These 90-Day-Old ETFs Are Doing Just Fine
Nay-sayers of new ETFs often say that investors should wait a little while before getting involved with these funds. New ETFs need to time to mature and become seasoned, the critics assert. Those words of caution are not entirely without, but there are at least two major flaws in that line of thinking.
First, those that tell investors to steer clear of new ETFs rarely, if ever, offer up a uniform set of standards that investors should look for before getting involved with new ETFs. Second, sitting on the sidelines for too long can keep investors from enjoying solid returns.
With those concepts in mind, investors do not need to blindly throw their hard-earned money at every new ETF that comes to market. However, the following funds have not even been around for three months and already have the look of winners.
WisdomTree China Dividend Ex-Financials Fund (NASDAQ: CHXF) The WisdomTree China Dividend Ex-Financials Fund paints the picture of why not all ETFs need to be treated like the town leper. In fact, waiting for CHXF to gather the appropriate amount of seasoning has proven foolhardy. CHXF, which debuted on September 19, already has $29.3 million in assets under management.
Assuming a price of $53.50 (slightly rounded lower) and average daily volume of 25,500 shares (slightly rounded up), CHXF's average daily dollar volume is strong at $1.36 million. Beyond those superficial statistics, CHXF has returned almost six percent since its debut. In terms of annual fees, CHXF is 11 basis points cheaper than the iShares FTSE China 25 Index Fund (NYSE: FXI), the largest China ETF by assets.
PowerShares S&P 500 High Dividend Portfolio (NYSE: SPHD) The PowerShares S&P 500 High Dividend Portfolio is not even two months old, but at this point, the fund already looks like a survivor. Raking in nearly $32 million in AUM since an October debut, proves as much.
Noteworthy is SPHD's AUM growth. Just two weeks ago, the fund had $23 million in AUM. Adding more than a third of that total in such a small time frame is impressive.
SPHD has a 30-day SEC yield of almost 4.7 percent, according to PowerShares data. That certainly helps the cause of any new ETF. The knock on SPHD to this point has been performance. The new ETF has lost about 4.3 percent since its debut, though is likely attributable to the fund's 21.4 percent allocation to utilities stocks, a group that has been punished on fiscal cliff fears.
iShares Core MSCI EAFE ETF (NYSE: IEFA) Some might say it is not fair to put an iShares fund on this list give the marketing prowess of the world's largest ETF sponsor. Fair enough, but there is only so much ETF sponsors can do to cajole money out of investors for new products. At some point, the new fund has to stand on its merits. It is safe to say IEFA is doing that or is at least close to.
As its name indicates, IEFA is a member of the iShares core suite, aimed at bringing more options to conservative, cost-conscious investors. IEFA is also the core equivalent of the popular iShares MSCI EAFE Index Fund (NYSE: EFA), but the two are by no means identical twins.
For starters, long-term investors should prefer IEFA because its expense ratio is 20 basis points lower. Also noteworthy is the fact that IEFA includes small-caps, something that EFA does not do. In part, that contributes to a large lineup for the new ETF. IEFA is home to over 2,500 stocks, while its older counterpart is home to 914.
For those obsessed with the superficial metrics, IEFA has jumped over four percent since its debut and has $68.3 million in AUM.
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