This Week's ETF Launches: Barclays Expands Its Enhanced ETN Lineup

Barclays has enjoyed some success with its exchange-traded note (ETN) roster, amassing roughly $3 billion in assets across nearly a dozen products. This week, it adds a pair of new funds to that group, while BlackRock brings another popular muni bond strategy to market.

Here are this week’s new fund launches:

For a list of all new ETF launches, take a look at our ETF Launch Center.

ETFs and ETNs are often dumped into the same bucket, but they are actually quite different. Whereas ETFs hold the underlying securities within the portfolio, ETNs are structured more like bonds and are vulnerable to any credit concerns of the issuer. Barclays is one of the larger issuers of ETNs and grows its lineup further this week.

The Barclays ETN+ FI Enhanced Europe 50 ETN Series C (FFEU C+) is designed to provide two times exposure to the STOXX Europe 50 Index, which provides a blue-chip representation of supersector leaders in Europe, covering almost 50% of the free-float market capitalization of the European stock market. The index covers 50 stocks from 18 European countries, and is generally considered one of the better benchmarks for large-cap European stock market performance. The ETN was launched in partnership with Fisher Investments, which manages the portfolios of a high-net-worth clientele.

FFEU is essentially a carbon copy of an existing ETN, the Barclays ETN+ FI Enhanced Europe 50 ETN Series B (FLEU B). Both ETNs track the STOXX Europe 50 Index, but FFEU carries a maturity date several years further out than FLEU. The ‘enhanced’ part of the ETN refers to the fact that it will use leverage to deliver twice the daily performance of the underlying index.

The Barclays ETN+ FI Enhanced Global High Yield ETN Series B (FIYY B+) is designed to provide two times the exposure to the MSCI World High Dividend Yield Index, which provides exposure to large and mid-cap stocks across nearly two dozen developed markets around the world. It’s designed to reflect the performance of equities with higher dividend yields and quality characteristics that are both sustainable and persistent. The index has roughly half of its holdings in the United States, and counts consumer staples, healthcare and financials as its top sector holdings. Top positions currently include ExxonMobil (XOM), Nestle and Intel (INTC).

FIYY also has a sister ETN, the Barclays ETN+ FI Enhanced Global High Yield ETN (FIGY B-), and, likewise, looks to deliver twice the daily performance of the underlying index.

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BlackRock’s iShares family of ETFs includes nearly 20 funds that target investment-grade bonds maturing within a specific calendar year. This week, it adds another fund to that lineup with the debut of the iShares iBonds Dec 2024 Term Muni Bond ETF (IBMM A-). The concept behind these products is pretty straightforward. They track the investment results of an index composed of investment-grade U.S. municipal bonds maturing after December 31, 2023 and before December 2, 2024. This allows investors a more targeted approach to their fixed income portfolio that might not be available through a generic short-term or total market bond fund. It caters to individuals who want to target a specific goal or maturity date, much in the same way that target-date funds do for longer-term investors.

The fund’s expense ratio of 0.18% is consistent with other muni funds within the iShares group, and makes it one of the cheapest offerings in the muni ETF segment. According to the fund’s website, its average yield of 2.33% translates to a tax-equivalent yield of 3.86% for those in the highest tax bracket.

All three of these products are in position to do fairly well given enough time. Most of the other funds in the iShares muni category have assets of between $150 million and $250 million, so it’s reasonable to think that IBMM could climb to that range over time. Barclays’ other ETNs, especially the twin ETNs that were launched previously, tended to grow assets pretty quickly, so they might have another pair of hits on their hands. Expense ratios for FFEU and FIYY are going to be a drawback, but that shouldn’t prevent them from establishing a good-sized asset base.

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