Neena Mishra: 2013 has been another significant year for the ETF industry. With 134 new products launched this year, the total number of products now stands at 1531, while assets under management have increased to $1.67 trillion.
Most of the products launched this year are designed to follow the popular strategies that have worked so far, whereas few others offer unique, innovative investing opportunities that were earlier unavailable to regular investors. However not all new products will be successful; some will flourish while some will languish due to lack of investor interest.
Below we have highlighted four ETFs launched this year that stand out from the rest and in our view, will emerge as big winners in the long-term.
iShares MSCI US Quality Factor ETF (NYSEARCA:QUAL)
This year has been great for most equity ETFs thanks mainly to Fed’s easy money policies but when the QE begins to fade away, only the ‘high-quality’ stocks and ETFs will shine. (Read: 3 Niche ETFs Crushing the SPY)
QUAL tracks the MSCI USA Index, which is comprised of high quality stocks, identifying stocks with high quality scores based on three main fundamental variables: high return on equity (ROE), stable year-over-year earnings growth and low financial leverage. It charges a low expense ratio of 15 basis points.
The product holds 124 securities in its portfolio with Apple, Google and Johnson & Johnson being the top three holdings. In terms of sectors, Technology takes about 40% of the asset base, while Consumer Discretionary, Energy, and Healthcare also get double digit allocations.
The fund has a SEC yield of 1.62%.Launched in July this year, this product has already attracted an impressive $210 million in assets so far.Looking at the five-year performance history (total return) of the index–S&P 500 High Quality Rankings Index had a total return of 21.8% handily beating the S&P 500 Index total return of 18.8%.
Cambria Shareholder Yield ETF (NYSEARCA:SYLD)
SYLD is an actively managed fund based on the research that free cash flow is a key predictor of a company’s strength.
This product invests in companies that show strong characteristics in returning free cash flow to their shareholders by way of cash dividends, share repurchases, or by reducing their leverage.