by Kyle Woodley | March 5, 2012 11:40 am
Five new exchange-traded funds joined the foray last week, but one got all the fanfare.
The “Bond King,” Bill Gross, entered the world of ETFs with his actively managed PIMCO Total Return ETF (NYSE:TRXT), an exchange-traded clone of his popular PIMCO Total Return A (MUTF:PTTAX) mutual fund.
Like PTTAX, TRXT’s benchmark will be the Barclays Capital U.S. Aggregate Bond Index, which Gross usually has beaten for more than two decades — sitting around an 8.35% return vs. the bond index’s 7.34% gains. However, Gross’s Total Return Fund did hit a snag in 2011, trading almost flat, but it’s up about 3% so far in 2012.
TRXT’s expense ratio, at 0.59%, is less than the Total Return mutual fund’s 0.85%, and early on, it’s seeing decent trading volume of about a half-million shares. Still, given Gross’ recent statements about Treasuries, TRXT’s launch might actually be ill-timed.
The other four funds released last week were split between First Trust and State Street (NYSE:STT).
State Street Global Advisors dished out some alphabet soup with its SPDR MSCI ACWI IMI ETF (NYSE:ACIM) and SPDR MSCI EM 50 ETF (NYSE:EMFT) funds.
The ACIM, with a 0.25% expense ratio, tracks the MSCI All Country World Investable Market Index, a broad benchmark of global equities. And while the index it tracks is considered “global,” U.S. equities are by far the best represented, at about 46% of the portfolio. ACIM’s top holdings include giants like Apple (NASDAQ:AAPL) and Exxon Mobil (NYSE:XOM). However, the ETF is extremely spread thin, at 736 stocks, with those top holdings each weighted at only about 1%.
EMFT, at a 0.5% ratio, tracks the MSCI EM 50 Index, which follows 50 of the largest members of the MSCI Emerging Markets Index. EMFT actually holds 53 stocks, with Samsung (PINK:SSNLF, 8.47%), Gazprom (PINK:OGZPY, 4.99%) and Taiwan Semiconductor (NYSE:TSM) among its biggest holdings. The fund’s launch comes after a great first two months in 2012 for emerging markets, with the iShares MSCI Emerging Markets Index (NYSE:EEM) fund recording an 18% gain year-to-date.
First Trust’s newest offerings are a pair of country-specific ETFs: The First Trust Taiwan AlphaDEX Fund (NYSE:FTW) and the First Trust United Kingdom AlphaDEX Fund (NYSE:FKU). Both have a little more than $3 million in net assets, and both have 0.8% expense ratios.
These ETFs run on “enhanced” S&P indices that are ranked and rebalanced semi-annually based on a number of factors, including price appreciation, sales growth, book to price and return on assets, among others. The primary difference between the two are their holding makeups: The U.K. fund holds about 75 stocks, with Rio Tinto representing the maximum weighting of 2.34%; the Taiwan fund comprises only 40 companies, with its top holding (Hotai Motor) nearly double FKU’s top weighting at 5.33%.
Including last week’s additions to the ETF investing world, 72 new funds have been brought to market in 2012. February saw 48 funds launch, according to XTF.com, and TRXT was the first ETF to go live in March. Among last month’s new ETFs were a “fracking” fund and some high-beta funds.
Kyle Woodley is the assistant editor of InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities. Follow him on Twitter at @KyleWoodley.
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