5 Successful New ETFs Of 1H16

The ETF industry is growing by leaps and bounds. Issuers seem not to leave any stone unturned and appear steadfast in rolling out new products in tandem with investors’ demand or market sentiment.

This took the industry to a phenomenal size of $2.23 trillion, contributed by about 1,658 ETFs. Novelty in product launches holds the key as issuers are extremely proactive in bringing about products on varied themes.

In the first half of 2016, as many as 126 ETFs were launched. Though the start was not great with the first quarter seeing just 46 new ETFs, the next three months was stellar in terms of issuances. As many as 80 funds entered the market with June seeing the highest addition of 31.

Among the new ETFs that hit the market in the last three months, the highest grossing one was initiated in March followed by a product that hit the market in February. Let’s take a look at the other winning ETFs that scooped up assets in the first half of 2016, and look to be big winners for their issuers down the road.

SPDR SSGA Gender Diversity Index ETF (SHE) – $270.7 million

The fund has generated about $270.1 million of assets since it debuted in March. It tracks the SSGA Gender Diversity Index and looks to focus on large-cap companies with female employees in senior leadership positions (read: Women Leaders ETFs Head to Head: WIL vs. SHE).

The fund holds 138 stocks in its basket and has an expense ratio of 0.20%. The fund’s portfolio is well diversified with none holding more than 6.48%. From a sectoral perspective, financials (17.2%), health care (16.7%) and information technology (15.8%) occupy the top three positions.

WisdomTree Dynamic Currency Hedged International Equity Fund DDWM– $238.9 million

It forayed into the ETF universe in February and has seen huge success. It focuses on the performance of dividend-paying companies in the industrialized world, barring Canada & the U.S., and rules out the effect of foreign currency translations relative to the USD from the index performance with a hedge ratio ranging from 0–100% on a monthly basis, as per the issuer.

With the currency market remaining extremely volatile this year following moderation in USD, strength in yen and plunge in pound on Brexit, a dynamic currency-hedging technique is sure to win (read: Europe After Brexit: 5 Keys to Investing with ETFs).

As of July 1, 2016, the fund’s aggregate hedge ratio is 50.68%, with pound being the most hedged by 74.86%. The fund charges 35 bps in fees and has solid exposure in the U.K., Japan and France.

First Trust Dorsey Wright Dynamic Focus 5 ETF (FVC) – $161.2 million

FVC is the dynamic version of the popular First Trust Focus 5 ETF (FV) that invests in the top five ranked First Trust sector and industry ETFs as identified by their relative strength rankings.

FVC offers a lower risk quotient than FV’s strategy as the former uses cash as represented by 1–3 month U.S. Treasury bills. In the current volatile market scenario, focus on lower-risk products has greater chances of outperforming. The fund entered the ETF world in March and charges 79 bps in fees.

UBS AG FI Enhanced Global High Yield ETN FIHD– $115.84 million

With record low yield prevailing in the global market on a flight to safety spurred by overall growth issues and now Brexit, investors’ craving for high-yield products makes sense. This led this note, which debuted in February, to amass about $115.8 million.

The underlying index of the note is MSCI World High Dividend Yield USD Gross Total Return Index. Investors should note that MSCI World High Dividend Yield index had an annual dividend yield of 3.97% as of May 31, 2016 (read: 7 Dividend ETF Winners of 1H16 Worth a Watch in 2H).

IQ Enhanced Core Plus Bond U.S. ETF AGGP – $122.9 million

The underlying index of the fund looks to track the U.S. dollar-denominated fixed income universe by focusing on a momentum investing strategy. In any case, fixed income investing has been on a tear this year with broader market turmoil having an upper hand (read: Top Performing Bond ETFs of 1H).

The fund takes a fund-of funds approach with iShares Iboxx $ Investment Grade Corporate Bond ETF (27.58%), Vanguard Mortgage-Backed Securities ETF (25.9%) and Vanguard Intermediate-Term Corporate Bond ETF (21.2%) each taking over 20% of the basket. The fund charges 35 bps in fees and has roped in about $122.9 million in less than two months.