As the debate about what an ETF's assets under management
needs to be for the fund to be considered viable rages on, a few
things are becoming clear. First, $100 million in AUM is the
number most folks seem to focus on. Second, no empirical evidence
exists to suggest an ETF's AUM total is a tell regarding the
fund's ability to generate returns.
Third, evidence does exist that there are plenty of
equity-based ETFs with less than
$100 million in AUM that are delivering
impressive returns
. Finally, it is also clear, and unfortunately so, that many
investors ignore ETFs due to superficial factors such as size and
volume.
This scenario is not exclusive to ETFs that hold stocks as
there are some fine examples of bond funds with sub-$100 million
AUM totals that are doing quite well this year. Here are some to
consider.
Arrow Dow Jones Global Yield ETF (NYSE:
GYLD
)
The Arrow Dow Jones Global Yield ETF debuted in May and has
managed to attract almost $21.6 million in AUM thus far. GYLD is
not a pure play on bonds as global equities do account for nearly
20 percent of the fund's weight. Non-bond investments such as
alternatives and REITs also combine for about 40 percent of GYLD,
but the fund does allocate the rest of its weight to global
sovereign and corporate debt.
The bulk of the fund's sovereign debt is dollar-denominated, a
trait that risk-averse investors may find appealing. GYLD has
returned almost seven percent since its debut and sports a 30-day
SEC yield of 6.11 percent. The fund is also one of the best ways
to get exposure to Venezuela, the
world's top-performing equity market this
year
.
Market Vectors CEF Municipal Income ETF (NYSE:
XMPT
)
Despite a rising number of municipal bankruptcies, municipal bond
ETFs have posted stellar returns this year. Undoubtedly,
investors have been drawn to the asset class due to
decent yields and low default rates
.
That also means investors have paying far more attention to
ETFs such as the Market Vectors High-Yield Muni ETF (NYSE:
HYD
) and the iShares S&P National AMT-Free Municipal Bond Fund
(NYSE:
MUB
). In the process, the Market Vectors CEF Municipal Income ETF
has been all but ignored. Ignoring XMPT because it has just $13.1
million in AUM has not been a wise move. The fund pays a monthly
dividend, has a 30-day SEC yield of 5.3 percent and is up 8.6
percent year-to-date.
iShares Baa - Ba Rated Corporate Bond Fund (BATS:
QLTB)
Maybe it is because the iShares Baa - Ba Rated Corporate Bond
Fund trades on an exchange that some traders and investors are
not familiar with. Maybe it is because such much attention has
been heaped on more familiar corporate bond fare such as the
iShares iBoxx $ Investment Grade Corporate Bond Fund (NYSE:
LQD
) and the iShares iBoxx $ High Yield Corporate Bond Fund (NYSE:
HYG
).
Whatever the reasons are, QLTB has drawn in just $10.5 million
in AUM since its late April debut. In QLTB's favor, it has
performed almost inline with LQD since coming to market. The
fund's holdings do not dwell too deep in junk status as only 0.5
percent of the holdings are rated B/B2 on the Standard &
Poor's scale. The 30-day SEC yield is 3.3 percent.
WisdomTree Emerging Markets Corporate Bond Fund (NASDAQ:
EMCB
)
If not for the PIMCO Total Return ETF (NYSE:
BOND
), the WisdomTree Emerging Markets Corporate Bond Fund would
likely be the most successful new bond to debut this year. It is
not an apples-to-apples comparison, but EMCB is up almost eight
percent in the past six months compared to a gain of nearly six
percent for BOND.
It also appears EMCB's time below $100 million in AUM is
limited because its asset growth has been nothing short of
impressive. Just two months ago, the fund
had less than $63 million in AUM
. As of the close of markets Tuesday, that number had risen to
almost $88.3 million,
according to WisdomTree data
.
EMCB's 30 holdings are dollar-denominated and feature an
effective duration of 6.26 years. The average yield to maturity
is 4.37 percent.
For more on ETFs, click
here
.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.