Ron Rowland: Eighteen new products arrived in August. All were ETFs, as the 2014 slowdown of ETN launches continues. Most notable for the month was the fact that fourteen of the product introductions were actively managed ETFs. These caused the ranks of currently listed actively managed ETFs to swell by 15% to 106. Five ETFs closed during the month, leaving the month-end count at 1,643, consisting of 1,435 ETFs and 208 ETNs.
Ten of the new actively managed funds were a suite of ETFs from new sponsor WBI “targeting an optimal blend of bear market capital preservation and bull market return.” ProShares is not new to the ETF arena, but in August, the firm brought out its first two actively managed ETFs. These funds also entered new territory by being the first ETFs targeting credit default swaps. First Trust added two more actively managed ETFs to its stable. With eleven of its products carrying an “actively managed” label, First Trust is showing it is serious about this space.
Asset levels crept closer to the $2 trillion mark, with the 3.5% boost in August pushing the level slightly above $1.9 trillion. The number of funds with more than $10 billion in assets increased from 39 to 40. Products above $1 billion increased from 237 to 243. However, 341 products have been unable to muster even $10 million in assets.
The 823 smallest funds represent more than half of the products on the market, yet only account for 1% of industry assets. Another example of the lopsided distribution is the average fund has more than $1.1 billion in assets, while the median holds only $80 million.
Trading activity dropped 4.2% in August, making four months of abnormally low turnover. Only five products averaged more than $1 billion a day in trading, but they accounted for 47.8% of all ETP dollars traded. Products averaging more than $100 million a day in trading decreased from 76 to 75, while those averaging more than $10 million increased from 262 to 264.
|August 2014 Month End||ETFs||ETNs||Total|
|Currently Listed U.S.||1,435||208||1,643|
|Listed as of 12/31/2013||1,332||204||1,536|
|New Introductions for Month||18||0||18|
|Delistings/Closures for Month||5||0||5|
|Net Change for Month||+13||0||+13|
|New Introductions 6 Months||87||9||96|
|New Introductions YTD||127||9||136|
|Net Change YTD||+103||+4||+107|
|Actively-Managed Listings||106 (+14)||n/a||106 (+14)|
|Assets Under Mgmt ($ billion)||$1,877||$28.3||$1,906|
|% Change in Assets for Month||+3.5%||+4.8%||+3.5%|
|Qty AUM > $10 Billion||40||0||40|
|Qty AUM > $1 Billion||237||6||243|
|Qty AUM > $100 Million||741||37||778|
|% with AUM > $100 Million||51.6%||17.8%||47.4%|
|Monthly $ Volume ($ billion)||$1,149||$45.0||$1,194|
|% Change in Monthly $ Volume||-5.1%||+27.5%||-4.2%|
|Avg Daily $ Volume > $1 Billion||4||1||5|
|Avg Daily $ Volume > $100 Million||73||2||75|
|Avg Daily $ Volume > $10 Million||253||8||264|
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 August (sorted by launch date):
- Compass EMP U.S. Discovery 500 Enhanced Volatility Weighted Fund (CSF), launched 8/1/14, will invest in 500 small-cap U.S. equities that have displayed net positive earnings for four quarters. The ETF has the ability to hedge by taking part of the portfolio to cash. If the index has a 10% decline, the fund will liquidate 75% of its holdings. The fund will be reinvested in full if it recoups the loss or in 25% increments each time it loses an additional 10%. In the current allocation, the Financials sector accounts for nearly 25% of the fund. The expense ratio will be capped at 0.68% through 10/31/15 (CSF overview).
- Direxion iBillionaire Index ETF (IBLN), launched 8/1/14, selects 30 large-cap U.S. equities, in which a chosen pool of investment billionaires has allocated the most assets according to SEC filings. Net worth, source of wealth, and portfolio size will be used to select the 5-10 billionaires to be monitored. Information Technology accounts for nearly 35% of the fund. The fund’s expense ratio will be capped at 0.65% through 9/1/15 (IBLN overview).
- First Trust Enhanced Short Maturity ETF (FTSM), launched 8/6/14, is an actively managed ETF seeking to provide current income while preserving capital and maintaining daily liquidity. It will invest in short-duration U.S. dollar-denominated securities, focusing on investment-grade bonds. No yield information is provided. The ETF will cap its expense ratio at 0.35% until 8/6/15 (FTSM overview).
- ProShares CDS North American HY Credit ETF (TYTE), launched 8/7/14, is the first actively managed ETF from ProShares. It will provide long exposure to the credit component of high yield debt issuers in North America by investing in credit default swaps. This is a play on the credit of these companies and not the interest on the bonds. The expense ratio will be capped at 0.50% until 9/30/15 (TYTE overview).