2013 has been another significant year for the ETF industry.
With 134 new products launched this year, the total number of
products now stands at 1531, while assets under management have
increased to $1.67 trillion.
Most of the products launched this year are designed to follow
the popular strategies that have worked so far, whereas few
others offer unique, innovative investing opportunities that were
earlier unavailable to regular investors. However not all new
products will be successful; some will flourish while some will
languish due to lack of investor interest.
Below we have highlighted four ETFs launched this year that stand
out from the rest and in our view, will emerge as big winners in
the long-term. (Read:
3 ETFs for the Holiday Season
iShares MSCI US Quality Factor ETF (
This year has been great for most equity ETFs thanks mainly to
Fed's easy money policies but when the QE begins to fade away,
only the 'high-quality' stocks and ETFs will shine. (Read:
3 Niche ETFs Crushing the SPY
QUAL tracks the MSCI USA Index, which is comprised of high
quality stocks, identifying stocks with high quality scores based
on three main fundamental variables: high return on equity (ROE),
stable year-over-year earnings growth and low financial
leverage. It charges a low expense ratio of 15 basis points.
The product holds 124 securities in its portfolio with Apple,
Google and Johnson & Johnson being the top three holdings. In
terms of sectors, Technology takes about 40% of the asset base,
while Consumer Discretionary, Energy, and Healthcare also get
double digit allocations.
The fund has a SEC yield of 1.62%.Launched in July this year,
this product has already attracted an impressive $210 million in
assets so far.Looking at the five-year performance history (total
return) of the index--S&P 500 High Quality Rankings
Index had a total return of 21.8% handily beating the S&P 500
Index total return of 18.8%.
Cambria Shareholder Yield ETF (
SYLD is an actively managed fund based on the research
that free cash flow is a key predictor of a company's
DB-HRVST CSI300 (ASHR): ETF Research Reports
PRO-SP5 ARISTOC (NOBL): ETF Research Reports
ISHARS-MS US QF (QUAL): ETF Research Reports
CAMBRIA SH YLD (SYLD): ETF Research Reports
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This product invests in companies that show strong
characteristics in returning free cash flow to their shareholders
by way of cash dividends, share repurchases, or by reducing their
SYLD has a diversified portfolio of 100 stocks with market caps
greater than $200 million, with a tilt towards large cap stocks
that currently comprise 56% of the portfolio. Consumer
Discretionary, Financials and Information Technology occupy the
top three spots in terms of sector exposure.
Expense ratio of 0.59% looks pretty reasonable for an actively
manage fund. The product made its debut in May this year and has
returned 15.6% in the past 26 weeks compared with 11.0% for SPY
during the same period.
Harvest CSI 300 China A-Shares Fund
Investing in Chinese equities known as China A shares directly
was not easy for foreign investors due to restrictions by the
Chinese Government. A-shares are equity securities issued by
companies incorporated in mainland China and are denominated and
traded in renminbi on the Shenzhen and Shanghai stock exchanges.
In the past, sponsors have found many innovative ways to gain
exposure to the equity market of the world's second largest and
one of the fastest growing economies, including using
derivatives. ASHR is the first ETF that offers direct access to
the China A-shares universe. (See:
China A-Shares ETFs Explained
ASHR has been able to offer access to China A shares via its tie
up with Harvest Global Advisors. Harvest Global Investments was
amongst the first few Chinese asset managers in Hong Kong to
obtain renminbi Qualified Foreign Institutional Investor (RQFII)
status in China. Holders of these RQFII licenses can use renminbi
that they hold overseas to invest directly in domestic Chinese
The product tracks the CSI 300 Index which is composed of
the 300 largest and most liquid stocks in the China A-share
market. It is a bit expensive though with an annual fees of
The fund currently has AUM of $172 million and trades in decent
volumes of more than 600,000 shares per day. (Read:
How Pure Strategies Crushed the Market
In terms of the portfolio, financials account for almost 40% of
the asset base, but Industrials, Consumer Discretionary and
Consumer Staples also receive double digit allocations.
ProShares S&P 500 Aristocrats ETF (
There was no dearth of dividend ETFs available to the investors
but new products continue to be launched in this very popular
space. I prefer dividend growth ETFs over high dividend yield
ETFs, particularly from the point of view of long term investing.
Launched in October, NOBL follows the S&P 500 Dividend
Aristocrats index that targets companies which have increased
dividend payments each year for at least 25 years, and meet
certain market capitalization and liquidity requirements. The
index weights its holdings equally and each sector's weight is
capped at 30% of the index weight.
Top sectors currently are Consumer Staples, Industrials,
Materials and Healthcare. It has minimal exposure (less than 2%)
to Utilities and telecom.
The product has an expense ratio of 35 basis points and the index
currently has an attractive dividend yield of 2.57%.
While the ETF was launched very recently, the index has been
consistently beating broader market index with lower
volatility since its inception in 2005. S&P Dividend
Aristocrats index had an
of 9.76% with 20.6% volatility versus a return of 6.72% for the
S&P 500 index with 21.8% volatility.
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