Tag Archives: first-trust

First Trust To Launch Second Actively Managed Commodity ETF

In 2013, First Trust launched the actively managed First Trust Global Tactical Commodity Strategy ETF (NASDAQ: FTGC ), a fund that takes long positions in commodity futures. The time since has been difficult for commodities markets, and as a result, FTGC’s performance has suffered along with other funds in the category: For the year ending January 31, for instance, the ETF has returned -20.52%. However, these returns ranked in the top quintile of funds in its category. Long and Short Positions Perhaps in response, First Trust’s second actively managed commodity ETF – for which it filed paperwork with the Securities and Exchange Commission (“SEC”) on January 28 – will pursue an absolute returns strategy . This means the fund will take both long and short positions in pursuit of positive returns, irrespective of benchmarks, while aiming for lower volatility than traditional funds. The ability to take short positions will obviously help the fund produce positive returns, should commodities remain in a bear market. A long/short approach in the commodity sector has been very effective for the LoCorr Long/Short Commodity Strategy Fund (MUTF: LCSAX ), one of the few long/short commodity fund competitors in the mutual fund and ETF space. That fund has bucked the downdraft in the commodities markets and has generated annualized returns of 12.79% over the past 3-years through January 31. Offshore Subsidiary Like FTGC (and many other funds that use commodity futures), the new fund will invest up to a quarter of its assets in a subsidiary based in the Cayman Islands. This subsidiary will invest in commodity-based futures contracts, with certain tax advantages, while the remainder of the fund’s assets will be invested in cash and short-term debt. Commodities markets have been struggling, largely due to the extreme bear market in crude oil, but this has actually led to increased interest in actively managed commodity funds. As pointed out by ETF.com, Elkhorn and Van Eck have both filed for such funds over the past few months, but First Trust’s new fund is the first to include a short component. This, combined with the firm’s pedigree as the first to launch an actively managed commodities ETF of any kind lends gravitas to the new fund, which will be known as the First Trust Alternative Absolute Return Strategy ETF. Jason Seagraves contributed to this article.

Inside 5 iShares ETFs Targeting The Globe

iShares is easily the biggest ETF sponsor globally, but other issuers are also holding their heads high now. Most sponsors are tapping lucrative areas as the market for plain vanilla ETFs looks to be maturing, compelling issuers to come up with novel themes. Most ETF launches are now based on the smart-beta theme. iShares has also started to regain its seemingly fading charm. The issuer has initiated quite a few ETFs with innovative ideas recently. As part of this effort, the mega issuer most recently launched five ETFs. Notably, in its all five launches, iShares provides exposure to stocks with high scores on attributes like value, quality, momentum, and low size. Let’s take a look inside the funds. iShares FactorSelect MSCI Global ETF (NYSEMKT: ACWF ) The newly launched passively managed ETF looks to track the performance of the MSCI ACWI Diversified Multi-Factor index. The fund currently holds 319 stocks from the 12 developed and emerging markets. The U.S. holds the highest weight with over 42% exposure followed by 12.8% occupied by Japan and 6.14% by China. All the other seven countries have less than 5.78% allocation each in the fund. Sector wise, Financials dominates the fund with 22% allocation, while Health Care (16.63%) and Industrials (16.43%) occupy the next two spots. The fund is low on utilities and energy, each carrying about 3% of the basket. The fund has very low company-specific concentration risk with no single stock occupying more than 2.35% of the total. The fund charges 50 basis points as fees. Competition: The newly launched product is likely to face competition from quite a number of funds prevalent in the global equities space. Still, a few specific ETFs can emerge as strong contenders. The SPDR MSCI World Quality Mix ETF (NYSEARCA: QWLD ), the AdvisorShares Accuvest Global Opportunities ETF (NYSEARCA: ACCU ) and the FlexShares International Quality Dividend Index ETF (NYSEARCA: IQDF ) are some of the examples. iShares FactorSelect MSCI International ETF (NYSEMKT: INTF ) The fund seeks to track the MSCI World ex-USA Diversified Multi-Factor Index to provide core international equity exposure. The fund holds a portfolio of 198 large and mid cap stocks from the developed markets outside North America. INTF focuses on an equal-weighted strategy with no stock forming more than 2.81% of the total fund assets. Japan is the top country holding of the fund with about 24% exposure followed by 18.5% in the U.K. and 10.31% in Switzerland. However, no other economy makes up over 6.82% of the basket. Sector wise, once again, Financials dominates the fund with 28.5% allocation, while Industrials (17.14%) and Consumer Discretionary (13.65%) occupy the next two spots. The fund is light on Telecom (3.9%) and Energy (2.0%) and charges 45 bps in fees. Competition: Like the global ETFs, this space is also heaving with products, with the Morningstar Developed Markets ex-US Markets Factor Tilt Index ETF (NYSEARCA: TLTD ), the JPMorgan Diversified Return International Equity ETF (NYSEARCA: JPIN ) and the First Trust Developed Markets Ex-US AlphaDEX ETF (NYSEARCA: FDT ) posing as tough competitors. iShares FactorSelect MSCI International Small-Cap ETF (NYSEMKT: ISCF ) This fund is also targeted at the international space with focus on the smaller spectrum of capitalization. Tracking the MSCI World ex-USA SmallCap Diversified Multi-Factor index, the fund holds a well-diversified portfolio of 659 stocks, with no stock taking more than 1.09% of the basket. Once again, Japan and the U.K. take top two positions in the fund with 29.4% and 23.7%, respectively. Sector wise, the fund is heavy on Consumer Discretionary (22.3%), Financials (19.2%) and Industrials (17.6%). The fund charges 60 bps in fees. Competition: The foreign mid and small cap equities ETF space is relatively less jam-packed compared to the other two segments discussed above. Among the set, while the Vanguard FTSE All-World ex-US Small-Cap Index ETF (NYSEARCA: VSS ) is one of the leaders based on AUM, the PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio ETF (NYSEARCA: PDN ) and the iShares Enhanced International Small-Cap ETF (NYSEARCA: IEIS ) can give ISCF a run for its money courtesy of their smart-beta and relatively active approach. U.S. ETFs Apart from global ETFs, the issuer also rolled out two U.S. ETFs, one with large-cap and the other with small-cap focus. The funds are the iShares FactorSelect MSCI USA ETF (NYSEMKT: LRGF ) and the iShares FactorSelect MSCI USA Small-Cap ETF (NYSEMKT: SMLF ). LRGF charges 35 bps in fees, while SMLF charges 50 bps. The large cap fund holds 133 stocks. No stock accounts for more than 2.87% of the basket. Health Care (21.39%) and Financials (20.87%) are the top two sectors of the fund. However, the small-cap fund is pretty spread out across 508 components with none accounting for more than 1.40% share. The fund is heavy on Financials (23.17%) and IT (21.71%). Notably, both spaces are crowded with products. Products like the First Trust Large Cap Core AlphaDEX ETF (NYSEARCA: FEX ) on the large-cap surface and the First Trust Small Cap Core AlphaDEX ETF (NYSEARCA: FYX ) on the small-cap space might emerge as competitors. Original Post

A Flurry Of IPOs Might Lift IPO ETFs

The U.S. IPO space, which was subdued at the start of 2015, looks to be on fire this week. As per Renaissance Capital , as many as 14 companies are slated to go public this week. This makes the week starting from May 4 the ‘busiest week’ of 2015 so far, per 247wallst.com . Investors should note that after a massive run last year, the IPO market cooled down considerably in the first quarter of 2015. Per Renaissance , 34 IPOs raised $5.4 billion in capital, making Q1 of 2015 the most inactive per IPO tally since 1Q of 2013. Also, the proceeds from IPO were the least since 3Q of 2011. Only, the health care sector managed to tread water in the gloomy U.S. IPO market. Rising rate worries, a strong greenback and later a moderation in U.S. growth have probably raised concerns over the space. However, with the Fed repeatedly hinting at a delayed rate hike, the space has now bucked up. Renaissance Capital’s IPO schedule indicated that the following companies are making a public market debut this week. These are Tallgrass Energy GP LP, Adaptimmune Therapeutics, International Market Centers, Commercial Credit, Bojangles, Collegium Pharmaceutical, aTyr Pharma, CoLucid Pharmaceuticals, Klox Technologies, MultiVir, Gelesis, Anterios, HTG Molecular Diagnostics and OpGen. The deal size ranges from $15 million to $900 million with OpGen having the lowest and Tallgrass Energy leading. Like Q1, the offerings are ruled by the health care and biotech space, with 10 out of 14 companies being bio-pharmaceuticals. Looking at the trend, one can assume that the sagging scenario of Q1 in the U.S. may turn around in Q2. Things are looking better at the international arena as ample cheap money will shore up corporate activities at foreign shores. Still, investors having faith in the revival of domestic operations might take a look at two IPO ETFs that are presently on offer. This is especially true given that the U.S. markets are now in the most active IPO week ‘ since the week of July 28, 2014 ‘, per Renaissance Capital. Renaissance IPO ETF (NYSEARCA: IPO ) Holding 56 stocks in the basket, the fund follows the Renaissance IPO Index, which holds the largest and most liquid newly listed U.S. initial public offerings. New companies seek inclusion on a ‘fast entry basis’ on the fifth day of trading. Currently, the product allocates more to Alibaba at 9.04%, closely followed by Twitter (7.46%) and Hilton (5.91%). Mid caps rule the portfolio with over half of the allocation. IPO ETF has attracted $28 million in its asset base. The ETF sees low volume of nearly 10,000 shares, suggesting additional cost beyond the expense ratio of 0.60%. From a sector look, technology stocks make up for over one-third share followed by consumer discretionary (20%), financials (17%) and health care (10%). The fund has added 6% year to date (as of May 4, 2015). First Trust US IPO Index Fund (NYSEARCA: FPX ) This ETF targets the U.S. IPO market and follows the IPOX-100 U.S. Index. It has accumulated $673.3 million in AUM and charges 60 bps in fees a year. Volume is decent as it exchanges around 75,000 shares in hand on average. In total, the fund holds 100 securities. The product has a nice mix of sectors, with the top two being consumer discretionary (23.87%) and information technology (22.01%). The red hot IPO sector health care takes about 18.55% of the basket. Since the ETF focuses on the 100 largest and most liquid U.S. IPOs, new companies can find entry into the fund’s holding after trading for a minimum of 100 days. FPX is up 7.5% so far this year (as of May 4, 2015). Original Post