It's a fact, assets under management at various exchange-traded products (ETFs, ETNs and related fare) are soaring. The AUM total for U.S. ETFs and ETNs currently stands at over $1.2 trillion following an 11 percent pop in the first half of 2012. Some research has said ETF assets could double or triple by 2015.
ETF observers believe the $1.2 trillion U.S.-listed ETF market will attract $2 trillion by 2013, $5 trillion by 2015 and $10 trillion by 2020, ETF Trends reported earlier this year. These factoids highlight the notion the the ETF industry's growth has been truly exponential.
Those statistics are also broad. Astute investors want to know to which ETFs the flows are going because rising inflows and an increase in share creations can tell investors an ETF is poised to rally, if it has not done so already. Here are several examples of that have seen impressive AUM growth in recent weeks.
PowerShares Senior Loan Portfolio (BKLN) The PowerShares Senior Loan Portfolio, the first ETF to offer exposure to senior loans, might be qualified as a high-yield instrument, but there are some differences between this ETF and a traditional junk bond fund.
For starters, BKLN has a 30-day SEC yield of 4.8 percent and while that is decent, it lags the 5.7 percent offered by the SPDR Barclays Capital High Yield Bond ETF (JNK) and related products. Second, a senior loan is different from a traditional junk bond in that a senior bank loan is surpasses all other obligations for the debtor.
It is also worth noting that BKLN's underlying paper is frequently traded, a trait that cannot be underestimated amid calls of diminishing liquidity in the U.S. junk bond market. BKLN's solid yield, monthly dividend and increased use of the fund by some professionals in place of credit default swaps have helped the ETF to almost $1.06 billion in AUM as of October 12. That is up from $580 million in July.
Global X SuperDividend ETF (SDIV) Not surprisingly, another ETF with a high yield makes the list. Highlighting investors' thirst for yield, SDIV was able to pull in $100 million in AUM in just 14 months of trading.
Not bad and the ETF celebrated that milestone in late August. Not even two months later, SDIV now has $148.1 million in AUM. Said another way, the ETF's assets total has surged 48 percent in less than 60 days. A 30-day SEC yield of 6.7 percent and a monthly dividend have no doubt played a part.
iShares MSCI Emerging Markets Minimum Volatility Index Fund (EEMV) It used to be that an ETF needed to attract at least $25 million in assets in its first year of trading to be deemed a success. That number would later rise to $50 million and these days an ETF has to have $100 million in assets to be considered "good" in the eyes of some experts.
All those number mean absolutely nothing to EEMV because when the ETF celebrates its first birthday on October 18, it will likely do so with more than $540 million in AUM. To be precise, EEMV had $544.1 million in AUM as of the close of trading Monday.
What is truly noteworthy about this ETF is that with an expense ratio of just 0.25 percent, the fund is far cheaper than iShares MSCI Emerging Markets Index Fund (EEM) and not much pricier than the Vanguard MSCI Emerging Markets ETF (VWO). More importantly, EEM and VWO are up an average of 9.5 percent this year, but EEMV is up 15.2 percent.
WisdomTree Europe Hedged Equity Fund (HEDJ) Earlier this year, the WisdomTree Europe Hedged Equity was restructured. The new version of this ETF dramatically slashed exposure to financial services names (now less than eight percent down from over 20 percent) while focusing on European dividend payers that derive the bulk of their revenue from outside the eurozone.
Now, HEDJ devotes a combined 34.6 percent of its weight to staples and health care, highlighting the fund's conservative nature. The ETF is not yet big in terms of assets, but growing to $21.7 million as of October 15 from under $13 million on September 7 is impressive on a percentage basis.
FlexShares Morningstar Global Upstream Natural Resources Index ETF (GUNR) The FlexShares Morningstar Global Upstream Natural Resources Index ETF shares a couple of things in common with the aforementioned EEMV. First, the FlexShares fund entered a niche littered with competition. Simply put, there is no shortage of resources ETFs on the market offering exposure to the likes of Exxon Mobil (XOM), BP (BP) and BHP Billiton (BHP).
Second, GUNR destroyed the notion that new ETFs need time to mature as if new funds are a fine bottle of Bourdeaux. GUNR is about 13 months and has already accumulated $526.8 million in AUM. The fund is up nearly 8.2 percent in the past 90 days.
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