There is still some debate as to what assets under management
watermarks an ETF needs to reach to ensure profitability for the
fund's sponsor. As has been noted,
impressive size is nothing more than impressive
size when it comes to ETFs
.
Size is not a guarantee of a fund's ability to generate alpha.
Still, the investment community loves numbers. When it comes to
exchange-traded products, conventional (though not necessarily
correct) wisdom seems to stipulate an ETF with $50 million in AUM
will be profitable for the fund's sponsor while an ETF with $100
million or more in AUM is assured survival.
There are some cold realities regarding the ETF landscape. One
of those realities includes the fact that
new funds are finding it harder to standout, as
Barron's recently noted
. Another is that all U.S.-listed ETFs and ETNs combined had
$1.17 trillion in AUM at the end of June, but $220.1 billion of
that total belonged to just three funds - the SPDR S&P 500
(NYSE:
SPY
), the SPDR Gold Shares (NYSE:
GLD
) and the Vanguard Emerging Markets ETF (NYSE:
VWO
).
It is hard for plenty of ETFs with over $100 million in AUM to
standout, but there are some anonymous $100 million (or more)
ETFs that are worth considering even if the so-called exports
have not discovered these funds yet.
PowerShares Dynamic Energy Sector Portfolio (NYSE:
PXI
)
The PowerShares Dynamic Energy Sector Portfolio is not quite the
competitor to the Energy Select SPDR (NYSE:
XLE
) it would appear to be. Nor is PXI a direct rival to ETFs such
as the SPDR S&P Oil & Gas Exploration & Production
ETF (NYSE:
XOP
) or the iShares Dow Jones US Oil & Gas Exploration Index
Fund (NYSE:
IEO
).
PXI features a little a bit of everything from the energy
sector, meaning integrated oil producer as well as independent
names are found in this ETF along with MLPs, coal producers and
refiners. More importantly, PXI has outperformed IEO, XLE and XOP
year-to-date. As of July 3, PXI had almost $113 million in
AUM.
First Trust Morningstar Dividend Leaders Index Fund
(NYSE:
FDL
)
With almost $587 million in AUM, the First Trust Morningstar
Dividend Leaders Index Fund is by no means small. Despite FDL's
heft, it is somewhat ignored in the conversation about dividend
ETFs. That should not be the case. FDL has a 30-day SEC yield
north of four percent and in the past 90 days, the fund has
outperformed larger, more popular dividend ETFs such as the
Vanguard Dividend Appreciation ETF (NYSE:
VIG
), the SPDR S&P Dividend ETF (NYSE: SDV) and the iShares High
Dividend Equity Fund (NYSE:
HDV
).
FlexShares Morningstar Global Upstream Natural Resources
ETF (NYSE:
GUNR
)
It can be argued that the universe of materials and energy ETFs
is saturated. There simply does not need to be more new ETFs
tracking these sectors. It can also be said that the FlexShares
Morningstar Global Upstream Natural Resources ETF could have
fallen victim to bad timing. The ETF debuted in September 2011
and with energy names struggling over the past several months, it
would have been fair to assume GUNR would struggle to accumulate
assets.
That has not been the case. In just 10 months on the market,
GUNR has raked in over $379.1 million in AUM. GUNR does offer
one-stop shopping for investors looking for resources exposure as
the fund's 121 holdings include fertilizer producers, integrated
oil names and gold miners among others. The fund is a rival to
the older Market Vectors RVE Hard Assets Producers ETF (NYSE:
HAP
).
PowerShares S&P 500 BuyWrite Portfolio (NYSE:
PBP
)
The PowerShares S&P 500 BuyWrite Portfolio is worth a look
for investors searching for income in form of covered call
writing. PBP's benchmark is the CBOE S&P 500 BuyWrite Index,
which measures the rate of return on an S&P 500 covered call
strategy, according to PowerShares. Not surprisingly, the
consistent use of options contracts does leave PBP with an
expense ratio that is much higher than a typical S&P 500
index fund (PBP charges 0.75 percent).
PBP, which has almost $208 million in AUM, reinvests dividends
and the options premiums generated from the covered calls. The
red flag: PBP has trailed the SPDR S&P 500 (NYSE:
SPY
) by a wide margin this year.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.