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The popularity of ETF investing has gone through the roof in just 20 years. Assets held by U.S.-listed ETFs have surged to more than $4.4 trillion. ETF assets reached $6.3 trillion globally in 2019, rising 32% year over year, per etf.com. Every month is seeing product launches with newer concepts.
Though the pace of rollout decelerated a bit in 2019 with about 256 launches compared with approximately 270 seen each in 2018 and 2017, the demand has been pretty strong. And certain slack in product launch is understandable given the maturity of the industry.
But then, as many as 129 products were closed down in 2019, mainly due to the incapability of gathering assets. Asset generation is a tough task for new issuers as industry biggies normally win and small players lose. BlackRock Inc. (BLK - Free Report) , Vanguard Group and State Street Corp. (STT - Free Report) dominate 81% of all ETF assets.
Small-asset ETFs stay unprofitable even after being on the marketplace for a year or two and are eventually shut down. Investors who bet on those small-asset funds encounter an “unexpected tax hit when a fund closes and returns their money,” per Wall Street Journal.As a result, only 12% of investors seek to buy a new ETF with less than $25 million AUM, a Brown Brothers Harriman’s ETF survey found.
“Prior to 2008, new funds had an easier time getting off the ground,” pointed out Wall Street Journal. But it is now too tough to enjoy a first-mover advantage as almost every theme, every asset class, every factor, every country has an ETF for itself (read: 10 ETFs That Have Been Investors' Favorites).
Against this backdrop, we highlight a few new ETFs that have managed to garner solid asset base within just a few months of launch and have also seen decent price performance so far.
iShares ESG MSCI USA Leaders ETF (SUSL - Free Report) – $1.93 billion – up 21.7% since inception
The underlying MSCI USA Extended ESG Leaders Index comprises U.S. large and mid-capitalization stocks of companies with high environmental, social, and governance performance relative to their sector peers (read: Most Interesting New ETFs).
Xtrackers S&P 500 ESG ETF (SNPE - Free Report) – $112.9 million – up 17.7% since inception
Having made a debut in May 2019, the fund follows the S&P 500 ESG Index. The index is broad-based and market-cap-weighted that measures the performance of securities meeting sustainability criteria, while maintaining similar overall industry group weights as the S&P 500 (read: ESG ETFs: Doing Well And Doing Good).
Defiance Next Gen Connectivity ETF (FIVG - Free Report) – $234.4 million – up 7.7%
The fund hit the market in May. The underlying BlueStar 5G Communications Index is a rules-based index that tracks the performance of a group of U.S.-listed stocks of global companies that are involved in the development of, or are otherwise instrumental in the rollout of 5G networks. It charges 30 bps in fees (read: Bet Big on These ETFs on Verizon-Amazon Deal).
Global X Cloud Computing ETF (CLOU - Free Report) – $462.7 million – up 15.7%
The fund forayed into the ETF universe in April. The underlying Indxx Global Cloud Computing Index provides exposure to exchange-listed companies in developed and emerging markets that are positioned to benefit from the increased adoption of cloud computing technology.
Franklin Liberty U.S. Core Bond ETF (FLCB - Free Report) – $903.9 million – up 2.4%
It hit the market on Sep 17, 2019.The 175-holding fund is active in nature. It is used as a core building block for broad exposure to U.S. investment grade bonds. As of Feb 5, 2020, Weighted Average Maturity of the fund was 7.97 years and Average Duration of the fund was 5.87 years.
HCM Defender 100 Index ETF (QQH - Free Report) – $76.9 million – up 26.5%
Launched in October, the underlying HCM Defender 100 Index seeks to outperform the Nasdaq 100 Index using a proprietary methodology.
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6 New ETFs That Could be Investors' Favorite
The popularity of ETF investing has gone through the roof in just 20 years. Assets held by U.S.-listed ETFs have surged to more than $4.4 trillion. ETF assets reached $6.3 trillion globally in 2019, rising 32% year over year, per etf.com. Every month is seeing product launches with newer concepts.
Though the pace of rollout decelerated a bit in 2019 with about 256 launches compared with approximately 270 seen each in 2018 and 2017, the demand has been pretty strong. And certain slack in product launch is understandable given the maturity of the industry.
But then, as many as 129 products were closed down in 2019, mainly due to the incapability of gathering assets. Asset generation is a tough task for new issuers as industry biggies normally win and small players lose. BlackRock Inc. (BLK - Free Report) , Vanguard Group and State Street Corp. (STT - Free Report) dominate 81% of all ETF assets.
Small-asset ETFs stay unprofitable even after being on the marketplace for a year or two and are eventually shut down. Investors who bet on those small-asset funds encounter an “unexpected tax hit when a fund closes and returns their money,” per Wall Street Journal.As a result, only 12% of investors seek to buy a new ETF with less than $25 million AUM, a Brown Brothers Harriman’s ETF survey found.
“Prior to 2008, new funds had an easier time getting off the ground,” pointed out Wall Street Journal. But it is now too tough to enjoy a first-mover advantage as almost every theme, every asset class, every factor, every country has an ETF for itself (read: 10 ETFs That Have Been Investors' Favorites).
Against this backdrop, we highlight a few new ETFs that have managed to garner solid asset base within just a few months of launch and have also seen decent price performance so far.
iShares ESG MSCI USA Leaders ETF (SUSL - Free Report) – $1.93 billion – up 21.7% since inception
The underlying MSCI USA Extended ESG Leaders Index comprises U.S. large and mid-capitalization stocks of companies with high environmental, social, and governance performance relative to their sector peers (read: Most Interesting New ETFs).
Xtrackers S&P 500 ESG ETF (SNPE - Free Report) – $112.9 million – up 17.7% since inception
Having made a debut in May 2019, the fund follows the S&P 500 ESG Index. The index is broad-based and market-cap-weighted that measures the performance of securities meeting sustainability criteria, while maintaining similar overall industry group weights as the S&P 500 (read: ESG ETFs: Doing Well And Doing Good).
Defiance Next Gen Connectivity ETF (FIVG - Free Report) – $234.4 million – up 7.7%
The fund hit the market in May. The underlying BlueStar 5G Communications Index is a rules-based index that tracks the performance of a group of U.S.-listed stocks of global companies that are involved in the development of, or are otherwise instrumental in the rollout of 5G networks. It charges 30 bps in fees (read: Bet Big on These ETFs on Verizon-Amazon Deal).
Global X Cloud Computing ETF (CLOU - Free Report) – $462.7 million – up 15.7%
The fund forayed into the ETF universe in April. The underlying Indxx Global Cloud Computing Index provides exposure to exchange-listed companies in developed and emerging markets that are positioned to benefit from the increased adoption of cloud computing technology.
Franklin Liberty U.S. Core Bond ETF (FLCB - Free Report) – $903.9 million – up 2.4%
It hit the market on Sep 17, 2019.The 175-holding fund is active in nature. It is used as a core building block for broad exposure to U.S. investment grade bonds. As of Feb 5, 2020, Weighted Average Maturity of the fund was 7.97 years and Average Duration of the fund was 5.87 years.
HCM Defender 100 Index ETF (QQH - Free Report) – $76.9 million – up 26.5%
Launched in October, the underlying HCM Defender 100 Index seeks to outperform the Nasdaq 100 Index using a proprietary methodology.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>