Since the start of August, Direxion, FocusShares and Russell
Investments have announced ETF closures for a combined 49 products.
The noticeably quickened pace of ETF closures has prompted
predictable opining that this is
no environment for new funds
Clearly, the exchange-traded products business has evolved and
become more competitive. That does not mean rookie ETFs cannot
thrive both in terms of performance and attracting assets. In fact,
there are several examples of this with new bond ETFs. Believe it
or not, there are new bond funds that are not
the PIMCO Total Return ETF (NYSE:
) that are enjoying decent rookie years.
Note: Only funds that have debuted in 2012 were considered for
Market Vectors Fallen Angel High Yield Bond ETF (NYSE:
) The Market Vectors Fallen Angel High Yield Bond ETF debuted in
April and after five months of trading, the fund has $10.3 million
in assets under management. Since there is only speculation and
little science behind what asset amount a new ETF needs to attract
to be deemed a success, it is fair to say ANGL, at the very least,
is off to a decent start.
Fallen angel bonds are those issues that once resided in
investment grade territory but have since been lowered to junk
status. That does not necessarily mean ANGL's roster of 66 holdings
is loaded with cautionary tales. Issuers of fallen angel bonds are
believed to have similar characteristics to investment grade
issuers and fallen angel bonds themselves are often viewed as more
stable than those that started off in junk territory.
With an expense ratio of 0.4 percent, ANGL has an average
modified duration of 5.74 years and a 30-day SEC yield of 6.23
percent. The fund has risen almost 3.2 percent since its debut.
SPDR BofA Merrill Lynch Emerging Markets Corporate Bond ETF
) The SPDR BofA Merrill Lynch Emerging Markets Corporate Bond ETF
is just two months old, but the fund is off to a fine start having
accumulated $15.4 million in AUM since its June debut. What makes
that haul all the more impressive is the fact that EMCD is
competing with two slightly older rivals.
The WisdomTree Emerging Markets Corporate Bond ETF (NASDAQ:
) and the iShares Emerging Markets Corporate Bond Fund (BATS: CEMB)
both debuted earlier this year. While the WisdomTree offering is
the clear-cut leader among emerging markets corporate bond ETFs at
this point, EMCD has passed its iShares rival in AUM terms.
EMCD has also outperformed the iShares equivalent. The SPDR
offering features a 30-day SEC yield of 3.87 percent and a modified
adjusted duration of 5.87 years.
iShares Global High Yield Corporate Bond Fund (BATS: GHYG) The
iShares Global High Yield Corporate Bond Fund has at least one
feather in its cap. Since its April debut, the ETF has accumulated
$25 million in AUM, one of the watermarks the so-called experts
often look to judge the success of a new ETF.
Just how "global" GHYG is is up for debate. Nearly
three-quarters of the funds holdings are denominated in U.S.
dollars and the U.S. is the ETF's largest country weight at over 66
percent. The U.K. is next at just 5.4 percent.
GHYG is up just 1.4 percent since its June debut, but the fund
features a 30-day SEC yield of 6.28 percent and income investors
will like the fact that GHYG pays a monthly dividend.
For more on bond ETFs, click
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