The ETF industry has tasted success so far this year with an
array of products entering into the space targeting a variety of
segments. It also hasn't hurt that, besides a recent bout of
volatility, markets have been pretty strong this year, attracting
a ton of investors to the markets (read:
Are Low Volatility ETFs Capable of Big Gains?
In this environment, several
experienced massive inflows and posted double-digit gains buoyed
by positive sentiments. However, there were also quite a few
closures. While 60 ETFs entered into the arena, 30 funds closed
their doors since start of this year.
Among those new funds though, investors have clearly embraced
a few of the names in the group, piling fresh capital into these
new ETFs. Below, we take a closer look at the top three new
players that have gathered solid
assets under management
since their recent launches:
SPDR Blackstone/GSO Senior Loan ETF (
Senior Loan ETFs have gained immense popularity in recent
months by providing investors with yield and protection against a
rise in interest rates. Plus, due to their junk security focus,
they can out-yield similar duration securities by a pretty wide
The concerns over the growing interest rates were looming
large across the globe, encouraging investors to flock to these
funds. At the latest FOMC meeting, the Fed committed to taper the
pace of bond purchases by as soon as the end of the year and
possibly close down the program around the middle of the next
Investors looking for higher yields, but concerned about the
potential rise in interest rates have shown increased interest in
senior loan ETFs, in particular SRLN. The fund has gathered over
$279 million in AUM since its debut in April this year (read:
State Street Launches Senior Loan ETF
SRLN is the first actively managed ETF in this space. Instead
of tracking an index it seeks to beat the Markit iBoxx U.S.
Leveraged Loan 100 Index through superior security selection.
This is done by partaking in credit analysis, and timely sales
and buys of senior loans.
Overall, the fund holds 144 securities and charges a slightly
high 90 bps a year in fees. Trading volume is also solid with
more than 143,000 shares per day (see more in the
Barclays ETN+ Select MLP ETN (
MLPs represent an attractive investment option for
income-focused investors in the current rock bottom interest rate
environment. In addition to high yields, MLPs have relatively
stable cash flows and a solid growth potential (read:
MLP ETF Investing: The Surge Continues
As structured pass-through entities, MLPs do not pay taxes at
the entity level and are thus able to pay out most of their
earnings to investors. These have low correlations with many
other asset classes including equities and commodities and thus
add diversification benefits to the portfolio.
As the energy industry continues to evolve with revolutionary
developments in the field of unconventional energy, MLPs present
a great way to benefit from the growth (read:
Behind the Rebound in Energy ETFs
In such a backdrop, the new ATMP has accumulated $136.5
million in AUM since its launch in March this year and has a
dividend yield of 1.03%.
The ETN tracks the Volume-Weighted Average price level of the
Atlantic Trust Select MLP Index. This benchmark is designed to
provide investors exposure to midstream American and Canadian
master limited partnerships, LLCs, and corporations in the MLP
These must trade on major U.S. exchanges and meet certain
eligibility criteria such as long-term credit ratings, cash flow
percentage derived from midstream operations and average daily
trading value. The note consists of both limited partnership
interests and general partner interests with a ceiling of 8% and
The product charges investors 95 basis points a year in fees,
in line with other products in the space.
AdvisorShares Newfleet Multi-Sector Income ETF (
It seems that the 'Great Rotation' is not from bonds to
equities, but from long-duration fixed income to shorter-duration
securities. Amid concerns about higher interest rates crushing
returns, shorter duration securities in the fixed income world
have become popular among investors due to their low interest
rate risk levels, steadiness, and ability to generate income
Buy These ETFs to Profit from The Great Duration
With regard to this, MINC has seen a great deal of investors'
interest and attracted assets worth $84.45 million since its
launch this March.
The ETF has an average duration of one to three years,
potentially making the fund a low interest rate risk choice. This
could be especially beneficial if rates suddenly rise thanks to
Fed actions, as these types of securities tend to do better in a
rising rate environment.
The portfolio zeros in on high quality investment grade debt.
In fact, non-investment grade securities only account for 20% of
the portfolio, while non-American securities make up for 30%,
suggesting its focus on domestic high quality bonds (read:
Forget BOND, Focus on These Junk Bond ETFs
Investors should note that the ETF actively rotates among
various bond sectors. This process seeks to overweight
undervalued bond sectors, and shun those that are overvalued, a
strategy that adds value to the portfolio.
The current yield to maturity is 2.72%, while the 30-Day SEC
yield is 2.55%. This is pretty good considering the high quality
focus of the ETF, and the ultra low duration which comes in at
just 2.64 years. MINC charges 75 bps in fees a year from
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BARCLY-SLCT MLP (ATMP): ETF Research Reports
ADVSR-NWFLT MSI (MINC): ETF Research Reports
SPDR-BS GSO SL (SRLN): ETF Research Reports
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