Thanks to the rise in "thematic investing” and craze for “smart beta”, the ETF industry is seeing explosive growth in terms of both AUM and launches. After 246 launches last year and 101 in the first half of this year, the industry has seen 57 launches in the third quarter, taking the total number of ETFs to 2,045 and total assets to nearly $3.16 billion in the U.S. market (read: Inside the Rise of Thematic ETFs).
This rapid growth is due to unique strategies, creativity, transparency, diversification benefits, enhanced tax competences, low turnover and low cost. Additionally, both existing and new issuers are active in binging innovative products to the market, carving a highly specialized theme (or niche investment) focusing on a narrow corner.
Below we highlight four ETFs that have been able to pull in over $120 million in AUM and have huge potential to dominate the market in the coming months.
DeltaShares S&P 500 Managed Risk ETF (DMRL - Free Report)
DMRL has become extremely popular having amassed $392 million in AUM since its debut on Jul 31. It seeks to track the S&P 500 Managed Risk 2.0 Index, which is designed to simulate a downside-protected portfolio, which utilizes a framework that includes targeted volatility and a synthetic option overlay to hedge the downside risk of the portfolio. It holds 507 securities in its basket with a tilt toward the top firm Apple (AAPL) while other firms account for less than 2.7% of assets (read: Hedge Against Volatility With These ETFs).
From a sector look, technology takes the top spot at 23% while financials and healthcare round off the top three with 14% share each. The fund trades in a paltry volume of under 1000 shares a day, thereby increasing the total cost of the fund beyond expense ratio of 0.35%.
DeltaShares S&P International Managed Risk ETF (DMRI - Free Report)
DMRI has amassed $234.6 million in AUM since its debut on Jul 31. It offers exposure to broad international developed markets using a managed risk strategy, which seeks to limit losses and capture the upside in rising markets. It follows the S&P EPAC Ex. Korea LargeMidCap Managed Risk 2.0 Index, charging investors 50 bps in annual fees. Holding 941 stocks in its basket, the fund is widely spread across components with each holding no more than 1.71% of assets. It is focused on large caps at 90%. European firms dominate the portfolio with 62% share while Asia Pacific firms account for 36% (read: Here's Why International ETFs Continue to Outperform?).
Financials, industrials, and consumer discretionary are the top three sectors. It also trades in a paltry volume of less than 1,000 shares, suggesting wide bid/ask spread.
The Main Sector Rotation ETF (SECT - Free Report)
This ETF was launched on Sep 5 and has been able to manage $172.3 million in its asset base so far. It is an actively managed ETF that seeks to achieve its objective through dynamic sector rotation. Sector selection is optimized by carefully reviewing the sector, industry, and sub-industries in the fund’s portfolio and allocating to sectors that appear undervalued and are poised to respond favorably to financial market catalysts. As such, SECT is an ETF of ETFs with (XLK - Free Report) , (XLV - Free Report) and (XLF - Free Report) taking the top three positions at 18%, 15.5% and 14.7%, respectively.
The fund seeks to outperform the S&P 500 in rising markets while limiting losses during periods of decline. Average daily volume is solid at 539,000 shares while expense ratio of 0.65% is a bit high (read: 4 ETFs to Profit from Sector Rotation).
DeltaShares S&P 400 Managed Risk ETF (DMRM - Free Report)
This ETF tracks the S&P 400 Managed Risk 2.0 Index, which is designed to measure U.S. mid-cap equities using a managed risk strategy seeking to limit losses and capture the upside in rising markets. It has gathered about $122.6 million in its asset base since its inception on Jul 31. It holds 403 securities in its basket with none holding more than 0.7% of assets.
Technology, financials, industrials, consumer discretionary and real estate are the top sectors accounting for double-digit exposure each. Volume does not seem to be an issue for the ETF as it exchanges nearly 305,000 shares a day on average.
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