ETF Stats For March 2014; First ETF Conversion To Mutual Fund

ETFsRon Rowland: March was the only month of the past twelve that failed to produce a net increase in the number of ETP listings.  A dozen new ETFs and one ETN came to market, but those figures were offset by thirteen ETF closures.  The net change of zero leaves the overall count at 1,568 (consisting of 1,365 ETFs and 203 ETNs).  The actively managed fund count also held steady at 85 with one new introduction and one closure.

One of the more interesting events occurring during the month was the conversion of an ETF to an old fashion open-end mutual fund.  To our knowledge, this is a first for the U.S. ETF industry and probably caught some shareholders off-guard.  March 21 was the last day of trading for the Pax MSCI EAFE ESG Index ETF (EAPS).  Ten days later, shareholder statements were showing a different holding – the Pax World International ESG Index Fund (PXNIX), a newly formed mutual fund that reused an existing ticker symbol while keeping the track record of EAPS.  There have been many forecasts and predictions about the ETF industry, but this is one thing that wasn’t supposed to happen.

ETP assets grew by 0.8% in March and now total $1.74 trillion.  The number of products exceeding $1 billion shrunk by one to 225, and they account for 88.4% of all ETP assets.  Funds with more than $10 billion now number 38, and while that represents just 2.4% of listings, they account for the majority (53.7%) of assets.  The 782 smallest products add up to only 1% of industry assets.

March trading activity increased 8.6% over the February level, reaching $1.55 trillion.  This falls short of industry asset levels, resulting in a 89% turnover rate for the month.  As usual, the SPDR S&P 500 ETF (SPY) grabbed the lion’s share, accounting for 30.7% of all ETP dollar volume for the month.

March 2014 Month End ETFs ETNs Total
Currently Listed U.S. 1,365 203 1,568
Listed as of 12/31/2013 1,332 204 1,536
New Introductions for Month 12 1 13
Delistings/Closures for Month 13 0 13
Net Change for Month -1 +1 0
New Introductions 6 Months 100 5 105
New Introductions YTD 52 1 53
Delistings/Closures YTD 19 2 21
Net Change YTD +33 -1 +32
Actively-Managed Listings 85 (+1-1) n/a 85 (+1-1)
Assets Under Mgmt ($ billion) $1,717 $25.7 $1,748
% Change in Assets for Month +0.8% +4.2% +0.8%
Qty AUM > $10 Billion 38 0 38
Qty AUM > $1 Billion 217 8 225
Qty AUM > $100 Million 697 33 730
% with AUM > $100 Million 51.1% 16.3% 46.6%
Monthly $ Volume ($ billion) $1,498 $50.4 $1,549
% Change in Monthly $ Volume +9.4% -7.4% +8.6%
Avg Daily $ Volume > $1 Billion 10 1 11
Avg Daily $ Volume > $100 Million 84 2 86
Avg Daily $ Volume > $10 Million 262 10 272

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 March (sorted by launch date):

  1. Horizons Korea KOSPI 200 ETF (HKOR), launched 3/4/14, will invest in the KOSPI 200 Index, which is a market capitalization weighted index comprised of 200 blue chip companies listed on the Korea Exchange.  Investors should be aware that nearly 22% of the fund is invested in Samsung Electronics.  With the exception of Hyundai Motor at 5.7%, the remaining constituents are under 5%.  The fund has an expense ratio of 0.38% (HKOR overview).
  2. AdvisorShares YieldPro ETF (YPRO), launched 3/5/14, is an actively managed fund-of-funds that will allocate the majority of the portfolio to long and short positions across all segments of the “fixed income” market.  Current holdings include MLPs and REITs.  The fund has the capability to hedge against what it sees as unfavorable conditions in certain segments of the bond market.  No yield information is provided.  The expense ratio is a bit on the high side for an ETF at 1.42% (YPRO overview).
  3. KraneShares Bosera MSCI China A ETF (KBA), launched 3/5/14, is part of the recent influx of fund companies taking advantage of the easing of restrictions by the Chinese government for foreigners to invest directly in Chinese companies.  The underlying index is the MSCI China A Index, providing comprehensive coverage of large, mid and small cap segments, while holding about 450 securities.  Investors will pay 1.1% annually to own this fund (KBA overview).
  4. First Trust Dorsey Wright Focus 5 ETF (FV), launched 3/6/14, is a fund-of-funds ETF managed by First Trust (“FT”) that invests in other ETFs from FT.  The fund employs a relative strength sector rotation strategy designed to provide targeted exposure to the five industry and sector ETFs the underlying index believes offer the greatest potential to outperform.  Current holdings include FT NYSE Arca Biotechnology (FBT), FT Dow Jones Internet (FDN), FT Health Care AlphaDEX (FXH), FT Consumer Discretionary AlphaDEX (FXD), and FT Consumer Staples AlphaDEX (FXG).  The fund has an expense ratio of 0.95% (FV overview).
  5. First Trust RBA American Industrial Renaissance ETF (AIRR), launched 3/11/14, targets small and mid size companies in the industrial and community bank sectors.  Included companies must have U.S. sales of at least 75% and have positive 12-month forward earnings estimates.  Banks will be chosen from states considered to be traditional manufacturing hubs and will be limited to 10% of the portfolio.  The fund will charge investors 0.70% per year (AIRR overview).
  6. First Trust RBA Quality Income ETF (QINC), launched 3/11/14, will provide access to a diversified portfolio of income producing equity securities, no matter their size capitalization.  The universe starts with high-yielding, global securities, and then is screened for debt levels and consistency of earnings/cash flow in an effort to weed out those that might be under pressure to cut dividends.  QINC sports a 0.70% expense ratio (QINC overview).
  7. Global X Guru International Index ETF (GURI), launched 3/11/14, will track, excluding fees and expenses of course, the Solactive Guru International Index.  The index will follow quarterly regulatory filings from a select group of hedge funds and institutional investors and invest in their highest conviction U.S. listed international holdings.  Investors should expect quarterly adjustments to the holdings, which are equally weighted.  The ETF has a 0.75% expense ratio (GURI overview).
  8. Global X Guru Small Cap Index ETF (GURX), launched 3/11/14, will track, excluding fees and expenses, the Solactive Guru Small Cap Index.  It will follow quarterly regulatory filings from a select group of hedge funds and institutional investors and invest in their highest conviction U.S. listed small cap equities.  As with GURI, investors should expect quarterly holding changes, equally weighting, and a 0.75% expense ratio (GURX overview).
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