In the first half of the year, ETF investors have been looking to find income, diversify away from the dollar, and protect themselves from inflation, says Morningstar’s Scott Burns. Today, we’re going to talk a little bit about the new launches in 2011 in the ETF space, particularly some of the themes that we see and who the real success stories have been. I think it should be really no shock that the largest launch and most successful launch to-date has been the WisdomTree Asia Local Debt ETF pulling in an astounding $485 million in the first six months of 2011.
There are a couple of things about this fund that I think are very interesting. One, it actually provides that access to Asian debt. So, it’s really capitalizing on that investor zeitgeist of staying away from the dollar and looking for income outside the United States right now.
The other thing that’s interesting about this fund is that it’s actually an active ETF. Now, it’s not exactly active in the sense of making active manager security selection, which is the traditional active that people are thinking about. But it does not actually follow an index, and so it’s using quantitative screens to determine which bonds get in. It’s almost self-indexing, and what we may be seeing with this fund is an investor adoption of a new way of ETFs being constructed. That is, instead of following an index, this vehicles are indexing themselves inherently.
Second on the list, again, congratulations to WisdomTree, it is WisdomTree Managed Futures. The managed futures fund has pulled in $200 million so far year to date. This really highlights the theme of alternatives. Managed futures in the alternatives space was, without a doubt, one of the best-performing areas throughout the market disruption of 2008 and 2009, posting positive returns in both ’08 and ’09. The ETF maintained its low correlation to the general stock and bond market while providing that positive return.
See the full “Morningstar” segment below:
ETFs mentioned in this video: WisdomTree Managed Futures (NYSE:WDTI), IQ Global Agribusiness Small Cap ETF (NYSE:CROP), Schwab U.S. Mid-Cap ETF (NYSE:SCHM), ETFS Physical Asian Gold Shares (NYSE:AGOL), Schwab US REIT ETF (NYSE:SCHH)