3 New ETFs ‘Give Back’ — for Better or Worse

by Kyle Woodley | May 29, 2012 12:39 pm

After a weeklong lull that saw no exchange-traded funds go live, three new products launched last week that all focus on giving a little back — with some twists.

On the seemingly moral upside is the AdvisorShares Global Echo ETF (NYSE:GIVE[1]), which is a multi-focused, actively managed fund geared toward “sustainable and impact investment opportunities.”

The fund’s focuses, by asset allocation, include domestic equities (33%), foreign equities (19%), short exposure (15%) and fixed income (5%), with the remaining quarter-plus of the fund in cash. The multi-pronged approach is aimed at reducing fund volatility.

Speaking about the sustainable focus of GIVE, Advisor Shares says …

“GIVE is designed as a core allocation that proactively seeks opportunities in Sustainable Investment themes while reducing volatility. The fund will allocate capital to equity and debt securities of [publicly] traded companies who have a proactive and meaningful sustainability mandate, as well as securities that may technologically, socially and environmentally impact the earth positively, with a focus on themes such as water, clean energy, innovation and other sustainable themes as defined by the portfolio managers.”

AdvisorShares also will donate 0.4% of its 1.7% management fee to the Global Echo Foundation, which is dedicated to a number of causes, including solving social issues that affect women and children, environmental conservation and supporting micro-enterprises.

This ETF follows in the steps of several other “socially responsible investing” funds[2], such as the iShares MSCI KLD 400 Social Index Fund (NYSE:DSI[3]) or iShares MSCI USA ESG Select Social Index Fund (NYSE:KLD[4]), which track indices focusing on companies’ environmental, social and governance (ESG) factors.

The other two products that went live last week were UBS’s Etracs Monthly Pay 2x Leveraged Dow Jones Select Dividend Index ETN (NYSE:DVYL[5]) and Etracs Monthly Pay 2x Leveraged S&P Dividend ETN (NYSE:SDYL[6]). These two exchange-traded notes aim to double the returns and dividends of their respective dividend-focused indices.

I discussed these funds at length last week[7], but the short take is that they’re risky investment vehicles using dividends to lure in income investors. And I’m not the only one on that train. Other commentaries and discussions about these ETNs’ focus on the dividend crowd have used terms like “war crime” and “capital punishment” to reflect disgust. Hyperbolic, sure, but certainly not unwarranted.

Last week’s additions put May’s total of launches at six. To date, 111 new funds have started up this year, according to XTF.com[8].

Kyle Woodley[9] is the assistant editor of InvestorPlace.com[10]. As of this writing, he did not hold a position in any of the aforementioned securities. Follow him on Twitter at @KyleWoodley[11].

  1. GIVE: http://studio-5.financialcontent.com/investplace/quote?Symbol=GIVE
  2. “socially responsible investing” funds: https://investorplace.com/2012/02/4-funds-for-socially-responsible-investors-dsi-kld-nasi-eaps/
  3. DSI: http://studio-5.financialcontent.com/investplace/quote?Symbol=DSI
  4. KLD: http://studio-5.financialcontent.com/investplace/quote?Symbol=KLD
  5. DVYL: http://studio-5.financialcontent.com/investplace/quote?Symbol=DVYL
  6. SDYL: http://studio-5.financialcontent.com/investplace/quote?Symbol=SDYL
  7. discussed these funds at length last week: https://investorplace.com/2012/05/double-dividend-funds-slow-down/
  8. XTF.com: http://www.xtf.com/
  9. Kyle Woodley: https://investorplace.com/author/kyle-woodley/
  10. InvestorPlace.com: https://investorplace.com/
  11. @KyleWoodley: https://twitter.com/#%21/kylewoodley

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