Invest With An Edge

ETF Stats for January 2014 – Launch Pace Highest Since 2007

ETF launch activity began 2014 with a bang.  Twenty-five new ETFs hit the market.  You are correct if that sounds like a large number because it is the highest January launch count since 2007 and comfortably above the five-year average of 17 new monthly introductions.  Another unique aspect of the January launches is that they were all ETFs – not a single ETN in the bunch.

January also witnessed a significant uptick in the number of actively managed ETFs introduced.  Eight of the new offerings carry that banner, increasing the actively managed ETF count by more than 11% to 79.

Two ETFs and two ETNs closed during the month, and the net increase of 21 brings the quantity of currently listed products to 1,557 consisting of 1,355 ETFs and 202 ETNs.  This easily marks a new all time high for ETFs on the market.  However, this is a 26-month low for the quantity of ETNs, which peaked at 218 back in mid-2012 and has been trending downward ever since.

ETP assets dropped 2.9% in January to $1.65 trillion after establishing a new record high of $1.7 trillion in December.  The decline is not surprising given that U.S. equities fell 3.2% and international stocks dropped 5.0% for the month.  The number of funds with more than $10 billion in assets held steady at 36, as did the count of 215 ETPs above the $1 billion threshold.  Meanwhile, 320 products are below $10 million in assets.

Asset distribution across the 1,557 listed ETPs is extremely lopsided.  It takes 788 of the smallest products, more than half the total, added together to equal just 1% of the assets under management.  At the other extreme, SPDR S&P 500 ETF (SPY) is the largest, and it alone holds 9.3% of all industry assets.  This is the same amount held by the smallest 1,292 ETPs.  In other words, 1,292 of the smallest ETPs (or 83%) hold the same amount of assets as the single largest.

Trading activity increased a hefty 17.8% for the month on top of a 12.6% increase in December.  Again, the action is not evenly distributed but skewed toward a handful of the most active.  SPDR S&P 500 ETF (SPY) single handedly accounted for 31% of the $1.5 trillion of ETP trading in January.  Eight ETPs averaged more than $1 billion a day in trading and accounted for 54.6% of all trading activity.  The turnover ratio (total dollar volume / assets under management) was 0.94 in January, up significantly from 0.73 in December.

 

January 2014 Month End ETFs ETNs Total
Currently Listed U.S. 1,355 202 1,557
Listed as of 12/31/2013 1,332 204 1,536
New Introductions for Month 25 0 25
Delistings/Closures for Month 2 2 4
Net Change for Month +23 -2 +21
New Introductions 6 Months 91 7 98
New Introductions YTD 25 0 25
Delistings/Closures YTD 2 2 4
Net Change YTD +23 -2 +21
Actively-Managed Listings 79 (+8) n/a 79 (+8)
Assets Under Mgmt ($ billion) $1,624 $23.4 $1,647
% Change in Assets for Month -3.0% +0.7% -2.9%
Qty AUM > $10 Billion 36 0 36
Qty AUM > $1 Billion 209 6 215
Qty AUM > $100 Million 664 32 696
% with AUM > $100 Million 49.0% 15.8% 44.7%
Monthly $ Volume ($ billion) $1,407 $49.5 $1,457
% Change in Monthly $ Volume +17.1% +39.8% +17.8%
Avg Daily $ Volume > $1 Billion 7 1 8
Avg Daily $ Volume > $100 Million 73 2 75
Avg Daily $ Volume > $10 Million 277 12 289

Data sources:  Daily prices and volume of individual ETPs from Norgate Premium Data.  Fund counts and all other information compiled by Invest With An Edge. 

New products launched in January (sorted by launch date):

  1. First Trust High Income (FTHI), launched 1/7/14, is an actively managed ETF that will first seek to provide income while aiming for capital appreciation as a secondary objective.  It will invest in large-cap equities, emphasizing high-dividend paying stocks.  To create additional income, it will write covered calls on the S&P 500 Index to collect the premiums for added cash flow.  The ETF carries a 0.85% expense ratio (FTHI overview).
  2. First Trust Low Beta (FTLB), launched 1/7/14, is an actively managed ETF whose description sounds a lot like FTHI with one twist.  FTLB will also purchase put options on the S&P 500 as a hedge against declining markets.  It also has an expense ratio of 0.85% (FTLB overview).
  3. First Trust NASDAQ Rising Dividend Achievers (RDVY), launched 1/7/14, will follow an index designed to provide a diversified portfolio of 50 large cap stocks with a history of raising their dividends and exhibiting characteristics they will continue to do so in the future.  Its expense ratio is 0.50% (RDVY overview).
  4. EGShares TCW EM Intermediate Term Investment Grade Bond ETF (IEMF), launched 1/8/14, provides exposure to Emerging Market sovereign and corporate bonds denominated in U.S. dollars.  It will invest in approximately 120 fixed income securities with remaining maturities between 4-7 years.  Latin America leads the regional allocation at nearly 40%.  Investors will pay 0.65% annually to own this ETF (IEMF overview).
  5. EGShares TCW EM Long Term Investment Grade Bond ETF (LEMF), launched 1/8/14, is a repeat of the description for IEMF except that the maturity range will be 8-12 years out.  Latin America is still near 40%, and the expense ratio is 0.65% (LEMF overview).
  6. EGShares TCW EM Short Term Investment Grade Bond ETF (SEMF), launched 1/8/14, is again a similar description with remaining maturities of 1-3 years and a reduction in number of securities to around 50 bonds.  It still sports the same 0.65% expense ratio (SEMF overview).
  7. SPDR MFS Systematic Core Equity ETF (SYE), launched 1/9/14, is an actively managed ETF that will attempt to outperform the S&P 500 Index using a systematic combination of fundamental and quantitative research.  MFS will manage the fund and expects to hold between 40 and 55 equities.  It will charge investors 0.60% per year (SYE overview).
  8. SPDR MFS Systematic Growth Equity ETF (SYG), launched 1/9/14, is an actively managed ETF whose goal is to outperform the Russell 1000 Growth Index.  As with SYE, it will select about 40-55 equities and charge investors 0.60% per year (SYG overview).
  9. SPDR MFS Systematic Value Equity ETF (SYV), launched 1/9/14, is an actively managed ETF that will try to outperform the Russell 1000 Value Index, will hold 40-55 securities, and will have a 0.60% expense ratio (SYV overview).
  10. Market Vectors Short High-Yield Municipal Index ETF (SHYD), launched 1/14/14, is designed to provide exposure to short-duration, high-yield municipal bonds.  The fund currently has a yield to worst of 5.0%, effective duration of 4.97 years, and an expense ratio of 0.35% (SHYD overview).
  11. AdvisorShares Sage Core Reserves ETF (HOLD), launched 1/15/14, is an actively managed ETF seeking to preserve capital while producing income using a broad selection of fixed-income securities.  The expectation is its average duration will be less than one year.  It will cap expenses for the first year at 0.35% (HOLD overview).
  12. PowerShares NYSE Century Portfolio (NYCC), launched 1/15/14, is based on the NYSE Century Index, which only holds companies that have been incorporated for at least 100 years, are listed on a major U.S. exchange, and have a market capitalization over $1 billion.  Investors will pay 0.50% per year to own this ETF (NYCC overview).
  13. Direxion Daily FTSE Europe Bear 3x Shares (EURZ), launched 1/22/14, will do its best to give investors 300% of the inverse (or opposite) of the daily performance of the FTSE Developed Europe Index.  The index measures large- and mid-cap stocks of the developed markets in Europe.  The fund will reset its leverage daily, so investors should not expect such a return over periods longer than a day.  The expense ratio is capped at 0.95% until 3/1/14 (EURZ overview).
  14. Direxion Daily FTSE Europe Bull 3x Shares (EURL), launched 1/22/14, is designed to provide investors with 300% of the daily performance of the FTSE Developed Europe Index.  The ETF will reset its leverage daily, so investors should not expect such a return over extended periods.  The expense ratio is capped at 0.95% until 3/1/14 (EURL overview).
  15. Vident Core U.S. Equity ETF (VUSE), launched 1/22/14, tracks an index that pursues a strategy of identifying U.S. companies demonstrating high standards of corporate governance and accounting.  That data is then consolidated with each company’s valuation, momentum, and risk to select the index constituents.  The ETF has a management fee of 0.55% (VUSE overview).
  16. Direxion Zacks MLP High Income Shares (ZMLP), launched 1/23/14, is a C-corporation that will invest in an index of 25 Master Limited Partnerships (MLP).  The structure means the product is not a pass-through vehicle for taxes, and the fund itself will pay federal and state income taxes, which can dramatically impact its performance.  It should have an initial yield of about 6.3% and will issue 1099 tax reports for shareholders.  The ETF will have a 0.65% expense ratio on top of all the taxes accrued and will therefore have a daily tracking error of about 38% (ZMLP overview).
  17. db X-trackers MSCI All World ex US Hedged Equity Fund (DBAW), launched 1/23/14, provides exposure to non-U.S. equity securities from developed and emerging stock markets while at the same time hedging against the currency fluctuations between the value of the U.S. dollar and the respective non-U.S. currencies.  It will do this with a 0.40% expense ratio (DBAW overview).
  18. db X-trackers MSCI Mexico Hedged Equity Fund (DBMX), launched 1/23/14, provides exposure to Mexican equities while at the same time hedging against the currency fluctuations between the value of the U.S. dollar and the Mexican peso.  The fund has a 0.50% expense ratio (DBMX overview).
  19. db X-trackers MSCI South Korea Hedged Equity Fund (DBKO), launched 1/23/14, provides exposure to the South Korean equity market while at the same time hedging against the currency fluctuations between the value of the U.S. dollar and the South Korean won at a 0.58% expense ratio (DBKO overview).
  20. Market Vectors MSCI Emerging Markets Quality Dividend ETF (QDEM), launched 1/23/14, seeks both long term appreciation and high current income in emerging market opportunities.  Its underlying index selects companies whose dividend yields are higher than average and are expected to be both sustainable and persistent.  For the first year, expenses will be capped at 0.50% (QDEM overview).
  21. Market Vectors MSCI Emerging Markets Quality ETF (QEM), launched 1/23/14, will invest in growth stocks in the Emerging Market universe.  Its underlying index looks for quality stocks based on three variables: high return on equity, stable year-over-year earnings growth, and low financial leverage.  Its net expense ratio is capped at 0.50% (QEM overview).
  22. Market Vectors MSCI International Quality Dividend ETF (QDXU), launched 1/23/14, seeks both long term appreciation and high current income in international equities.  Its underlying index selects companies whose dividend yields are higher than average and are expected to be both sustainable and persistent.  For the first year, expenses will be capped at 0.45% (QDXU overview).
  23. Market Vectors MSCI International Quality ETF (QXUS), launched 1/23/14, invests in non-U.S. growth stocks.  Its underlying index looks for quality stocks based on three variables: high return on equity, stable year-over-year earnings growth, and low financial leverage.  Its net expense ratio is capped at 0.45% (QXUS overview).
  24. PIMCO Diversified Income ETF (DI), launched 1/23/14, is an actively managed ETF providing broadly diversified exposure to the various global credit markets, such as investment grade and high yield corporate bonds, emerging market debt, and other global credit instruments with about 43% currently allocated to the U.S.  The fund’s expense ratio is 0.85% (DI overview).
  25. PIMCO Low Duration ETF (LDUR), launched 1/23/14, is an actively managed ETF investing in shorter-term, high quality bonds across the mortgage-backed, Treasury, corporate, and international fixed income sectors.  It is predominantly a U.S. fund with less than 10% of assets currently invested internationally.  The average duration is expected to be in the range of 1-3 years.  Investors will pay a 0.55% annual fee (LDUR overview).

Product closures/delistings in January:

  1. ETRACS Natural Gas Futures Contango ETN (GASZ) [UBS to Freeze Value of OILZ and GASZ January 17]
  2. ETRACS Oil Futures Contango ETN (OILZ)
  3. PureFunds ISE Diamonds/Gemstone (GEMS) [PureFunds Shuttering Two of Three ETFs]
  4. PureFunds ISE Mining Service (MSXX)

Product changes in January:

  1. WisdomTree currency ETFs added the word “Strategy” to their names effective January 7, presumably to help identify them as being actively managed.
  2. Market Vectors China ETF (PEK) was renamed Market Vectors ChinaAMC A-Share ETF (PEK) effective January 8, signifying the fund now provides direct exposure to physical A-shares (pdf).
  3. ProShares had 2:1 forward splits on five ETFs and 1:4 reverse splits on 17 ETFs effective January 24.  Please consult the press release (pdf) for a list of affected funds.

Announced Product Changes for Coming Months:

  1. EGShares will change the underlying indexes for three ETFs effective February 3.  EGShares Brazil Infrastructure (BRXX) and EGShares Low Volatility Emerging Markets (HILO) will move from INDXX to FTSE supplied indexes.  EGShares Emerging Markets Domestic Demand (EMDD) will switch from INDXX to S&P.
  2. PowerShares announced (pdf) its intention to close four ETFs.  February 18 will be the last day of trading for PowerShares KBW International Financial (KBWX), PowerShares MENA Frontier Countries (PMNA), PowerShares Dynamic MagniQuant (PIQ), and PowerShares Lux Nanotech (PXN).
  3. Effective February 19, Invesco PowerShares will change the names on 10 ETFs from “Dynamic” to “DWA” reflecting a change in the underlying indexes to ones provided by Dorsey, Wright & Associates.  The affected products include the nine Dynamic sector portfolios and Dynamic OTC portfolio.  Further details and the product list are available in the press release (pdf).
  4. BlackRock announced (pdf) its intent to close and liquidate its iShares ACWI ex-US sector suite consisting of ten ETFs.  The last day of trading for the affected funds will be March 25.

Previous monthly ETF statistics reports are available here.

Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned.  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.