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These New ETFs Hit The Ground Running

by
January 28, 2016 9:11 am
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Last year, 284 new exchange traded products came to market in the U.S. As is always the case with new ETFs, some of last year's crop of rookie funds found quick success while other new ETFs are still scuffling in their efforts to attract investors' assets.

 

Two of the most successful ETFs to debut last year are the SPDR DoubleLine Total Return Tactical ETF (NYSE: TOTL) and the iShares Exponential Technologies ETF (NYSE: XT). Now home to $1.94 billion in assets under management, TOTL is not only one of the most successful ETFs to debut last year, but also one of the largest actively managed ETFs of any stripe.

 

This actively managed ETF, subadvised by oft-quoted market guru Jeffrey Gundlach's DoubleLine Capital, is more expensive than many other passively managed bond ETFs with a 0.65% gross expense ratio (0.55% net expense ratio),” said S&P Capital IQ in a new research note. “TOTL had a 30-day SEC yield 3.0% TOTL's exposure is primarily in mortgage-backed securities (59% of assets as of mid-January), with additional stakes in Treasuries (9%) emerging markets (8%) and investment-grade corporates (6%). The ETF's average duration of 3.9 years.”

 

Since coming to market, TOTL has outperformed the Barclays US Aggregate Bond Index by 50 basis points. 

 

The iShares Exponential Technologies ETF is just over 10 months old and already has nearly $600 million in assets under management. Like TOTL, XT is a partnership between a well-known ETF issuer and a well-known money manager.

 

Edelman Financial Services, a financial services firm, collaborated on the ETF's creation and as of September 2015, held the majority of the ETF's shares. S&P Capital IQ thinks this could limit the liquidity of the ETF. XT trades, on average, 140,000 shares daily, and has a 0.47% expense ratio,” said S&P Capital IQ.

 

XT, which allocates nearly two-thirds of its weight to U.S. stocks, is not a dedicated technology ETF. The fund devotes 31.5 percent of its weight to tech stocks and nearly 31 percent to healthcare names. Telecom and industrial names combine for over 23 percent.

 

First Solar Inc. (NASDAQ: FSLR), Dow component Verizon Communications Inc. (NYSE: VZ) and Valeant Pharmaceuticals International (NYSE: VRX) are among the 200 stocks found in XT's lineup.

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