UBS, Emerging Global Advisors and iShares all unveiled a batch
of new ETFs and an ETN this week. Here's an overview.
Super-Sized Mortgage REITs
UBS has rolled out a new exchange traded note designed to
double the returns and dividends of theMarket Vectors Mortgage
REITs Income ETF (
). The ETRACS Monthly Pay 2xLeveragedMortgage REIT ETN (
) debuted Oct. 17, boasting a fat 24.82% annual dividend
The underlying index is most heavily weighted inAnnaly Capital
) at 19% of assets,American Capital Agency (
) 15%,Two Harbors Investment (
) 5%,MFA Financial (MFA) 5% andHatteras Financial (HTS) 5%.
It charges a low annual fee of 0.40% of assets -- far less
than the 1% usually charged by leveraged ETFs.
Mortgage real estate investment trusts raise money by getting
short-term loans to issue mortgages and buy longer-termed,
higher-yielding mortgage-backed securities. They make money on
the difference between their short-term borrowing costs and the
yield on their longer-term investments. As REITs, they must
distribute at least 90% of their income each year to investors in
the form of dividends.
MORT has appreciated 25% year to date and 33% in the past 12
months. It now yields 9.43%.
As an ETN, MORL's value is subject to UBS' credit quality and
a ratings downgrade of the company may affect share prices
regardless of the underlying stocks. ETN holders could lose their
money if UBS goes bankrupt or is unable to pay its debts.
Broader Emerging Market ETF
Emerging Global Advisors, specializing in emerging market
ETFs, has released a new fund it says offers more accurate
exposure to developing countries than existing ETFs.
EGShares Emerging Markets Core ETF (EMCR), tracking the
S&P Emerging Markets Core Index, holds stocks from China,
South Africa, India, Brazil, Russia, Chile, Malaysia and Mexico.
It excludes Korea and Taiwan because EGA doesn't consider those
countries developing markets due to their big tech industries and
economic wealth. Korea and Taiwan are included in bellwether
MSCI Emerging Markets Index (EEM).
EMCR holds 108 stocks and is most heavily weighted in consumer
staples at 18% of assets, consumer discretionary 17%, financials
16%, industrials 10%, utilities 7%, info tech 7%, energy 7%,
health care 6%, basic materials 6% and telecom 5%.
EGA says it offers more balanced exposure to developing
countries than major emerging market ETFs, which overweight
financials and energy stocks that are dependent on global growth.
EMCR's overweighting in consumer stocks offers more exposure to
internal growth and demand.
EMCR charges an annual management fee of 0.7% of assets.
iShares New Core ETFs
IShares -- the world's biggest ETF provider -- unveiled a new
Core family of ETFs by rolling out some new funds and renaming
existing funds. Most got new tickers and fees were cut on six
iShares Core S&P Total U.S.
Stock Market ETF (ITOT) (previously ISI).
iShares Core S&P 500
iSharesCore S&P Mid-Cap ETF
Core S&P Small-Cap ETF (IJR).
Core MSCI Total International Stock ETF (IXUS).
Core MSCI Emerging Markets ETF (IEMG).
iSharesCore MSCI EAFE ETF
iShares Core Total U.S.
Bond Market ETF (AGG).
iShares Core Long-Term U.S.
Bond ETF (ILTB)(previously GLJ).
iShares Core Short-Term U.S.
Bond ETF (ISTB).