ETF Update: Pipeline Continues To Fill
The summer months generally bring a slowdown in trading activity on Wall Street, so it isn’t surprising that product development activity has seemingly slowed a bit in the ETF industry as of late. After dozens of new product launches in previous months, just ten new ETFs debuted in July according to the ETF Launch Center. And as we near the midway point in August, only four new ETFs have started trading this month: the India Consumer ETF (NYSE:INCO), Emerging Markets High Beta Low Income ETF (NYSE:HILO), SmallCap 600 Equal Weight ETF (NYSE:EWSM), and MidCap 400 Equal Weight ETF (NYSE:EWMD).
But while the pace of new launches may have slowed, issuers have remained busy behind the scenes laying groundwork for new ETPs that could begin trading later in 2011 (of course, many proposed ETFs may never see the light of day). Among the ideas stuffed into a bursting pipeline over the last few weeks are more international bond ETFs, some targeted financial products [for updates on all new ETFs, sign up for the free ETFdb newsletter]:
PowerShares Plans Financial ETFs
A recent filing from PowerShares sketched out four targeted financial sector ETFs:
- PowerShares Bank Portfolio
- PowerShares Capital Markets Portfolio
- PowerShares Insurance Portfolio
- PowerShares Regional Banking Portfolio
Little information was included on these proposed funds; the filing didn’t include ticker symbol, index, or expenses. If launched, these funds would beef up a suite of financial funds from PowerShares that already includes the Dynamic Financial Portfolio (NYSE:PFI), Dynamic Banking Portfolio (NYSE:PJB), Dynamic Insurance Portfolio (NYSE:PIC), KBW International Financial Portfolio (NYSE:KBWX), KBW Property & Casualty Insurance Portfolio (NYSE:KBWP), and High Dividend Yield Financial ETF (NYSE:KBWD) [see also Broker-Dealers: The Best Financial ETFs?].
None of the proposed funds would likely be first to market concepts; in addition to a number of bank ETFs, investors currently have the SPDR KBW Capital Markets ETF (NYSE:KCE), a few insurance ETFs (NYSE:IAK), (NYSE:KIE), and multiple regional banking funds (RKH, KRE, IAT).
Russell Plans Bond ETFs
Russell, the long-time index provider and relative newcomer to the space in the role of ETF issuer, is planning to introduce some bond ETFs to go along with a growing suite of equity products. In a recent SEC filing the company detailed plans for three bond ETFs:
- Russell Total Return Fixed Income ETF
- Russell Core Fixed Income ETF
- Russell Emerging Markets Fixed Income ETF
The filing was light on details, but did mention that each of the three would be actively-managed ETFs. Russell has yet to launch any active ETFs since acquiring Reno-based U.S. One, the firm behind what was originally called the One Fund (NYSE:ONEF). That ETF, which holds multiple equity funds, was renamed the Russell Equity ETF after the acquisition.
PIMCO Bond ETFs
Russell isn’t the only issuer laying the groundwork for an expanded suite of fixed income ETFs; bond fund giant PIMCO recently sketched out three international funds that would target debt markets in a few of the world’s strongest economies:
- PIMCO Australia Bond Fund
- PIMCO Canada Bond Fund
- PIMCO Germany Bond Fund
Each of these ETFs would be linked to indexes consisting of debt denominated in the local currency, meaning that investors would be able to achieve dollar diversification through these proposed funds. The products focusing on debt markets in Canada and Australia would be first-to-market concepts, though WisdomTree is expected to convert its Dreyfus New Zealand Dollar Fund (NYSE:BNZ) to the Dreyfus Australia & New Zealand Debt Fund by the end of the current month [see also PIMCO Proposes Three Developed Market Bond ETFs].
PowerShares and Deutsche Bank have already teamed up on an ETN that offers exposure to German debt (NYSE:BUNL).
Northern Trust Gears Up For Another Run At ETF Industry
Northern Trust continues to prep for another run at the ETF industry; the company had previously offered a suite of 17 ETFs, many of which were country-specific funds. But after failing to generate significant traction–the funds had total assets of about $33 million at the end of 2008–Northern Trust shut down its ETF lineup in early 2009 after less than a year in the space. Shortly after that decision, of course, equity markets began an impressive recovery and ETF assets skyrocketed [see ETF Hall Of Shame].
The company has been laying the groundwork for a potential return to the ETF space since pulling out in 2009, and recent filings shed some light on a few more potential products. Among those detailed in SEC filings made earlier this month:
- FlexShares Morningstar U.S. Market Factor Tilt Index Fund
- FlexShares Morningstar Global Upstream Natural Resources Index Fund
- FlexShares iBoxx 3-Year Target Duration TIPS Index Fund
- FlexShares iBoxx 5-Year Target Duration TIPS Index Fund
- FlexShares iBoxx 7-Year Target Duration TIPS Index Fund
The natural resources fund would invest in companies that “have significant business operations in the ownership, management and/or production of natural resources in energy, agriculture, precious or industrial metals, timber and water resources sectors,” while the Market Factor Tilt ETF would provide broad based equity exposure with a tilt towards small cap stocks and value stocks [see also ETF Insider: Run For The Hills!].
Written By Michael Johnston From ETF Database Disclosure: No positions at time of writing.
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