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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. It has seen 175 launches and 125 closures so far this year, taking the total number of ETFs to 2,171 and total assets to more than $3.7 trillion in the U.S. market (read: Global ETFs' AUM Rises to $5.1 Trillion in July: What's Hot?).
The rapid growth can be traced back to unique strategies, creativity, transparency, diversification benefits, enhanced tax competences, low turnover and the most importantly — low cost. Additionally, both existing and new issuers are active in bringing 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 $1 billion in AUM and have huge potential to dominate the market in the coming months.
This is the most popular entrant of this year that has amassed more than $1.8 billion in AUM since Jun 15. It seeks to provide exposure to the broad Japanese equity market using a "passive" investment approach. It tracks the Morningstar Japan Target Market Exposure Index, which is a free-float adjusted market-cap weighted index consisting of stocks traded primarily on the Tokyo and Nagoya Stock Exchanges. The ETF holds a broad basket of 385 securities, with each holding less than 4.3% of assets (read: New JPMorgan Japan ETF Tops $1B in AUM).
Sector-wise, industrials and consumer discretionary take the largest share at 21.6% and 19.9%, respectively, while information technology and financials round off the next two spots, with double-digit exposure each. The fund charges a low annual fee of 19 bps and trades in a heavy volume of 1.7 million shares a day on average.
BBEU has amassed $1.3 million in AUM since its debut on Jun 15. It provides investors exposure to developed European equity markets by tracking the Morningstar Developed Europe Target Market Exposure Index, which is a free-float adjusted, market-cap weighted index consisting of stocks traded on the primary exchanges in developed countries across Europe. Holding 536 securities in its basket, the ETF is widely diversified as none accounts for more than 2.76% share. Financials, consumer staples, industrials, health care and consumer discretionary are the top five sectors with double-digit exposure each.
The product is among the lowest cost choice in the space charging just 9 bps in fees from investors. It also trades in heavy volume of nearly 1.2 million shares a day on average.
This ETF also belongs to the same BetaBuilders family but targets the broad Canadian equity market. Like its cousins, it uses a passive investment approach and comes with a low fee of 0.19%. The fund follows the Morningstar Canada Target Market Exposure Index and holds 94 stocks in its basket with concentration on the top two firms at 8% each. Other firms hold no more than 4.9% share. From a sector look, financials dominates the fund’s returns at 41%, while energy and industrials round off the next two with double-digit exposure each (read: Guide to the 25 Cheapest ETFs).
The fund has gathered more than $1.4 billion in its asset base since its debut on Aug 7 and trades in a heavy average daily volume of about 3.3 million shares.
Barclays ETN+ FI Enhanced Global High Yield ETN Series B
This ETN option debuted on Mar 15 and has accumulated around $1.6 billion in its asset base. The product seeks to deliver two times (2X or 200%) the returns of the MSCI World High Dividend Yield USD Gross Total Return Index, which measures the performance of large and mid-cap stocks across 23 developed markets countries tracked by the MSCI World Index with higher-than-average dividend yields that are potentially both sustainable and persistent.
However, the fund trades in a lower average daily volume of 28,000 shares, which increases the cost of trading beyond the expense ratio of 0.93%.
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4 Most Successful ETF Launches of 2018
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. It has seen 175 launches and 125 closures so far this year, taking the total number of ETFs to 2,171 and total assets to more than $3.7 trillion in the U.S. market (read: Global ETFs' AUM Rises to $5.1 Trillion in July: What's Hot?).
The rapid growth can be traced back to unique strategies, creativity, transparency, diversification benefits, enhanced tax competences, low turnover and the most importantly — low cost. Additionally, both existing and new issuers are active in bringing 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 $1 billion in AUM and have huge potential to dominate the market in the coming months.
JPMorgan BetaBuilders Japan ETF (BBJP - Free Report)
This is the most popular entrant of this year that has amassed more than $1.8 billion in AUM since Jun 15. It seeks to provide exposure to the broad Japanese equity market using a "passive" investment approach. It tracks the Morningstar Japan Target Market Exposure Index, which is a free-float adjusted market-cap weighted index consisting of stocks traded primarily on the Tokyo and Nagoya Stock Exchanges. The ETF holds a broad basket of 385 securities, with each holding less than 4.3% of assets (read: New JPMorgan Japan ETF Tops $1B in AUM).
Sector-wise, industrials and consumer discretionary take the largest share at 21.6% and 19.9%, respectively, while information technology and financials round off the next two spots, with double-digit exposure each. The fund charges a low annual fee of 19 bps and trades in a heavy volume of 1.7 million shares a day on average.
JPMorgan BetaBuilders Europe ETF (BBEU - Free Report)
BBEU has amassed $1.3 million in AUM since its debut on Jun 15. It provides investors exposure to developed European equity markets by tracking the Morningstar Developed Europe Target Market Exposure Index, which is a free-float adjusted, market-cap weighted index consisting of stocks traded on the primary exchanges in developed countries across Europe. Holding 536 securities in its basket, the ETF is widely diversified as none accounts for more than 2.76% share. Financials, consumer staples, industrials, health care and consumer discretionary are the top five sectors with double-digit exposure each.
The product is among the lowest cost choice in the space charging just 9 bps in fees from investors. It also trades in heavy volume of nearly 1.2 million shares a day on average.
JPMorgan BetaBuilders Canada ETF (BBCA - Free Report)
This ETF also belongs to the same BetaBuilders family but targets the broad Canadian equity market. Like its cousins, it uses a passive investment approach and comes with a low fee of 0.19%. The fund follows the Morningstar Canada Target Market Exposure Index and holds 94 stocks in its basket with concentration on the top two firms at 8% each. Other firms hold no more than 4.9% share. From a sector look, financials dominates the fund’s returns at 41%, while energy and industrials round off the next two with double-digit exposure each (read: Guide to the 25 Cheapest ETFs).
The fund has gathered more than $1.4 billion in its asset base since its debut on Aug 7 and trades in a heavy average daily volume of about 3.3 million shares.
Barclays ETN+ FI Enhanced Global High Yield ETN Series B
This ETN option debuted on Mar 15 and has accumulated around $1.6 billion in its asset base. The product seeks to deliver two times (2X or 200%) the returns of the MSCI World High Dividend Yield USD Gross Total Return Index, which measures the performance of large and mid-cap stocks across 23 developed markets countries tracked by the MSCI World Index with higher-than-average dividend yields that are potentially both sustainable and persistent.
However, the fund trades in a lower average daily volume of 28,000 shares, which increases the cost of trading beyond the expense ratio of 0.93%.
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 >>