With 2012 behind us, it's time to take a look at the new trends
that resonated in the ETF market last year.
The best way to do that is to look at which newly launched
garnered the most assets in 2012.
The methodology is inherently biased, as it disadvantages funds
that launched later in the year, simply because they hadn't had
enough time to gather assets.
Still, it notes a number of interesting trends. Moreover, even
with the late start, a few late bloomers made the list, including
two iShares ETFs-the iShares Core MSCI Emerging Markets ETF
(NYSEArca:IEMG) and the iShares Core MSCI EAFE ETF (NYSEArca:IEFA).
And they were close to the top, too.
So here they are, in reverse order, based on total assets under
management on Dec. 31, 2012.
No. 12:Market Vectors Morningstar Wide Moat Research ETF
IndexUniverse Segment:Equity:U.S. -
Launch Date:April 24, 2012
Year-End 2012 AUM:$115.4 Million
The Market Vectors Morningstar Wide Moat Research fund
(NYSEArca:MOAT) selects companies using Morningstar's 'Wide Moat'
methodology, which aims to identify firms with real competitive
advantages versus their peers.
It's similar in many ways to the Elements Morningstar Wide Moat
Focus ETN (NYSEArca:WMW), which launched a number of years ago and,
with just $19 million in assets, has clearly struggled to pull in
assets. But investors seem to like the fact that MOAT has a
considerably lower price tag than WMW-49 basis points vs. WMW's 75.
Also, it doesn't carry the credit risk of an ETN.
With ETN issues swept aside, Morningstar's name, savvy marketing
and strong performance combined here to create a winner, with
almost $120 million in assets.
No. 11:First Trust North American Energy Infrastructure
IndexUniverse Segment:Equity:U.S. MLPs
Launch Date:June 20, 2012
Year-End 2012 AUM:$123.7 Million
Who says investors don't like active strategies? This
fast-growing ETF offers an active slant on the popular MLP space,
aiming to identify funds with strong yields and solid capital
The fund is managed by Energy Income Partners LLC, which has
about $1.6 billion in assets under management. The ETF does,
however, have a hefty annual expense ratio-0.95 percent. That's
much more than competing MLP ETPs.
That price tag may be worth it, however, given EMLP's total
return of 5.15 percent since its inception June 20, versus the
largest competing ETF, the Alerian MLP ETF AMLP (NYSEArca:AMLP),
which returned 4.27 percent over the same time period.
No. 10:UBS AG FI Enhanced Big Cap Growth ETN
IndexUniverse Segment:U.S. - Large Cap Growth
Launch Date:June 6, 2012
Year-End 2012 AUM:$139.8 Million
This UBS fund showed somewhat shocking growth for an isolated,
leveraged ETF. The ETN operates on a somewhat unorthodox
rebalancing strategy, aiming to produce double the returns of the
large-cap Russell 1000 Index, but resetting whenever the index it
tracks hits a certain level.
FBG is not part of the UBS E-Tracs family, but there appears to
be internal demand for FBG from UBS clients. UBS charges a fee for
FBG that varies with Libor. Still, for all the idiosyncrasies of
FBG, it pulled in $139 million in just six months since its
inception, which is surely noteworthy.
No. 9:iShares Treasury Bond Fund (NYSEArca:GOVT)
IndexUniverse Segment:Fixed Income:U.S. Government
Launch Date:Feb. 14, 2012
Year-End 2012 AUM:$146.2 Million
The iShares Treasury Bond ETF (NYSEArca:GOVT) rapidly became the
sweetheart of its segment following its launch on Feb. 14,
This product seems to have effectively filled a gap in the
iShares lineup, offering core exposure to a market-cap-weighted
index of U.S. Treasury bonds with maturities of one year or
Given the growing interest in targeted slices of the
fixed-income space, a broad-based Treasury ETF was natural, and
appears to have been welcome.
No. 8:iShares Emerging Markets High Yield Bond Fund (BATS:EMHY)
IndexUniverse Segment:Fixed Income:Emerging Markets - Broad
Market High Yield
Launch Date:April 3, 2012
Year-End 2012 AUM:$198.3 Million
Combine two popular themes-emerging markets debt and high-yield
bonds-and what do you get? A popular new ETF.
The iShares Emerging Markets High Yield Bond Fund (BATS:EMHY)
won fans among investors looking for credits with
higher-than-average yields coming from markets that are growing
As the only fund in its segment, EMHY seems to have launched at
the perfect time to fill a niche, as the nearly $200 million in
assets clearly shows.
No. 7:Market Vectors International High Yield Bond ETF
IndexUniverse Segment:Fixed Income:Global Ex-U.S. -
Corporate High Yield
Launch Date:April 2, 2012
Year-End 2012 AUM:$209.9 Million
The Market Vectors International High Yield Bond ETF
(NYSEArca:IHY) saw success in 2012 for many of the same reasons as
However, unlike EMHY, IHY includes developed international, in
addition to emerging market, bonds.
Also similar to EMHY, it's the only fund of its kind, and its
April 2012 launch fortuitously struck a chord among investors.
No. 6:iShares MSCI Global Select Metals & Mining Producers
IndexUniverse Segment:Equity:Global Metals &
Launch Date:Jan. 31, 2012
Year-End 2012 AUM:$253.7 Million
Metals and miners is a popular category in the ETF space, but
the predominant growth has been in gold miners, led by the $9.4
billion Market Vectors Gold Miners ETF (NYSEArca:GDX) from Van
iShares clearly thinks there's appetite for firms outside of
gold and silver that nonetheless pull things from the earth, and it
looks like the world's biggest ETF firm might be right.
iShares' MSCI Global Select Metals & Mining Producers ETF
(NYSEArca:PICK) holds a global portfolio of mining firms, excluding
gold and silver miners, and has pulled in more than $253 million in
assets since its January 2012 launch.
Consider it an alternative play on the global resource boom.
No. 5:iShares Core MSCI Emerging Markets ETF
IndexUniverse Segment:Equity:Emerging Markets - Total
Launch Date:Oct. 18, 2012
Year-End 2012 AUM:$261.0 Million
iShares rolled out its 'Core' brand in October 2012, launching
four new funds and revamping six existing ETFs. The strategy was
iShares' way of jumping into the 'ETF fee war,' with
ever-decreasing price tags on funds across the industry.
The iShares Core MSCI Emerging Markets ETF (NYSEArca:IEMG) was
one of these Core funds, offering cheaper exposure to emerging
markets than its peer, the iShares MSCI Emerging Markets Fund
(NYSEArca:EEM). IEMG has an expense ratio of 18 basis points-or $18
for every $10,000 invested- compared to EEM's whopping 67 bps.
Plus, unlike EEM, IEMG includes small-cap stocks.
The only real surprise with IEMG is that it didn't attract
assets. It's more than likely that, over time, that's exactly
what's going to happen.
No. 4:iShares Core MSCI EAFE ETF (NYSEArca:IEFA)
IndexUniverse Segment:Equity:Developed Markets Ex-U.S. -
Launch Date:Oct. 18, 2012
Year-End 2012 AUM:$279.4 Million
Like IEMG, the iShares Core MSCI EAFE ETF (NYSEArca:IEFA) was
part of iShares' 'Core' rollout.
Since its inception just two months before the end of the year,
IEFA has brought in more than $279 million in assets.
It's cheaper exposure than the iShares MSCI EAFE Index Fund
(NYSEArca:EFA), whose 34-basis-point price tag can't compete with
IEFA's 14-basis-point price.
No. 3:iShares Aaa-A Rated Corporate Bond ETF (NYSEArca:QLTA)
IndexUniverse Segment:Fixed Income:U.S. - Corporate
Launch Date:Feb. 14, 2012
Year-End 2012 AUM:$316.5 Million
With the U.S. Treasury debt downgraded in the summer of 2011 and
short-term notes yielding next to zero, some are turning to
top-rated corporate debt as an alternative 'safe credit' that
nonetheless offers a bit more income than Treasurys.
Given its top-quality credit profile, QLTA pays out less than a
broad-based, investment-grade corporate bond ETF like the iShares
iBoxx $ Investment Grade Corporate Bond Fund (NYSEArca:LQD), but it
yields more than government bond ETFs of a similar ilk.
Traditional 'investment grade' credits go down to' 'BBB-'-this
fund focuses instead on the 'best of the best.' Consider it
'gold-plated fixed income.'
No. 2:SPDR Barclays Short Term High Yield Bond ETF
IndexUniverse Segment:Fixed Income:U.S. - Corporate High
Launch Date:March 14, 2012
Year-End 2012 AUM:$621.6 Million
Short-term high-yield debt is resonating for investors looking
The SPDR Barclays Short Term High Yield Bond ETF (NYSEArca:SJNK)
and the Pimco 0-5 Year High Yield Corporate Bond Index ETF
(NYSEArca:HYS) have pulled in significant assets by offering
investors high payouts with a lower perceived risk.
The thinking here is twofold:First, shortening your duration
protects you from rising interest rates; second, while high-yield
debt is always risky, there's a feeling that short-term high-yield
bonds are less risky, as investors expect short-term default rates
to remain low.
Combine those considerations with SJNK's 7.7 percent current
yield to maturity and, well, you've got a successful fund with more
than $620 million in assets.
No. 1: Pimco Total Return ETF (NYSEArca:BOND)
IndexUniverse Segment:Fixed Income:Global - Broad
Launch Date:February 29, 2012
Year-End 2012 AUM:$3.87 Billion
Pimco's Total Return ETF BOND is the second-fastest-growing new
ETF of all time after the bullion ETF, SPDR Gold Shares
(NYSEArca:GLD). That's what you get when you combine the world's
most famous bond manager-Bill Gross-a strong bond market and
BOND crushed not just the Vanguard Total Bond Market ETF
(NYSEArca:BND) and other broad-based bond ETFs, but even Pimco's
own Total Return Bond Fund (
It collected its first $1 billion in less than three
months-quick, though not as lightning quick as GLD, which did it in
three days back in November 2004-and is now well on its way to
becoming a $4 billion ETF.
At the time this article was written, the author held no
positions in the securities mentioned. Contact Hannah Tool at
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