This past week saw a highly diverse group of new ETFs launch, a continuation of the rapid development in the space as investors demand access to previously unattainable asset classes, countries, niche markets, or investment strategies. Investors have taken notice of the powerful ability of ETFs to gain exposure to new areas and ETF providers are responding in an attempt to quell investors’ insatiable appetite. This week’s offerings display innovation in the industry:
- June 30th: MacroShares’ Housing ETFs, the first ETFs tracking US housing, began trading on the NYSE Arca. As discussed in a previous blog, the bullish MacroShares Major Metro Housing Up (UMM) ETF seeks to deliver three times the cumulative percentage change in the S&P/Case-Shiller Composite-10 Home Price Index while the bearish MacroShares Major Metro Housing Down (DMM) attempts to deliver three times the inverse cumulative percentage change in the index.
- July 1st: Javelin launched the Dow Jones Islamic Market International Index Fund (JVS) which seeks to mimic the performance of the Dow Jones Islamic Market Titans 100 Index. This index is comprised of 100 companies from outside the US that abide by Islamic law and finance rules which include avoiding companies involved with alcohol, gaming, pork products, highly leveraged companies, etc.
- July 2nd: ProShares launched the first ETF providing short and leveraged exposure to the Russell 3000 Index, which tracks the 3,000 largest companies in the U.S. The ProShares Ultra Russell 3000 ETF (UWC) aims to return 200% of the daily performance of the Russell 3000 Index. The ProShares UltraShort Russell 3000 ETF (TWQ) attempts to return 200% of the inverse daily performance of the Russell 3000 Index.
In addition, on July 2nd, iShares reached an agreement with Peru’s pension funds allowing for the creation of the first Peruvian ETF in the US, the iShares MSCI All Peru Capped Index Fund. The Peruvian pension funds will essentially exchange shares of local companies in exchange for shares of the ETF. Because of the lack of liquidity in the Peruvian market, this arrangement allows Barclays to access shares of companies that would otherwise be extremely difficult to acquire. Peru’s Lima General Index is up 86% so far this year.
