Risk. It’s what makes the investment world go ‘round. And increasingly, exchange-traded fund (ETF) sponsors have been launching products designed to reduce various investment risks and smooth the ride for portfolios.
This week’s round of new fund launches focuses on reducing a variety of different scenarios that investor might face. From inflation to currency headwinds, investors got it all this week.
For a list of new ETF launches, take a look at our ETF Launch Center.
| Ticker | Name | Issuer | Launch Date | ETFdb.com Category | Expense Ratio |
|---|---|---|---|---|---|
| (QXRR) | QuantX Risk-Managed Real Return ETF | QuantX Funds | 01/25/2017 | Diversified Portfolio | 0.95% |
| (QXMI) | QuantX Risk Managed Multi-Asset Income ETF | QuantX Funds | 01/25/2017 | Diversified Portfolio | 0.79% |
| (QXGG) | QuantX Risk-Managed Growth ETF | QuantX Funds | 01/25/2017 | Diversified Portfolio | 0.95% |
| (QXTR) | QuantX Risk Managed Total Return ETF | QuantX Funds | 01/25/2017 | Diversified Portfolio | 1.25% |
| (FLIO) | Franklin International Opportunities ETF | Franklin Templeton | 01/25/2017 | Foreign Large Cap Equities | 0.64% |
| (GLDW) | SPDR Long Dollar Gold Trust | State Street | 01/27/2017 | Precious Metals | 0.50% |
Gold’s Currency Problem
For many investors, investing in gold has plenty of appeal. The precious metal doesn’t really function like other asset classes. It zigs when the market zags. It provides inflation protection in addition to a host of portfolio benefits. The problem is that it’s supposed to do these things, but the recent strength of the dollar has made the benefits less pronounced. Since it’s priced in greenbacks, the strength of the U.S. dollar has helped to keep a tight lid on rising gold prices in recent months.
State Street may have the answer.
The investment manager has announced a compliment to its immensely popular SPDR Gold Shares (GLD ). The SPDR Long Dollar Gold Trust (GLDW) will own physical bullion stored in a vault, just like GLD. However, unlike its sister fund, GLDW will add a hedging twist. Tracking the Solactive GLD Long USD Gold Index, GLDW will also add a currency overhaul to the fund.
The ETF will short a position in a preset FX basket comprised of euros, Japanese yen, British pounds, Canadian dollars, Swedish krona and Swiss francs vs. the U.S. dollar. The underlying index can increase in value when the price of gold increases and/or when the value of the dollar increases versus the value of the foreign exchange basket. The idea is that it takes the dollar out of the equation and gold is able to function more like gold. That is, as a store of value, inflation and catastrophe hedge.
In the end, GLDW can be used in conjunction with GLD to provide gold exposure in any currency scenario. And since expenses are only 0.50%, or $50 per $10,000 invested, the new fund is both easy and cheap to add.
Use our Head-to-Head Comparator tool to compare two ETFs issued by State Street.
BlueSky Breaks Ground
While the ETF industry is dominated by a few major players, new issuers have been hard at work launching plenty of interesting funds. A prime example of that comes from sponsor BlueSky and its new QuantX lineup of ETFs. The grouping of funds is designed to use a multi-asset approach to solving basic portfolio problems. Looking for an inflation hedge? Then QuantX Risk-Managed Real Return ETF (QXRR) could be for you.
The key is that the new funds follow an innovative and proprietary screen methodology that looks across the full asset spectrum to design the right mix of asset classes best suited to tackle the problems for each fund. As a smart-beta indexed solution, investors are getting both active and passive management from the funds. The “Risk Managed” in their title indicates that they are also managed to provide downside protection.
In addition to QXRR – which bets on “real assets” like commodities, real estate and infrastructure assets – there are four other new ETFs in the suite. The QuantX Risk Managed Multi-Asset Income ETF (QXMI) seeks to avoid interest rate risk and provide higher income in its basket of fixed income securities. The QuantX Risk-Managed Growth ETF (QXGG) aims to bet on growth stocks from around the world, while cash and bonds provide a safety net for volatility. Finally, the QuantX Risk Managed Total Return ETF (QXTR) is an all-in-one approach that combines the best fixed-income and equities in an attempt to provide the best combination of gains for the current market scenario.
In the end, the suite is designed to help investors meet a variety of needs while providing easy access with one ticker. Expenses for the suite of QuantX funds range from 0.59% to 1.25%.
Franklin Gets Active
Mutual fund powerhouse Franklin Templeton continues to expand its LibertyShares lineup of ETFs. This time, the issuer gets a bit active with its latest launch. The Franklin International Opportunities ETF (FLIO) will seek to find the best opportunities in the international world – developed, emerging or frontier nations. Tapping into Templeton’s long history and expertise in global investing, FLIO is designed to provide a high level of return, while accounting for global and local market risks.
The hope is to craft an international portfolio that will do well during bull market cycles, while still holding its own during bear ones. Expenses for FLIO run 0.64%.
The Bottom Line
As more investors have become aware of the risks they face in their portfolios, ETF sponsors have been happy to design solutions to tackle those issues. This week’s round of launches is a testament to that advance. Investors now have more tools to address problems head on.
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