ETF Investing Strategies: Seven New ETFs In 2014

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Exchange traded fund providers have kicked off the New Year by rolling out a batch of new funds onto the stock market .

Van Eck Global introducedMarket Vectors Short High-Yield Municipal Index ETF ( SHYD ) Tuesday. It holds 43 noninvestment grade, tax-free municipal bonds maturing in one to 10 years.

During a time of rising interest rates, it delivers a yield greater than investment-grade bonds but with half the interest-rate risk, said Jim Colby, senior municipal strategist at Van Eck Global.

The longer a bond has until maturity the more sensitive its price is to interest rate changes. Because bond prices and yields move opposite each other, investors risk losing principal when interest rates and yields rise.

High-yield municipal bond issuers have a default rate of about 6% over the past two decades, while corporate high-yield issuers have default rates twice that, Colby said.

SHYD carries an annual expense ratio of 0.38%.

EGA And TCW Team Up

Emerging Global Advisors and TCW Group have joined forces in releasing Jan. 8 three emerging market, fixed-income ETFs that each carry a 0.65% annual expense ratio.

1.EGShares TCW EM Short Term Investment Grade Bond ( SEMF ) holds a mix of dollar-denominated corporate and government bonds from Europe, Latin America, Asia and the Middle East that mature in one to three years. The bonds have an average coupon of 5.2%.

SEMF has 18.1% of its assets in Brazil, 17.8% in Russia and 14.2% in Mexico.

2.EGShares TCW EM Intermediate Term Investment Grade Bond ( IEMF ) holds an equal mix of corporate and sovereign bonds that mature in four to seven years. They have an average coupon of 6.2%.

IEMF has 20% of its assets in Russia, 19.8% in Brazil and 11.1% in Mexico.

3.EGShares TCW EM Long Term Investment Grade Bond ( LEMF ) weights corporate bonds at 44% and government bonds 56%. The average coupon is 5%. It has 18.4% of assets in Brazil, 13% in Russia and 11.5% in Mexico.

Actively Managed SPDRs

State Street Global Advisors launched three actively managed ETFs Jan. 9. Each carries a 0.60% annual expense ratio.

1.SPDR MFS Systematic Core Equity ETF ( SYE ) holds 42 blue chip companies with an average five-year earnings growth rate of 16%, a price-earnings ratio of 13 and price-to-book ratio of 2.6.

MFS seeks to beat the S&P 500 index by applying a bottom-up process that uses both fundamental and qualitative research. MFS evaluates stocks based on valuation, price, earnings momentum and earnings quality, the prospectus states.

On a macro level MFS says it examines companies' potential "in light of their financial condition, market, economic, political and regulatory conditions."

Top holdings:Exxon Mobil (XOM),JPMorgan Chase (JPM),Verizon (VZ),IBM (IBM) andOracle (ORCL).

2.SPDR MFS Systematic Growth Equity (SYG) contains 49 stocks with an average five-year earnings growth rate of 20%, P-E ratio of 15, price-to-book ratio of 4.3 and an average market cap of $90 billion.

It's similar to SYE except it focuses on companies that fund managers believe "have above-average earnings growth potential compared to other companies."

Top holdings: Oracle,Facebook (FB),Comcast (CMCSA),Lockheed Martin (LMT) and IBM.

3.SPDR MFS Systematic Value Equity (SYV) is a basket of 50 large-cap companies with an average five-year earnings growth rate of 18%, P-E ratio of 12 and price-to-book of 1.8. It uses the same stock picking criteria as SYE and SYG, while focusing on companies that the fund managers believe are "undervalued compared to their perceived worth."

Top names: Exxon Mobil, JPMorgan Chase,Citigroup (C),Chevron (CVX) andNorthrop Grumman (NOC).



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs

Referenced Stocks: IEMF , LEMF , SEMF , SHYD , SYE

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