0.08%, IMTB should be a hot product as well. (BlackRock’s core lineup is just one of several of the fund giant’s options for investors. Check out the entire suite of funds on the iShares issuer page here.)
The Bottom Line
After a short drought of new products, this week’s ETF launches continue to dive into major and popular themes for investors.
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