Wrapping Up The Week's Launches
Heather Bell, Managing Editor, ETF.com
Last week saw the launch of several interesting ETFs, including the second ETF to focus on marijuana. The AdvisorShares Pure Cannabis ETF (YOLO) is actively managed.
Its portfolio includes cannabis companies domiciled in the U.S. and Canada, whose industries range from consumer products to real estate to health care. It’s a pure-play fund in that it targets companies that derive 50% or more of their revenue from the marijuana and hemp industry. These securities could originate from a variety of industries and sectors, including agriculture, biotech, pharmaceuticals, real estate, retail and finance.
At least 25% of the fund will be invested in pharmaceutical, biotech and life sciences companies using cannabis and cannabinoid-related substances.
The ETF will also invest in federally legal U.S. companies that don't touch the plant directly, such as Innovative Industrial Properties, a U.S.-listed REIT that focuses on medical marijuana facilities.
Though the starting portfolio is 100% equity, the fund's active managers have sweeping discretion to invest in a range of other securities, including derivatives, swaps, futures, other ETFs and even IPO opportunities, according to the fund's prospectus. The fund is currently limited to stocks trading on the NYSE, Nasdaq, Toronto Stock Exchange and TSX Venture exchanges.
iShares Completes iBonds Muni Buildout
iShares has finally finished the buildout of its lineup of target maturity municipal bond funds. The rollout of the iShares iBonds Dec 2028 Term Muni Bond ETF (IBMQ) means the iBonds municipal bond products can be used in 10-year laddering strategies, a typical time horizon for such approaches.
IBMQ coms with an expense ratio of 0.18% and lists on Cboe Global Markets, parent company of ETF.com.
These latest launches bring the municipal lineup of the iBonds family into line with the iBonds investment-grade corporate bond lineup in terms of years covered. Both series now cover the years 2019 through 2028. The iBonds family now has roughly $7.5 billion in assets under management, with $1.4 billion in the muni funds.
One Big Difference
In a significant change from the products in the iBonds muni lineup prior to 2019, the newer products can include callable bonds. Noncallable muni bonds with maturities beyond seven years are less common.
The underlying indexes of the newest iBonds muni products can include callable bonds ranging from those with call dates two years prior to their final maturity to those with call dates up to four years after the index’s final maturity date. For example, IBMQ’s index can include bonds with final maturity dates in 2032 as long as they have call dates in 2018.
As the funds’ underlying indexes near maturity starting five years out, the callable bonds see their weights capped, and are then gradually removed from the indexes during monthly rebalances so that only the bonds maturing in the targeted year remain when the fund reaches its own maturity year. The callable bonds add to the diversification of the funds’ underlying indexes as well as reducing extension risk.
Ultra-Short Bonds & Cloud Computing
On April 17, Goldman Sachs added an ultra-short-term bond fund to its ETF lineup. The Goldman Sachs Access Ultra Short Bond ETF (GSST) aims to offer investors current income and preservation of capital, according to its prospectus.
The fund comes with an expense ratio of 0.16% and lists on Cboe Global Markets.
GSST’s portfolio mainly includes a wide variety of mostly investment-grade U.S. dollar-denominated debt in its portfolio. The portfolio targets an effective duration of one year or less. It is also expected to have significant concentrations of more than 25% in debt issued by financial services companies, the prospectus says.
Also last week, Global X rolled out its own cloud computing ETF. The Global X Cloud Computing ETF (CLOU) targets companies that are likely to benefit from the growing adoption and proliferation of cloud computing technology.
The fund charges an expense ratio of 0.68% and lists on the Nasdaq.
Companies included in the index must have a cloud computing-connected primary business based on the provision of software, platform services or infrastructure via the cloud-based subscription; providing server storage space and data centers as a real estate investment trust; or providing software and hardware that supports cloud computing.
The index included 36 securities as of the start of March, according to CLOU’s prospectus.
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