Market Overview

Two More New ETFs to Consider

Two More New ETFs to Consider

The pace of new ETF introductions has picked up in recent weeks, though as the industry matures, it is reasonable to expect that the days of hundreds of new funds debuting in a year may have already passed.

That does not mean investors have slim pickings among viable, new ETFs. Actually, the opposite is true.

Even when confining the search to those funds that are less than a year old, investors looking to enjoy the infancy of some ETFs have plenty of nifty choices. Importantly, the roster of compelling new ETFs includes plenty of rookie dividend funds that are worth a look.

Investors in the market for a new ETF should remember there is no empirical evidence to suggest new ETFs are slack performers or riskier than the more seasoned equivalents. They should also consider the following new ETFs.

FlexShares Quality Dividend Index Fund (NYSE: QDF)
In late 2012, Northern Trust's (NASDAQ: NTRS) FlexShares unit rolled out a three-ETF suite of new dividend funds, of which QDF was a member. The fund is off to a decent start with nearly $48 million in assets under management since its mid-December debut.

More importantly, QDF has returned nearly 11 percent since it came to market and the weighted average dividend yield of 3.44 percent is decent among ETFs with heavy emphasis on U.S. large-caps. QDF tracks the Northern Trust Quality Dividend Index, which goes beyond cap-weighting to select companies "based on expected dividend payment and fundamental factors such as profitability, solid management, and reliable cash flow," according to the issuer.

QDF's top-10 holdings include Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX) and Pfizer (NYSE: PFE). The annual expense ratio is 0.37 percent.

PowerShares S&P MidCap Low Volatility Portfolio (NYSE: XMLV)
Looking to capitalize on the success of the PowerShares S&P 500 Low Volatility Portfolio (NYSE: SPLV), PowerShares rolled out mid- and small-cap equivalents in February. XMLV is the mid-cap answer to SPLV and the ETF is off to a fine start with a gain of just over five percent.

Low volatility ETFs are popular, the inflow data highlight as much, but they are not all the same. Investors might expect XMLV to be heavy on consumer staples and utilities just like SPLV is. Indeed, XMLV has a 24.3 percent weight to utilities, but financials dominate this new ETF with an allocation of 51.3 percent. The staples sector is merely the sixth-largest sector weight in XMLV at a mere 4.4 percent.

Investors should also note XMLV allocates about 23 percent of its weight to small-caps. The performance potential is there. Year-to-date, XMLV's underlying index, the S&P MidCap 400 Low Volatility Index, has outpaced the S&P MidCap 400 and the S&P 500, according to PowerShares data.

No stock receives a weight of more than 1.78 percent. XMLV holdings investors may already be familiar with include Church & Dwight (NYSE: CHD), Tootsie Roll (NYSE: TR) and Mercury General (NYSE: MCY). The new ETF has an expense ratio of 0.25 percent per year.

For more on ETFs, click here.


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Posted-In: Long Ideas News Broad U.S. Equity ETFs Short Ideas Dividends Dividends Specialty ETFs New ETFs Best of Benzinga

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