VelocityShares initially sought to shake up the broad
exchange-traded market with its innovative lineup of VIX-focused
ETNs. The company soon branched out into various metal and energy
centric products as well, although it doesn't appear that this is
the end for the upstart by any means.
via a couple SEC filings
, looks to expand its product lineup beyond its ETNs and into the
In the filings
, the company revealed plans for five ETFs in total, two that look
to target the large cap American market with lower risk, and then
three focused in on various segments of the emerging market world
via depository receipts.
The new additions, if ever approved by the SEC, will expand the
company's lineup from 22 to 27 funds and will also mark the first
forays of the firm into the equity world. Given this, the potential
products could be interesting additions to the lineup and may also
be somewhat novel funds in the broader ETF space as well.
In light of this, we have highlighted some of the key details
from the filings that investors should be aware of at this time.
While all the details were not yet available-ticker symbols and
expenses ratios were not in the filings at this time-we discuss
some of the top points from these still-in-registration funds
VelocityShares Emerging Markets DR ETF
This proposed product looks to track the BNY Mellon Emerging
Markets DR Index, a benchmark of depository receipts of companies
in emerging markets. The underlying index is focused on
shares in Brazil (21%), Russia (17.5%), and China (14.2%), although
it also includes a smattering of other nations as well (read
Get True Emerging Market Exposure With These Three
VelocityShares Russia Select DR ETF
This still-in-registration fund looks to track the BNY Mellon
Russia Select DR Index, a benchmark of ADRs and GDRs of companies
located in Russia. Seemingly, this fund will have a heavy focus on
the energy industry as this constitutes a huge chunk of Russia's
economic output and especially its publically traded firms.
VelocityShares Emerging Asia DR ETF
This product looks to give investors a new way to play Asian
markets by tracking the BNY Mellon Emerging Market Asia DR Index.
This benchmark looks to roughly have about 30% in both China and
South Korea, and then 21.7% in Taiwan, and 14.4% in India to round
out the top four (see
Asia Ex-Japan ETF Investing 101
VelocityShares Tail Risk Hedged Large Cap ETF
This proposed ETF
looks to follow the VelocityShares Tail Risk Hedged Large Cap
index, which looks to follow in the trend of offering investors
large cap exposure with less levels of risk. The fund hopes to do
this by allocating 85% of the portfolio to three large cap ETFs (
) while putting the remaining 15% in two 'geared' VIX-focused ETFs
(UVXY and SVXY).
VelocityShares Volatility Hedged Large Cap ETF
This fund looks to follow a similar strategy to the previous
ETF, except it will target the VelocityShares Volatility Hedged
Large Cap Index. This invests in the same five ETFs as its
counterpart above, but it does so in a different proportion with
this ETF allocating 1/3 to
and 2/3 to
(of the 15% total volatility allocation) compared to a 45/55
breakdown for the previous product (read
Three Defensive ETFs for a Bear Market
As of right now, it is hard to say how popular or competitive
these proposed ETFs will be when compared to the broad ETF world.
The emerging market focused funds are particularly interesting as
the space could definitely afford to have a few more ETFs in it,
although it remains to be seen how different VelocityShares'
exposure to these key regions is.
The volatility hedged funds, on the other hand, could see some
competition from a few products already on the market from a number
of issuers. These funds include
First Trust's VIXH
Barclays VEQTOR ETN (
, and a few 'volatility response shares' from Direxion such as
While many of these funds are new, most have failed to attract a
decent following, at least so far. In fact, only VQT has managed to
attract a good deal of assets, coming in at just over $360 million
in AUM (read
Guide to the 25 Most Liquid ETFs
Given this as well as the uncertainty over emerging markets, it
remains to be seen if VelocityShares will see the same level of
interest as it has seen in some of its leveraged and inverse ETNs
already on the market. Either way, should the firm manage to pass
SEC scrutiny for these five funds, they could offer up some
interesting exposure that some investors may want to take a closer
look at should they not feel that the current options in the market
meet their portfolio's needs.
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PRO-SH VIX STF (SVXY): ETF Research Reports
PRO-ULT VIX STF (UVXY): ETF Research Reports
BARCLY-SP VEQTR (VQT): ETF Research Reports
DIR-SP15 RC VRS (VSPR): ETF Research Reports
DIR-SP5 RC VRS (VSPY): ETF Research Reports
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