The month of October was a busy month for ETFs as numerous providers launched new ETFs or filed registration paperwork with the Securities and Exchange Commission to launch new ETFs.
iShares filed a registration form to launch the first line of ETFs that hold municipal bonds which have maturities that fall within a specified date range. The funds are designed to work like traditional municipal bonds in that they return tax-exempt distributions and an investor’s principal investment. The new fixed income funds will be designed to track indexes in the S&P AMT-Free Municipal Bond Index Series and will distribute its assets to shareholders after the last holding of the fund hits maturity, which is expected to be around August 31 of the year in the fund’s name.
To further extend out the line of fixed income ETFs on the market, bond giant, PIMCO, is expected to launch two new ETFs that track the Treasuries market. The first is the PIMCO 3-7 Year U.S. Treasury Index Fund (FIVZ) which will carry an expense ratio of 0.15%. The second is the PIMCO 20+ Year Zero Coupon U.S. Treasury Index (ZROZ), which will carry an expense ratio of 0.15% and track the Treasury STRIPS 20-25 Year Equal Par Bond Index which sells Treasuries and securities at a discount and doesn’t offer interest payments because the bonds mature at par.
In the commodities arena, ETF provider Jefferies has launched two ETFs based on agriculture and industrial metals indexes. The first is the Jeffries/TR/J CRB Global Agriculture Index Fund (CRBA) and the second is the Jeffries/TR/J CRB Industrial Metals Equity Index Fund (CRBI). Both ETFs are based upon the Thompson Reuters/Jeffries CRB-EQ series of indexes, carry an expense ratio of 0.65% and hold equity securities.
CRBA holds international companies that are focused on the production and distribution of agricultural products and equipment, whereas CRBI offers investors exposure to companies that engage and specialize in the production and distribution of base and industrial metals and products around the globe.
Additionally, ETF Securities recently announced that it plans to launch the ETFS Palladium Trust (PALL), which will be the first U.S. listed ETF that holds physical palladium.
To offer further diversity, the ETF landscape broadened with the launch of the first state-focused ETF, the Spade Oklahoma Index (OOK). OOK focuses on companies that are domiciled in Oklahoma, carries an expense ratio of 0.85% and donates at least 10% of revenue generated from fees to an Oklahoma charity. The fund tracks an index of 29 companies, each with a market cap of at least $100 million and is heavily concentrated in the energy sector – more specifically, drilling and exploration, pipeline and oil and gas.
