Three New ETF Clones from Old Mutual GlobalShares

April 7, 2010 by  
Filed under Commentary, ETF IPOs (New ETFs), ETFs

Old Mutual added three ETFs to its GlobalShares lineup yesterday (4/6/10). Similar to its previous two fund launches, these new funds are nearly identical to existing products from other sponsors. Joining an already crowded field are GlobalShares FTSE All-World Fund (GSW), GlobalShares FTSE All-World ex-US Fund (GSO), and GlobalShares FTSE All-Cap Asia Pacific ex-Japan Fund (GSZ).

Old Mutual’s ETF strategy is unclear. Launching funds that are essentially clones of ETFs from proven sponsors that enjoy lower expense ratios and better brand recognition sounds like a recipe for disaster. Old Mutual has tried a few tricks like zero expense ratio teasers and share splits to attract attention, but those attempts have failed so far. I anticipate seeing all five of the GlobalShares funds on ETF Deathwatch once their six-month grace periods expire.

GlobalShares FTSE All-World Fund (GSW) (summary page, fact sheet pdf) is designed to track the performance of large and mid-cap companies located throughout the world. The underlying FTSE Index has about 2,500 stocks, representing 90-95% of the world’s investable equity market capitalization. Expenses are capped at 0.35% through January 2012.

GSW is an attempt to clone Vanguard Total World Stock ETF (VT) (overview), which tracks the same FTSE index but has a lower 0.30% expense ratio. Another competitor, iShares MSCI ACWI (ACWI), is part of the commission-free ETF lineup at Fidelity. VT still gets our vote for best all country ETF.

GlobalShares FTSE All-World ex-US Fund (GSO) (summary page, fact sheet pdf) is designed to track the performance of large-cap and medium-cap companies located in developed and emerging market countries throughout the world, excluding the United States. The underlying FTSE Index has approximately 2,200 stocks, representing about 98% of the world’s investable market capitalization (excluding the United States). Expenses are capped at 0.35% through January 2012.

GSW is a clone of the Vanguard FTSE All-World ex-US ETF (VEU) (overview), which tracks the same index but has a lower 0.25% expense ratio. In addition to VEU, five other ETFs compete in the all-world ex-US space: iShares MSCI ACWI ex-US (ACWX), SPDR MSCI ACWI ex-US (CWI), WisdomTree World ex-US Growth Fund (DNL), SPDR S&P World ex-US (GWL), and Vanguard FTSE All-World ex-US Small-Cap (VSS) (launch article).

GlobalShares FTSE All-Cap Asia Pacific ex-Japan Fund (GSZ) (summary page, fact sheet pdf) is designed to capture the performance of large-cap and medium-cap companies located in the Asia Pacific region, excluding Japan. The underlying FTSE Index includes more than 1,700 stocks, representing approximately 98% of the investable market capitalization of the target area. The fund’s expenses are capped at 0.50% through January 2012.

There are currently six other Asia Pacific ex-Japan ETFs, although each has a slightly different target than GSZ. This makes GSZ the “most original” ETF ever launched by GlobalShares. iShares MSCI AC Asia ex-Japan (AAXJ) excludes the “Pacific” countries of Australia and New Zealand, WisdomTree Pacific ex-Japan Dividend (DND) has a dividend focus, WisdomTree Pacific ex-Japan Equity Income (DNH) includes only developed markets, iShares MSCI Pacific ex-Japan (EPP) includes only developed markets, SPDR Emerging Asia Pacific ETF (GMF) includes only emerging markets, and PowerShares FTSE RAFI Asia Pacific ex-Japan (PAF) employs fundamental indexing.

Find our coverage of all new ETF introductions here.

Disclosure covering writer, editor, and publisher: Long VT and ACWI. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

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