Published September 24, 2012
There are some undeniable truths about the state of the exchange-traded products industry. Assets are expected to rise in 2012 and in the coming years, but on the downside fund closures are on the uptick, too.
Despite a turbulent market environment and intensifying competition, ETF sponsors continue to issue new products at a solid clip and recent filing data indicate pipelines for future introductions are robust.
It is the debut of plans and for new ETFs and ETNs that shines a light on another undeniable truth: Not all new ETPs will succeed, but some will. In fact, a fair amount of funds that have debuted in 2012 are off to solid starts and that does not include the $2.7 billion PIMCO Total Return ETF (BOND). Not surprisingly, the "Bill Gross ETF" is in a league of its own when it comes to successful new ETFs.
A recent Barron's piece highlighted several new funds that are prospering.
We will look at some of those ETFs as well as add to the list right here:
iShares MSCI Global Select Metals & Mining Producers Fund (PICK)
In an already crowded field for materials ETFs, PICK has thrived, as Barron's noted. The fund has hauled in more than $221 million in AUM since its February debut.
While PICK has clearly been a success, another pair of new iShares mining funds have seen mixed AUM performances. The iShares MSCI Global Gold Miners Fund (RING) and the iShares MSCI Global Silver Miners Fund (SLVP) have notched stellar gains in recent weeks as gold and silver miners have surged, but the funds have just $41.4 million and $2.4 million in AUM, respectively.
In the case of RING, that is not too bad for an ETF that debuted in February. However, both RING and SLVP prove it is tough to go up against well-established competitors such as the Market Vectors Gold Miners ETF (GDX) and the Global X Silver Miners ETF (SIL).
Market Vectors Preferred Securities ex Financials ETF (PFXF)
Van Eck, parent company of Market Vectors, looks like it has struck gold with PFXF to this point. It is not surprising because PFXF has multiple selling points. For starters, are craving yield and PFXF features a 30-day SEC yield of 6.21 percent.
Second, PFXF is truly unique in that it is the only ETF tracking preferred stocks that does not feature an absurd weight to financial services names. REITs account for a third of the fund's weight, but that is nothing compared to the 80 percent or higher allocation given to bank stocks by other preferred stock ETFs. Next, PFXF's expense ratio of 0.4 percent makes it the cheapest preferred stock ETF on the market.
Add all that up, and it is not surprising that the ETF has $67.3 million in AUM in just three months of trading.
iShares MSCI Frontier 100 Index Fund (FM)
It might not be fair to include the iShares MSCI Frontier 100 Index Fund on this list because the fund is just starting its second full week of trading. That said, the newest entrant to the frontier market ETF competition is off to a banner start with almost $13 million in assets under management.
FM's debut was widely anticipated in some corners of the ETF industry and despite the elevated risk involved with frontier markets compared to emerging economies, FM has thus far lived up to the hype. Some might say it is too early to hop on the FM bandwagon and what could prove integral to the fund's success going forward is its ability to provide some form of decent liquidity in markets with a reputation for being illiquid.
FM's fact sheet indicates measures are in place to bolster liquidity and if the fund makes good on that, it could be one of the more popular new products of 2012.
SPDR Barclays Capital Short Term High Yield Bond ETF (SJNK)
The SPDR Barclays Capital Short Term High Yield Bond ETF is an interesting case. One cannot look at this ETF and gloss over a modified adjusted duration of just over two years, meaning the fund is more exposed to changes in interest rates than its longer duration counterparts.
Additionally, SJNK is completely overshadowed in junk bond ETF conversation by the iShares iBoxx $ High Yield Corporate Bond Fund (HYG) and the SPDR Barclays Capital High Yield Bond ETF (JNK). Perhaps "overshadowed" is too harsh an assessment. SJNK has accumulated almost $289 million in AUM since its mid-March debut. That puts the fund in position to be one of this year's most successful new ETFs of any kind and probably no worse than the second-best new bond ETF in terms of AUM behind the PIMCO Total Return ETF.
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