the magazine for etf advisors · in assets under management and has had some major swings over the...
TRANSCRIPT
LIFETIME ACHIEVEMENT
INNOVATIVEMOST
EQUITYGLO
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FIXED-INCOME COMMODITY ETF OF
MULTI-ASSET CURRENCY ALTERNATIVES INDES
BEST NEWSTRATEGIST U.S. EQUITY
MOSTGROUNDBREAKING ISSUER
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BEST NEW ETFINTERNATIONAL
ETF-FOCUSED
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RESEARCH TEAM BEST
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EYEAREQUITY BEST INDEX PROVIDER WEBSITE OF
BEST ONLINE BROKERAGE MOST INNOVATIVE
CAPITAL MARKETS ETF
DESK OF THE YEAR
BEST INDEX PROVIDER
ETF-FOCUSED INVESTORS OF
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MARKETMAKER
BESTOF ISSUEA P R I L 2 0 1 4T H E M A G A Z I N E F O R E T F A D V I S O R S ///////////////////////////////////////////////////////////
P U B L I S H E D BY
features
Volume 14 | No. 4 Contents
first annual etf.com awardsETFs represent an exciting and rapidly evolving corner of the financial markets. ETF.com, publisher of ETF Report, decided it was time to recognize the standouts in the field.
first lady of etfsETF Report spoke with the winner of the first-ever ETF.com Lifetime Achievement Award, Kathleen Moriarty, touching on everything from the start of the ETF industry to the percolating Bitcoin ETF.
the awards methodologyThese winners and finalists weren’t just drawn from a hat. In a three-tiered process, ETF.com started with open nominations and used two separate committees to decide on the winners.
and the Winners are …ETF Report announces the other winners of the ETF.com Awards, as well as listing the other finalists and explaining what sets each of the victors apart.
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© 2014 ETF.com. All rights reserved. The text, images and other materials contained or displayed are proprietary to ETF.com, except where otherwise noted, and constitute valuable intellectual property. No material from any part of any ETF.com publication, product, service, report, email or website may be downloaded, transmitted, broadcast, transferred, assigned, reproduced or in any other way used or otherwise disseminated in any form to any person or entity, without the explicit written consent of ETF.com. For permission to photocopy and use material electronically, please contact [email protected] or call 415-659-9029.
EVP, Global HEad of SalESFoster Wright, 646-867-4481
US PUbliSHEr, VP NortH amEricaN SalESNoel d’Ablemont Smith, 646-558-6985
rEPriNt SalESKevin Kelly, 646-582-9040
PrESidENt, aNalyticS & PUblicatioNS Matt Hougan
foUNdEr, cEo Jim Wiandt
Editor Drew Voros
maNaGiNG Editor Olly Ludwig
ProdUctioN Editor Heather Bell
coPy Editor Lisa Barr
crEatiVE dirEctor Jeannine Gaubert Pamoukdjian
GraPHic dESiGNEr Patrick Hamaker
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Subscribe by contacting Lauren Paisley at [email protected] or by calling 415-659-9029. The annual subscription rate is $99.
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2 New etf launches iShares rolls out a Treasury floating-rate bond ETF—with no ex-pense ratio. Plus: Our monthly look at launches, filings and closures.
4 etf explainer: fXe Our ETF explainer focuses on the CurrencyShares Euro ETF from Guggenheim and how it’s fared in the last year.
6 Profile Cascade Financial Management is directing more assets into ETFs—and into portfolios from AthenaInvest.
32 sectors In review February saw every sector and subgroup register positive returns, except for telecommunications, which was down slightly.
34 Why I own: Dsum Hahn Investment Stewards’ Tyler Mordy explains why his firm sees PowerShares’ China bond ETF as a long-term holding.
36 etf Data Our monthly databank breaks down ETF returns for every market segment.
DePartmeNts
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powershares.com/forward | @PowerShares
PowerShares QQQ is based on the Nasdaq-100 Index®. The Fund will, under most circumstances, consist of all stocks in the Index. The Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization.There are risks involved with investing in Exchange-Traded Funds (ETFs) including possible loss of money. The funds are not actively managed and are subject to risks similar to stocks, including those related to short selling and margin maintenance. Ordinary brokerage commissions apply. Shares are not FDIC insured, may lose value and have no bank guarantee.Holding Weights as of 9/18/13: Microsoft 7.66%, Google 6.74%, Amazon.com 3.91%, Cisco Systems 3.65%, Intel 3.27%, Starbucks 1.59%. Holdings are subject to change.
Shares are not individually redeemable and owners of the shares may acquire those shares from the Funds and tender those shares for redemption to the funds in Creation Unit aggregations only, typically consisting of 50,000 shares.PowerShares® is a registered trademark of Invesco PowerShares Capital Management LLC. ALPS Distributors, Inc. is the distributor for QQQ. Invesco PowerShares Capital Management LLC is not affiliated with ALPS Distributors, Inc.
An investor should consider the Fund’s Investment objective, risks, charges and expenses carefully before investing. To obtain a prospectus, which contains this and other information about the QQQ, a unit investment trust, please contact your broker, call 800.983.0903 or visit www.invescopowershares.com. Please read the prospectus carefully before investing.
PowerShares QQQ looks to companies that are looking forward. That’s why the ETF invests in 100 of the world’s most revolutionary companies. Each is listed on the Nasdaq Stock Market® and includes household names such as Amazon.com, Starbucks, Microsoft, Intel, Cisco Systems, and Google. With all of these revolutionary companies in one fund, innovative investing is within your reach.
15% us fixed income
23%us equity
35% int’l equity
iShares rolled out its Trea-sury Floating Rate Bond ETF (TFLO) on Feb. 3 in an attempt to replicate the suc-cess of its $3.7 billion iShares Floating Rate Bond ETF (FLOT|A-99). TFLO tracks the Barclays U.S. Treasury Floating Rate Index.
At the same time, WisdomTree launched its own competing fund, the WisdomTree Bloomberg Floating Rate Treasury Fund (USFR); however, there is a key difference between the two.
BlackRock Fund Advisors, TFLO’s advisor, contractually agreed to waive its advisory fee of 0.15 percent through Feb. 28, 2015, ac-cording to a regulatory filing. By comparison,
iShares Treasury Floating Rate Bond ETF (TFLO)a floating-rate treasury bond with a difference
USFR has an annual expense ratio of 0.15%.Right now, investors are scouring the ETF
landscape for yields in a rising-interest-rate environment. Floating-rate bond ETFs were very popular in 2013, partly because of the yields they deliver, but also for the interest-rate-risk protection they provide. This year, these ETFs should only become more popu-lar as investors brace for the Federal Reserve to begin pushing interest rates higher. And the floating-rate Treasury funds are likely to offer the lowest credit risk in the space.
At least one more floating-rate Trea-sury ETF is in the works, with State Street Global Advisors filing for the SPDR Float-ing Rate Treasury ETF at around the same time WisdomTree and iShares made their initial filings.
TFLO Quick View
Issuer ishares
segment fixed income: u.s. Govt treasury floating Rate
expense ratIo 0.00%
structure open-ended fund
Date LauncHeD 2/3/2014
competIng FunD usfR
Source: ETF.com, Data and information as of 2/28/2014. ETF Filings sidebar covers launches and filings for the month of February.
NeW fuNDs
eTFLaunches
FeaTured eTF
etF FILIng actIvIty
LauncHes
InTERnaTIOnaL EQuITy
ishares currency Hedged msci eAfe
ishares currency Hedged msci Germany
ishares currency Hedged msci Japan
ishares enhanced international large-cap
ishares enhanced international small-cap
Powershares international BuyBack Achievers
Workplace equality
u.S. FIxEd InCOmE
ishares 2019 Amt-free muni term
ishares treasury floating Rate Bond
sPdR Barclays 0-5 year tiPs
Wisdomtree Bloomberg floating Rate treasury
COmmOdITIES
Gartman Gold/British Pound
Gartman Gold/euro
Gartman Gold/yen
aLTERnaTIVES
Advisorshares international Gold
seLecteD FILIngsARK disruptive innovation
db x-trackers managed municipal Bond
db x-trackers ultra-short duration Bond
Global x china Bond
Global x Guru international
infracap Active mlP
ishares msci Japan minimum Volatility
ishares msci qatar capped
ishares msci usA with em exposure
isharesBond 2017 corporate term
Kraneshares ftse emerging mrkts + All china
Reality shares isolated dividend Growth
sPdR msci eAfe quality mix
Wisdomtree europe dividend Growth
40-appsdreyfus
uscf Advisers
cLosuresGuggenheim enhanced core Bond
3% leVeRAGed
13% int’l fixed income
8% commodities
3% inVeRse
3% AlteRnAtiVes
ETFs40year-to-Date
By Heather Bell
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2 ETF.com/ETF Report
G L O B A L F I X E D I N C O M E | H E D G E S T R AT E G I E S | G E A R E D | I N F L AT I O N A N D V O L AT I L I T Y
Rising Interest Rates. If you’re concerned about them, you may have considered short-term bond funds. But short-term bond funds can still be signifi cantly impacted by rising rates.
Our innovative Interest Rate Hedged Bond ETFs go beyond short-term bond funds. They target a duration (measure of price sensitivity to interest rate changes) of zero.
Learn more by calling 866.296.3820 or visiting ProShares.com.
IGHG Investment Grade—Interest Rate Hedged ETFHYHG High Yield—Interest Rate Hedged ETF
As rates rise, will short-term bond funds let you down?
Investing involves risk, including the possible loss of principal. These ProShares ETFs entail certain risks, which include the use of derivatives (futures contracts), imperfect benchmark correlation, leverage and market price variance, all of which can increase volatility and decrease performance. Bonds will generally decrease in value as interest rates rise. High yield bonds may involve greater levels of credit, liquidity and valuation risk than higher-rated instruments. Narrowly focused investments typically exhibit higher volatility. These ETFs do not attempt to mitigate factors other than rising Treasury interest rates that impact the price and yield of corporate bonds, such as changes to the market’s perceived underlying credit risk of the corporate entity. These ETFs seek to hedge against the negative impact of rising rates by taking short positions in Treasury futures. These positions lose value as Treasury prices increase. No hedge is perfect. Because the duration hedge is reset on a monthly basis, interest rate risk can develop intra-month, and there is no guarantee the short positions will completely eliminate interest rate risk. There is no guarantee any ProShares ETF will achieve its investment objective.Carefully consider the investment objectives, risks, charges and expenses of ProShares before investing. This and other information can be found in their summary and full prospectuses. Read them carefully before investing. Obtain them from your fi nancial adviser or broker/dealer representative or visit ProShares.com. ProShares are distributed by SEI Investments Distribution Co., which is not affi liated with the funds’ advisor. © 2013 PSA 2013-5707
PS_ETFR_IGHG-HYHGcombo.indd 1 11/27/13 10:32 AM
Guggenheim’s Currencyshares euro etf
each month, we look at an eTF with a particularly interesting chart and explain the market forces behinds its performance. This month we look at Guggenheim’s currencyShares euro eTF (FXE|A-98), which has $210M in assets under management and has had some major swings over the past 12 months.
Source: Bloomberg. Data for 2/20/2013 to 2/20/2014.
IN DetaIl
ETF Explainer: fXe
Eurozone unemployment hits a new high in May, eclipsing 12%. Youth unemployment, a hot-button issue in the region, rises to 23.8% for the month.
The euro tumbles as ECB President Mario Draghi warns that more economic stimulus may be necessary to ward off the forces of “Japanese style” stagflation.
The euro drops as first-quarter eurozone GDP falls by 0.2% from the previous quarter, and by 1% from a year earlier. This compares with fourth-quarter GDP growth of -0.6%.
Eurozone inflation cools to just 0.7% in October, down 1.1% from a month earlier and well below the ECB’s target of 2%.
The euro catches a bid after a week of selling thanks to a $13 billion bailout package for Cyprus. The bailout will be repaid using taxes applied to savings accounts in excess of ¤100,000.
The euro rallies as GDP in the region showed positive growth for the first time since 2011, rising 0.3% from the previous quarter.
mar
5auG
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maY
15NoV
15
Jul
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9
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-2
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-4
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%
RetuRn
fxe etf
feB mAR APR mAy Jun Jul AuG seP oct noV dec JAn feB
2014
2.92%
Issuer Guggenheim
segment currency: euro
expense ratIo 0.40%
aum $210 million
competIng FunDs eRo, GBB
FxE Quick View
mar5
maY15
Jul1
NoV15
JaN9
By Paul Baiocchi
auG14
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4 ETF.com/ETF Report
BSVVanguard Short-Term Bond ETFA low-cost way to help your clients find more balance.
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Vanguard ETF Shares can be bought and sold only through a broker (who may charge a commission) and cannot be redeemed with the issuing Fund. The market price of Vanguard ETF Shares may be more or less than net asset value.
For more information about Vanguard ETF Shares, visit advisors.vanguard.com/bonds, call 877 279-1708, or contact your broker to obtain a prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.
© 2014 The Vanguard Group, Inc. All rights reserved. U.S. Patent Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623. Vanguard Marketing Corporation, Distributor.
Follow us @Vanguard_FA for important insights, news, and education.
HIGH nET WORTH FOCuSCascade’s pyramid-shaped, three-tiered model is designed to accommodate the needs of the high net worth investor. At its base is the operating portfolio, which is focused on income and liquidity, and includes cash and cash equivalents, short-term fixed income and absolute-return strategies. Retired clients who need income usually have more allocated to this portfolio than other clients.
Van Sant says he’s seen a huge trend toward ETFs in the operating portfolios of individual clients. A typical operating portfolio is a combination of a 50/50 split between iShares ETFs and actively managed BlackRock funds.
The capital appreciation portfolio, the middle tier, is what Van Sant describes as the “market exposure” portion of the client’s investment, with significant usage of ETFs.
Meanwhile, the top tier of the pyramid is the strate-gic portfolio, which is generally only available to high net worth clients since it is mostly illiquid assets. ETFs are largely absent from these portfolios due to their overwhelming focus on liquid investments, Van Sant says. Clients’ strategic portfo-lios include assets like hedge funds, public nontraded com-panies, options strategies and family properties.
But it’s how Cascade addresses that middle portion of the pyramid that’s perhaps the most interesting part of the model; it’s also reflective of a growing trend in the financial advisory business toward the use of strategists.
OuTSOuRCInG CapITaL appRECIaTIOnAlthough the freedom afforded its advisors to exercise their judgment is one of Cascade’s defining qualities, according to Van Sant, about three years ago, the firm’s advisors asked management to narrow down the selec-tion to what would be the “best of breed” platform strat-egies and money managers.
Not too long after that, Van Sant’s chance encoun-ter at a compliance meeting led to an introduction to and eventual partnership with the Greenwood Vil-lage, Colo.-based firm AthenaInvest Advisors LLC.
Founded by C. Thomas Howard, Ph.D., a profes-sor emeritus at the University of Denver’s School of Finance, the firm manages money according to a pat-ented behavioral research methodology. Athena itself
Cascade is a registered investment advisor, a broker-dealer and an insurance firm all rolled into one. Estab-lished in 1994 by financial industry veteran Myron Bagley, who will soon mark his 60th year in the field, Cascade’s day-to-day operations are overseen by Van Sant and Turner.
It was Turner, after joining the firm from Piper Jaf-fray in 1998, who led the firm’s shift to an investment advisory and wealth management model, Van Sant says.
Cascade’s 11 advisors operate with a great deal of freedom and flexibility, even though only two are inde-pendent contractors. According to Van Sant, the advi-sors “at a very high level” provide very similar services and implementation, but differ in the way they manage client money, with some managing it all themselves and others outsourcing much of that role. Every client, how-ever, gets a customized portfolio.
“As long as it’s legal and suitable, the advisors are really empowered to deliver what they feel is in the best interests of the client,” Van Sant said.
All of those individual advisors use ETFs in their investment management, with some operating all-ETF portfolios for smaller clients.
Currently, roughly 75 percent of Cascade’s clients are either close to or in retirement. Although the firm targets the high net worth investor space, with a typical minimum investment threshold of $1 million, there are some smaller clients, with some of the advisors setting their minimum investment level at $250,000. Van Sant puts the firm’s “sweet spot” at $2 million to $25 million, noting that Cas-cade is moving toward a multifamily-office structure.
DeNVer’s CasCaDe fINaNCIal maNaGemeNtmakes its home in the heart of the city’s bustling finan-cial district, located on 17th Street, which is also known as “Wall Street of the West.” With the administrative staff working in the suite’s large center space, and meet-ing rooms and offices located on the perimeter, the over-all effect is one of openness and connectivity.
That sense of transparency and access is much like exchange-traded funds, which offer those two elements to investors, which is why Cascade is embracing ETFs more and more. ETFs represent about $60 million, or about 15%, of the firm’s assets under management, but they’re a growing por-tion. President and Chief Financial Officer John Van Sant says he expects ETF assets to top $75 million by the end of the year, and
surpass the $100 million mark in 2015. “We’re definitely moving away from mutual funds;
we just feel ETFs are better from an implementation standpoint,” he noted.
“It’s just a very good solution for certain asset classes,” CEO David Turner agreed.
What’s really interesting, though, is how the vehicle structure has infiltrated the firm’s investments.
has close ties with the ETF world—after all, it’s the manager for the AdvisorShares Athena International Bear ETF (HDGI).
The two firms worked together closely for about a year to develop the model Cascade would implement before launching its portfolios about a year ago. There is currently about $23 million invested in the portfolios Athena manages for Cascade. The heads of both firms serve as the investment committee for the strategies, and meet on a monthly basis.
Athena Vice President Lambert Bunker describes his firm’s role as that of a “strategic equity partner,” and calls the relationship a “true strategic alliance.”
Turner agrees. “There was definitely an alignment with regard to how they feel about what goes on in the market and the ability for active management to help you make selections offering greater upside opportu-nity,” he said of the synergy between the two firms.
EndOWmEnTS & BEHaVIORaL FInanCEBunker says Athena uses behavioral factors at every step in its investment process, but that it takes an approach similar to endowments, separating out its long-term capital appreciation component from its short-term operating component.
“I think the endowment model allows us to dial up and down. It allows us to be very aggressive with the equity, but still manage within the client’s risk toler-ance,” Van Sant said.
Athena’s research has identified two ways to gener-ate returns: high-conviction individual stock positions; and the right exposure to the right markets.
“The traditional approaches are breaking down,” Bunker said, noting that the traditional 60/40 approach was fine when bonds and equities were delivering higher returns, but that recent trends like low yields and high correlations have undermined that. He believes imple-
Cascade’s alliance with strategist athenaInvest leads to plan for outperformance
by Heather bell
FIrm cascade financial management
FounDeD 1994
LocatIon denver
aum $400 million
aLL etFs? no
advisor Quick View
SuccessForOutsourcing
pROFILE
CEO David Turner (l) and President & CIO John Van Sant (r) oversee the day-to-day operations at Cascade Financial Management
Cascade’s bright and spacious offices are located in the heart of Denver’s financial district
6 april 2014 7ETF.com/ETF Report
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menting style boxes unnecessarily constrains active equity managers and leads to overdiversification, per-formance chasing and asset-class overlap—or “global mush,” as Bunker terms it.
Athena and Cascade have settled on three basic port-folio structures targeting different levels of risk—growth; moderate; and conservative. Athena implements and manages customized portfolios for Cascade’s clients after the advisor has decided upon a strategy and allocation.
Athena’s starting point at the endowment level is the National Association of College and University Business Officers database, which has information on the invest-ments and returns of institutions of higher education. It channels that raw data and its behavioral finance impli-cations into a tactical investment approach.
“In the tactical component, we want exposure to specific asset classes or markets. ETFs make a very good vehicle if we just want exposure, for example, to EAFE or small-cap or large-cap. They’re a very efficient way to do that—the trading costs are low; we don’t have to pay the active management fees for the market or asset class exposure,” Bunker noted.
“In certain circumstances, we want to be leveraged. Again, the ETF gives us a very easy way to get that lever-aged exposure,” he added. The firm actively manages its ETF exposure in the tactical component.
Because Cascade already has a fixed-income allo-cation targeting income in the operating portfolio, Bunker says the fixed-income exposure in the capital-appreciation segment is intended for capital preser-vation and maintaining purchasing power. “The net effect of this is that we buy ETFs that match up with specific portfolio objectives—SHV [iShares Short Trea-sury Bond (A|97)], STIP [iShares 0-5 Year TIPS Bond (B|99)], etc.,” he said.
Similarly, the firm will invest in an ETF like the Vanguard REIT ETF (VNQ|A-88) to achieve real estate exposure. However, it’s stopped using futures-based commodity ETFs due to the inconvenience K-1 forms represented for investors.
“We would prefer to use ETFs, but we had to be cog-nizant of tax issues,” Van Sant explained.
Finally, the alternatives sleeve consists of a combi-nation of managed futures strategies and the Athena-managed HDGI.
The firm will also use ETFs to create portfolios for smaller accounts and to provide short- to intermediate-term exposure when investors are building up their portfolios, Bunker says.
“For the smaller clients, definitely the implementa-tion is going to be around ETFs. As the client moves up in net worth, that’s where it makes sense to have a chunk of individual equities, and you’re going to implement ETFs more for the market exposure,” added Van Sant.
mORE ETFS, mORE aTHEnaFor the future, Cascade’s Van Sant and Turner see more ETFs in the firm’s investments and an expanding relation-ship with AthenaInvest.
“We’ve seen the slow trend of advisors moving away from mutual funds to ETFs, both with existing money and with new money. That trend is just going to con-tinue,” Van Sant said.
“We’ve got roughly $50 million in assets in mutual funds; I see that number just getting smaller and smaller, and that’s going to be reallocated to the ETF world. Organically, I just see that happening across the space with the advisors. The new money that’s going to be coming will be going into models like these, where you’re going to have anywhere from a 25-50% allocation into ETFs,” he added.
And there’s little doubt that a large portion of the increase in ETF exposure will come from the firm’s rela-tionship with Athena.
“Specifically, in the last six months, it’s really been taking off,” Van Sant noted.
He says he anticipates assets in the Athena models to grow from $23 million to $50 million by the end of the year, with annual increases of $25 million or more going forward.
Van Sant says he expects Cascade to increase its allocations to ETFs in the future
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To download a copy of the prospectus, visit http://pwr.sh/DBCp The funds are not mutual funds or any other type of Investment Company within the meaning of the Investment Company Act of 1940 and are not subject to its regulation. DB Commodity Services LLC, a wholly owned subsidiary of Deutsche Bank AG, is the managing owner of the funds. Certain marketing services may be provided to the funds by Invesco Distributors, Inc. or its affiliate, Invesco PowerShares Capital Management LLC (together, “Invesco”). Invesco will be compensated by Deutsche Bank or its affiliates. ALPS Distributors, Inc. is the distributor of the funds. Invesco, Deutsche Bank and ALPS Distributors, Inc. are not affiliated. Commodity futures contracts generally are volatile and are not suitable for all investors. An investor may lose all or substantially all of an investment in the funds.
DBCPowerShares DB Commodity Index Tracking Fund
DBC
win-ners
and the
are...
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We’re really excited about this award. I’m sure it came to you as no surprise, because your track record is impressive. Well, actually, it did come to me as a big surprise. I thought it would go to John Bogle for being sort of—weirdly—the impetus of the whole thing.
And yet, he hates ETFs. Exactly!
You have been involved in this industry from the very beginning. When was the very first time you heard the term “exchange-traded fund”? Originally, that wasn’t a term anybody used because we didn’t need to use that term. There weren’t that many different products, so we just called them what they were: SPDRs, Diamonds [SPDR Dow Jones Industrial Average Trust (DIA|A-70)], midcap [SPDR S&P MidCap 400 (MDY|A-57)], country baskets, iShares. It was sometime after iShares’ original launch of about 40 or 45 products; after that, there were enough of them that everybody felt that we needed a generic name.
That’s almost 10 years after the very first ETF came to market. Right. There just weren’t that many in the very beginning.
What appealed to you about this idea of bringing to market an unmanaged transparent portfolio? You helped Nate Most draft the regulatory paperwork for the very first ETF, the SPDR S&P 500 (SPY).
KaTHLEEn mORIaRTy’S namE IS SynOnymOuS WITH ETF InnOVaTIOn. a partner at the New York law firm Katten Muchin rosenman, she was there when Nate Most first put into motion his plans for the Spdr S&p 500 (SPY|A-97) more than two decades ago. SpY’s launch kick-started an entirely new industry that today includes more than $1.7 trillion in assets—and 1,500-plus eTFs—in the u.S. alone. always up for a new challenge, Moriarty has since then helped just about every issuer bring to market new ideas in eTF wrappers. Her reach extends from the original Spdrs to iShares’ initial beginning lineup to WisdomTree’s first self-indexed fund to proShares’ leveraged and inverse strate-gies. all that, at the very least, has earned Moriarty eTF.com’s first lifetime achievement award. as active as ever, she is now the lead attorney in the Winklevoss eTF Trust’s plans to bring to market another first: a bitcoin eTF. clearly, Moriarty is undeterred by naysayers who dismiss the viability of such a security. She is one of the legends of the fast-growing eTF industry, and makes it clear that while a lifetime achievement award is flattering, she’s not about to slow down.
LifetimeachievementFIRST Lady OF ETFs KaTHLEEn mORIaRTy
It was mainly Nate’s idea, which he had spoken to John Bogle about, which was, “Why don’t we trade mutual fund shares?” The advantage, it seemed to me, over a mutual fund was that you could trade it just like a stock. You could buy it from any broker. You didn’t have to buy it through, say, the issuer. If you go back 10 years, a lot more people only sold their own funds, so you always had to go through the issuer.
If you wanted to put a limit order on, or a stop order, you could do that. If you wanted to buy it in the middle of the day, you could do that. If you wanted to sell it in the middle of the day, you could do that. You weren’t constrained by the mutual fund once-only redemption NAV price. You had a lot more flexibility. That’s what I thought was appealing. That’s initially what Nate thought as well.
How did you get involved in the process of bringing to market the first ETF? It’s actually a funny story. I started my career as a munic-ipal bond attorney in the 1980s. And one of the things my partner did, in addition to municipal bonds, was rep-resent a client, PaineWebber, who did municipal bond unit investment trusts. I became involved in investment trusts, and there weren’t many people who knew what they were because they’re a unique structure.
I later left that firm and went to a new firm in 1987, where a partner had been general counsel at PaineWeb-ber, and knew about PaineWebber’s unit trust. We had worked together for a little bit before. One day he was over at the Amex; he and Nate were talking, debating whether they should set it up as a mutual fund or as a unit trust. Nate wanted it simple and cheap, so he said, “Let’s do it as a unit trust.” And the partner said, “Oh, I know a person who knows what unit trusts are.” He called me.
Did you ever anticipate that the ETF market would grow to more than $2 trillion in assets globally?Nobody did, not even Nate. Nate was one of the biggest optimists I’ve ever met. But I don’t think even Nate thought it would grow that big. When we launched SPDRs, we were hoping for $1 billion within a year. I’m not sure we hit that number the first year, but we were hoping for it for credibility.
Nate was actually really hoping for $2 billion, because he thought that would make us very estab-lished. No one had an idea that it would get to be as big as it became, or certainly that it would create an entire industry, or that the entire industry would have as much money as it does.
When you look back, what do you think is your biggest accomplishment in this industry? What are you most proud of?I’m most proud of having been able to be involved in so many of the products, and of continuing to be involved in the industry to keep it innovative. It’s a great indus-try to be in, so I’m proud of the whole thing, really.
Do you have a tally of how many products you’ve been directly involved with? It depends on how you count. But it’s got to be at least 15 issuers. SPDRs, ... iShares, WisdomTree, ProShares, IndexIQ , FocusShares—it’s a lot. Typically, I’ve been involved with any innovative idea. From the first fund to iShares—where it was among the first to do an open-end fund-based ETF, rather than a unit trust-based ETF; to WisdomTree, when it was the first to self-index a fund to ProShares, when it was the first to offer inverse and leveraged funds. There was also gold [SPDR Gold Shares (GLD|A-100)]. I’ve been involved with just about every innovation in ETFs.
So any time somebody needs a trailblazer for a new idea, they call you? They tend to now, yes. Sometimes it gets very funny. I got one the other day that said, “We have an ETF of col-lectible comic books. I have a whole bunch in my attic.”
What would you say is the biggest asset you bring to this industry? Is it your experience with so many different corners of this industry, your expertise with regulation? I think it’s the whole package. I basically know the underlying premises of this industry. When you get people joining this industry more recently, when every-thing is already set up, they don’t necessarily have to know how it all works, as long as it does work.
But in the very beginning, when we first started, you had to know, because we had to put it together. In that case, we also had to know what the legal underpin-nings were to talk with regulators. It’s my experience that gives me the ability to represent any number of people. It’s not just ETF issuers; it’s index providers and
I’m mOST pROud OF HaVInG BEEn aBLE TO
BE InVOLVEd In SO many OF THE pROduCTS
by cinthia Murphy
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14 ETF.com/ETF Report
high-frequency traders who deal with ETFs, all kinds of people in the industry. I’ve gotten a lot of perspective from different people.
Is there anything that, in hindsight, you wish you’d done differently as it relates to ETFs? Any tough lessons you learned along the way? Yes. The tough lesson I’ve learned is really a lesson about me. Sometimes I could have been more forceful when I knew I was right, and the client didn’t want to agree with me. And so I said, “All right. It’s your money and your show. Go ahead.” And then it would turn out that, if we had done it my way, it would have been a lot faster and a lot cheaper. I’ve learned to be more insistent, say-ing “Look, you’re hiring me for my expertise.”
Who would you say has influenced you the most in this industry? I would say it was Nate [Most]. He was a mentor. He was a colleague. The fact that we were 40 years apart didn’t bother him in the least. And he was someone who was very smart and very creative. But he was always willing to listen to other people, because he could learn from other people. And he was very modest. He never bragged about himself, but he was on top of everything. And he loved what he did. He was a very happy man. I was in-credibly fortunate to have spent as much time with him as I did. And in a way, I kind of considered him like a grandfather, although that isn’t quite the right word. But he was somebody of that stature—somebody really important to me.
You’re currently involved with the development of a Bitcoin ETF. In a way, when we look back at SPY, and now we look forward to a Bitcoin ETF, we’re looking at the evolution of granularity in ETFs. That’s true.
Is more and more granular exposure the future? What people realize—and I think Nate knew this all along—was that he was creating a package and a dis-tribution tool. It wasn’t just that he was creating an ex-change-traded portfolio of securities; he was creating a mechanism to package a pool of something and sell it on
a stock exchange in a way that would be available to any-one who was entitled to buy stocks on a stock exchange.
I think that’s why he chose SPDR to be first, because he wanted something that would have the most appeal to the broadest group of people, and have the most cred-ibility. He chose the S&P 500 because institutional in-vestors and retail valued that, whereas he could have started out with Diamonds, but he knew that the insti-tutional investors didn’t really care about the Dow. He picked shrewdly, the most appealing to everyone.
How do you think a Bitcoin ETF fits into this environment where investors are faced with an ever-growing number of funds? At the end of the day, how credible is an investable product that’s tied to a crypto currency susceptible to hacking, and one that lacks regulatory oversight? Before we agreed to take on the representation of that product, we spent a long time looking into the under-pinnings of Bitcoin. Now, obviously, I’m not going to tell you that I trained myself with a mathematician so I could understand all of the algorithms. But we spent a lot of time talking to people who understand those algorithms, as well as a lot of other people, and did a lot of research on our own. We have discovered that it’s a mathematically-based system.
Yes, there are ways you can corrupt, not the sys-tem, but you can steal Bitcoins, or you can dupe people with Bitcoins, or a whole host of things that you can do that are bad. But the system, per se, is not a bad sys-tem. There just can be a lot of bad actors involved. Our thought was that, given that it wasn’t inherently “poi-soned,” we could work with people who wanted to be responsible about it, and who wanted, in fact, to start getting some regulation involved because they saw this is an interesting method of payment for the future.
I don’t think anybody who really is involved with it on a serious basis thinks it will become the univer-sal exchange mechanism of the world, but it would be one method that might have a lot of appealing ben-efits in certain circumstances. So, we were interested in getting involved with those people, and with regu-lators, to make it a good system that could be used to people’s advantage.
Any other thoughts you have about receiving this award? I’m unbelievably honored and excited. And I can’t quite believe it. I did say to Jim [Wiandt, ETF.com founder and CEO], “You’re saying this is a lifetime achievement award. If you think I’m going to retire after this, you’re wrong.”
SOmETImES I COuLd HaVE BEEn mORE FORCEFuL WHEnI KnEW I WaS RIGHT
* #1 in number of equity ETFs benchmarked to MSCI indexes, according to Bloomberg as of January 31, 2014. You cannot invest in an index. MSCI does not sponsor, recommend or endorse any ETFs or other products or trading strategies tracking any MSCI index. ©2013 MSCI Inc. All rights reserved.
nsight.
#1 INDEX PROVIDER FOR THE ETF MARKETPLACE *
Before you can evaluate ETFs, it’s essen al to evaluate the indexes they are built on. With me culous research and deep market knowledge, MSCI gives you con dence that you are working with trusted intelligence.
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etf ETFOF the
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DXJ epitomizes everything that’s good about exchange-traded funds. At the start of 2013, investors around the world were buzzing about Japan. Newly elected Prime Minister Shinzo Abe announced bold plans to rein-vigorate the moribund Japanese economy through extraordinary measures—even by U.S. standards—of quantitative easing.
One big piece of “Abenomics” was to devalue the yen to support Japan’s export-oriented economy. Hedge funds around the world clamored to get into the so-called trade of the year—going long Japanese stocks while shorting exposure to the yen.
A few years ago, that would have been the extent of it—hedge funds would have capitalized on this trade while the rest of us would have looked on wistfully from
tors liked the unique combo, and after launching in April, SRLN gathered more than $590 million in assets for 2013.
Why would investors need an actively managed bank loan ETF? They already have a perfectly good and lower-cost index-based bank loan ETF in the Power- Shares Senior Loan Portfolio (BKLN|B), which charges 0.66% vs. 0.90% for SRLN.
Simple: One of our big concerns is that investors don’t understand the bank-loan space. By layering Black-stone’s active management on top of an already-attractive asset class, SRLN pro-vides a real choice that could be valuable in the years to come.
ETF investors entered 2013 with a big problem: How do you find income in a near-zero interest rate environment? The answer came in many forms: bank loans, junk bonds and emerging markets debt among others.
Into this perfect storm of demand came the SPDR Blackstone / GSO Senior Loan ETF (SRLN|B).
The fund–offering that magic com-bination of high yields and low-interest-rate risk—broke new ground by combin-ing State Street Global Advisors’ (SSgA’s) expertise in ETF management with the active management expertise of GSO Cap-ital Partners, the credit analysis group of private equity giant Blackstone. Inves-
ISSUERSSgA
AUM$616 million
EXPENSE RATIO0.90%
SEGMENTFixed Income: Global –
Corporate High Yield
Floating Rate
db X-trackers Harvest CSI
300 China A-Shares (ASHR)
PowerShares Senior
Loan Portfolio (BKLN)
iShares Core MSCI
Emerging Markets (IEMG)
Vanguard Total World
Stock Market (VT)
db X-trackers Harvest CSI
300 China A-Shares (ASHR)
Vanguard Total Int’l Bond
(BNDX)
WisdomTree Bloomberg U.S.
Dollar Bullish Fund (USDU)
Vident International
Equity ETF (VIDI)
WisdomTree Japan Hedged Equity Fund (dxJ) SpdR Blackstone / GSO Senior Loan ETF (SRLn)
dxJ VS. EWJ SLRn VS. BKLn
RetuRn%50
40
30
20
10
0
-10
RetuRn%3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0JAn feB mAR APR mAy Jun Jul AuG seP oct noV dec
2013
APR mAy Jun Jul AuG seP oct noV dec JAn feB2014
DXJ
SRLN
EWJ
BKLN
FInaLISTS FInaLISTS
ISSUERWisdomTree
AUM$12.1 billion
EXPENSE RATIO0.48%
SEGMENTEquity: Japan – Total Market
dETaILS
dETaILS
the sidelines. After all, managing an FX hedge is complex and time-consuming. But DXJ offered yen-hedged exposure to Japa-nese stocks in a simple package, with a fee of just 0.48 percent per year.
Investors bought in: DXJ was the sec-ond-most-popular ETF of 2013, pulling in more than $9.5 billion in net flows. And investors were rewarded: DXJ ended the year up 41.86 percent, while the un-hedged iShares MSCI Japan ETF (EWJ|B-97) rose just 26.48 percent, highlighting just how much of a difference currency hedg-ing can make.
For opening up the concept of currency hedging for investors—and allowing inves-tors around the world to profit—DXJ is ETF.com’s ETF of the year for 2013.
Source: Bloomberg. Data for 1/2/2013 to 12/31/2013. Source: Bloomberg. Data for 4/4/2013 to 3/10/2014.
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18 ETF.com/ETF Report
CLS Investments
Good Harbor Financial
Main Management
Sage Advisory
HEADQUARTERSPalo Alto, CA
AUM$500 million
FInaLISTS
FInaLISTS
dETaILS
dETaILS
BlackRock’s iShares
Deutsche Bank
EG Shares
FlexShares
HEADQUARTERSMalvern, PA
AUM$342 billion
Vanguard led all ETF issuers for net inflows in 2013, pulling in nearly $55 billion. Total assets under management ended the year at $334 billion, putting the Malvern, Pa.-based firm within striking distance of State Street Global Advisors, the second-largest ETF is-suer at $392 billion in assets.
Vanguard succeeds by doing one thing well: Offering low-cost, well-run and intel-ligently designed ETFs that provide broad-based exposure to important areas of the market. It also has a loyal client base that invests regularly in its funds regardless of market conditions.
But Vanguard deserves credit for far more than that. It broke new ground in 2013 by be-
Wealthfront Investment Management rep-resents a fundamental threat to the aver-age financial advisor. The venture-capital-backed firm offers well-designed ETF-based portfolios managed by Chief Investment Officer Burton Malkiel. Investors answer a few risk-profiling questions online, enter an email address, and Wealthfront pro-vides an intelligently designed portfolio. It will rebalance that portfolio regularly and apply sophisticated tax-loss harvest-ing strategies to boot.
Moreover, for the first $25,000 in assets, Wealthfront charges a manage-ment fee of exactly 0.00% per year. It
ing the most aggressive ETF issuer advocating for investors to diversify their fixed-income holdings overseas. The fund giant launched the Vanguard Total International Bond ETF (BNDX), the first currency-hedged, broad-based and low-cost international bond ETF on the market, at a fee of just 0.20 percent a year.
Further, it put its money where its mouth was, creating an international fixed-income sleeve for all of its target-date funds—a move that could change the way investors look at fixed-income investing forever.
For this, and for its relentless efforts to drive down the cost of investing, Van-guard deserves its award as best ETF is-suer of the year.
tacks on exactly $0 in custody fees and $0 in commissions on trades, making it the best advisory solution for small investors … ever. Fees don’t rise much for the rest of us: Management fees above $25,000 in assets are just 0.25% per year.
The firm is the fastest-growing soft-ware-based advisory solution in the world and currently has more than $500 million in assets under management. Not surpris-ingly, it has proven especially popular with younger investors.
Exceptional ETF portfolios with tax efficiency and extraordinarily low fees? What’s not to love?
The Vanguard Group
Wealthfront Investment management
StRAtegiStetf
etf iSSuerOF the YeAR
OF the YeAR
/ECON
The World’s Leading Authority on Exchange-Traded Funds
21april 201420 ETF.com/ETF Report
KraneShares CSI China
Internet (KWEB)
Market Vectors Israel (ISRA)
Robo-Stox Global Robotics
and Automation (ROBO)
WisdomTree Emerging Mkts
Consumer Growth (EMCG)
Vident International
Equity ETF (VIDI)
ISSUERDeutsche Bank
AUM$166 million
EXPENSE RATIO0.82%
SEGMENTEquity: China -
Total Market
FInaLISTS
dETaILS
ISSUERSSgA
AUM$616 million
EXPENSE RATIO0.90%
SEGMENTFixed Income: Global
- Corporate High Yield
Floating Rate
iShares Liquidity
Income (ICSH)
Market Vectors Emerging Mkts
Aggregate Bond (EMAG)
ProShares High Yield – Interest
Rate Hedged (HYHG)
Vanguard Total
Int’l Bond (BNDX)
FInaLISTS
dETaILS
iShares Enhanced U.S.
Large Cap ETF (IELG)
Global X MLP and Energy
Infrastructure ETF (MLPX)
Horizons S&P 500 Covered
Call (HSPX)
Renaissance Capital IPO
ETF (IPO)
ISSUERiShares
AUM$287 million
EXPENSE RATIO0.15%
SEGMENTEquity: U.S. - Total
Market Growth
dETaILS
FInaLISTS
ISSUERDeutsche Bank
AUM$166 million
EXPENSE RATIO0.82%
SEGMENTEquity: China -
Total Market
Horizons S&P 500
Covered Call (HSPX)
ProShares Investment Grade –
Interest Rate Hedged (IGHG)
WisdomTree Barclays U.S.
Aggregate Bond Negative
Duration (AGND)
Vanguard Total International
Bond (BNDX)
FInaLISTS
dETaILS
ETF investors love China. At the end of 2013, there were 35 different ETFs provid-ing exposure to China. Collectively, they held more than $10 billion in assets, and included everything from pure currency funds to equity, bond, and leveraged and inverse products.
So why does the world need another China-focused ETF? Simple: Because the db X-trackers Harvest CSI 300 China A-Shares ETF (ASHR) offers investors the first-ever direct exposure to the domestic Chinese equity market. And that matters.
The Chinese equity markets can be puz-zling. There are shares intended for for-eigners, and shares reserved for domestic
The iShares MSCI USA Quality Factor ETF (QUAL) is one of the most unique ETFs to launch in recent years. The fund was devel-oped by BlackRock/iShares in partnership with the Arizona State Retirement System (ASRS), a $23 billion pension fund with a history of innovative thinking.
ASRS had been working with indexer MSCI to employ factor analysis to enhance return and reduce risk. MSCI’s factor indexes capture six equity risk premia that help ex-plain a stock’s returns: value, size (small cap), momentum, low volatility, dividends and quality. ASRS wanted to have tools it could use to over- and underweight these six factors in its portfolio based on market conditions.
investors. Until recently, domestic shares (called “A-shares”) were all but off limits to U.S. investors. Deutsche Bank was able to use its global reach to secure a so-called qualified foreign institutional investor quota that allows it to invest directly in lo-cal markets.
This could end up mattering a lot in the years to come. Many of the most entrepreneurial companies in China are only listed on the A-share market. As Chi-na goes from an export-oriented econo-my to one focused on domestic consump-tion, the A-share market might well be the place to invest. If that happens, ASHR will be ready.
In years past, ASRS would simply have hired a firm to manage a separate account. But the pension giant saw the liquidity ad-vantages offered by ETFs and worked with iShares to launch the fund (and three others), seeding QUAL with $100 million in assets.
iShares priced the fund at the institu-tional level of just 0.15 percent, putting high-quality factor-based strategies within reach of everyday investors at pension-level pricing.
With four funds launched by iShares for ASRS, why did QUAL rise to the top? Not only is it the biggest fund of the bunch, but MSCI’s research suggests that over long periods of time, quality is the highest-returning factor of all.
gRoundBReAkingmOSt
neW ETFdb x-trackers Harvest CSI 300 China a-Shares Fund (aSHR)
iShares mSCI uSa Quality Factor ETF (QuaL)
u.S. equitYBeSt neW
eTF
We’ve already written about the db X-trackers Harvest CSI 300 China A-Shares ETF (ASHR) as the most groundbreaking new ETF of 2013. It also won Best New In-ternational/Global Equity ETF of 2013.
What’s the difference? Groundbreak-ing equals innovative. ASHR won that award because Deutsche Bank figured out the first way to gain exposure to Chinese A-shares without the use of derivatives. Winning an award as the “best” means something altogether different: It means providing new and useful exposures that help investors achieve better results.
How do A-shares fit that bill? For start-ers, the A-share market includes some of
After winning best new ETF of 2013, it’s no surprise that SRLN got the nod as best new fixed-income ETF of 2013 as well. As we wrote earlier, the combination of the right exposure—short-term, high-yield-ing debt—and Blackstone / GSO’s active management overlay creates a unique so-lution fine-tuned for today’s market, with its devastatingly low yields.
You can see the power of the GSO ac-tive overlay by comparing SRLN with its much larger, index-based competitor, the PowerShares Senior Loan Portfolio (BKLN): While the two funds turned in nearly identical performance in 2013 (since SRLN launched in April), SRLN ex-
the more innovative and entrepreneurial firms in China. As investors focus on the growing power of the Chinese consumer, ASHR fits the bill.
But there’s more to the A-share market that makes it interesting right now. For instance, valuation. Historically, A-share markets have traded at a sharp premium to Hong Kong-listed shares. But over the past year, that’s flipped to a discount, making the A-share market attractive in a whole new way.
This unique opportunity has started catching the interest of all types of ETF in-vestors—including institutions. 2014 looks to be an interesting year for ASHR.
hibited much lower drawdowns during market pullbacks.
Will active management pay off over the long haul for SRLN’s investors? That depends in part on how important credit analysis becomes—2013 saw few defaults. If credit starts to matter, the appeal of GSO’s active credit overlay may overwhelm SRLN’s slightly higher expense ratio (0.90 percent versus 0.66 percent) and drive more assets into the smaller fund.
At the very least, we’re always in favor of giving investors a choice, and SRLN of-fers investors an intriguing alternative to the dominant fund in the space.
fixed-incomeBeSt neW
etF
inteRnAtionAL/gLoBAL equitY
BeSt neW
etFdb x-trackers Harvest CSI 300 China a-Shares Fund (aSHR)
SpdR Blackstone / GSO Senior Loan ETF (SRLn)
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22 ETF.com/ETF Report
Credit Suisse Commodity
Rotation ETN (CSCR)
Credit Suisse Gold Shares
Covered Call ETN (GLDI)
iShares Dow Jones-UBS
Roll Select Commodity
Index Trust (CMDT)
ISSUERFirst Trust
AUM$5 million
EXPENSE RATIO0.95%
SEGMENTCommodities:
Broad Market
FInaLISTS
dETaILS
CurrencyShares Singapore
Dollar Trust (FXSG)
PIMCO Foreign Currency
Strategy ETF (FORX)
ISSUERWisdom Tree
AUM$37 million
EXPENSE RATIO0.50%
SEGMENTInverse Currency:
Basket - Global Ex-US
FInaLISTS
dETaILS
2013 was a good year for commodity ETF innovation. Though just a handful of funds launched, they offered truly unique expo-sures. From a covered-call gold ETF to an iShares product that offers enhanced roll strategies, there were solid improvements across the commodity board.
The First Trust Global Tactical Com-modity Strategy ETF (FTGC) rose to the top by offering two important innovations in one package. First, it is the first actively managed commodity ETF to hit the mar-ket, with a strategy that aims to limit vola-tility while maximizing upside returns. Second, it’s the first commodity ETP to be structured as a 1940 Act fund.
One of the most popular calls on Wall Street in 2014 is a bullish bet on the dollar. With the eurozone a mess and Japan devaluing, the greenback is the best house in a bad neighborhood. That makes the WisdomTree Bloomberg US Dollar Bullish Fund (USDU) the right fund at the right time.
Historically, investors have relied on the PowerShares DB US Dollar Bullish Fund (UUP|B-39) to bet on the dollar. UUP tracks the trusty old, widely used U.S. Dol-lar Index. The problem is that the U.S. Dol-lar Index was created in 1973 following the end of the Bretton Woods agreement … and basically hasn’t changed since. That
If fund structure sounds boring, con-sider this: Most commodity futures ETFs are structured as commodity pools. That means all positions are marked-to-market at year-end, meaning investors must pay taxes on gains whether or not they sell. Moreover, all gains are taxed as 60% short-term and 40% long-term gains, creating a high blended tax rate. FTGC appears to avoid all that and be treated like any other equity.
FTGC also distinguishes itself by not issuing K-1s. As any advisor knows, K-1s can make client taxes difficult. By com-bining active management and potential-ly greater tax efficiency, FTGC looks like a winner.
means it tracks just six currencies, and is so dominated by the euro (58% of the port-folio) that nothing else really matters.
USDU tracks a trade-weighted index that measures the U.S. dollar against a truly diversified basket of currencies. The euro is still the largest holding, but it’s only 32% of the portfolio. Other critical trade partners with the U.S. get boosted weights including Canada (12% of the portfolio), Mexico (10%) and other emerging economies like China, Brazil and South Korea.
In today’s global age, you need a tru-ly global currency ETF, and that’s what USDU provides.
First Trust Global Tactical Commodity Strategy Fund (FTGC)
WisdomTree Bloomberg u.S. dollar Bullish Fund (uSdu)
commoditYBeSt neW
eTF
cuRRencYBeSt neW
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Incisive interviews with high-profile investors & strategists
22 IndexUniverse.com/ETF Report
What are some of the potential macroeconomic scenarios you see unfolding in the near
future, and what should investors do in these possible scenarios?Everyone understands that the pricing in the capital markets is reflective of the fi-nancial repression, quantitative easing, zero rates and everything else that goes with that. The big issue of the day is, When quantitative easing ends, what’s going to happen in the bond market, and in the capital markets, generally? In a sense, this is a two-part question because it largely depends on how you think quantitative easing is going to end.
For instance, according to the Fed’s hopes and dreams, QE is going to end in a strong, robust economic prosperity, lots of job creation, etc. Under those types of con-ditions, investors should be limiting inter-est-rate exposure, and favoring the credit side of the fixed-income markets, which is to say corporate bonds, bank loans, maybe some high-yield paper. Non-agency mort-gages work pretty well in that scenario too.
There’s another way that QE can end, and that’s not the way the Fed intends it to, but in our estimation it’s more probable. To put a number to that probability, let’s say there’s a 25 percent chance it ends the way I just described—in a good way—and there’s a 50 percent chance it’s going to end badly.
Ending badly essentially means that the side effects of the medication are caus-ing more harm than ostensible benefits. Rather than seeing much in the way of labor market improvement, what we are actually seeing is a rather substantive run in pricing in asset markets, and to a certain degree we’re also seeing significant chang-es with respect to the issuance of high-yield bonds—the lower-quality ranges are being issued, toggle structures are coming to market again. Basically, we’re seeing conditions we haven’t seen since 2006, be-fore it [the financial crisis] all began.
Under a bad ending, the Fed is essen-tially forced to withdraw from QE with-out the economic recovery, and that will lead us to see higher rates. Those higher rates are going to be occurring against a
TAD RIVELLEBUCKLE UP: BUMPY ROAD AHEAD
The Federal Reserve has been signaling that it’s prepared to begin tapering its quantitative-easing programs, but what happens when QE ends is anyone’s guess. Tad Rivelle, TCW’s chief investment officer and managing director of the firm’s fixed-income group, argues that while there are a few possible scenarios that might unfold here, the most likely one does not involve a happy ending. Instead, Rivelle, who oversees more than $80 billion in fixed-income assets, told ETF Report’s Cinthia Murphy that the U.S. is more likely to be headed into a double-dip recession, albeit not severe, than into an economic boom in the near future.
Rivelle will be a keynote speaker at IndexUniverse’s Inside Fixed Income Conference Oct. 18 in San Francisco.
Tad Rivelle, CIO of TCW, sees the end of the Fed’s quantitative easing as likely the start of a mild recession.
By Cinthia Murphy
The latest news on ETF launches and strategies
16 IndexUniverse.com/ETF Report
BackBasics
GUIDE TO ETF TRADING
UNDERSTANDING THE CREATION AND REDEMPTION MECHANISMBack
BasicsTo
MSFTAAPL
900 SHARES
750 SHARES
THEAUTHORIZED PARTICIPANT
THEETF BASKET
The AP buys the
underlying shares that constitute a
creation unit
The ap delivers
underlying shares to the
etf issuer
ETFs now routinely represent 25% of the total dollar volume of securities traded in the United States. Why have ETFs taken off while their kiss-ing cousins, closed-end funds, have languished?
The answer—and the key to understand-ing how to trade ETFs—lies with the “creation/ redemption mechanism.”
WHAT IS THE CREATION/ REDEMPTION MECHANISM?The creation/redemption mechanism is the secret sauce that allows ETFs to trade close to their fair value. Though it’s a bit complex on the surface, it’s the single most important thing to under-stand about ETFs, and is relatively easy to grasp once we consider the problem, the solution and the mechanism that enable ETFs to work.
Objective research and data on 200+ ETF segments
U.S. EqUITY: TOTAl mARKET
PowerShares Dynamic Market PWC 0.60 130.5 18.90 11.76 -0.13
Vanguard Total Stock Market VTI 0.06 23,288.1 16.18 13.40 1.55
SPDR Dow Jones Total Market TMW 0.20 433.6 16.04 13.24 1.42
Schwab US Broad Market SCHB 0.04 1,117.2 15.92 - -
iShares Dow Jones US IYY 0.20 626.7 15.91 13.17 1.30
iShares Russell 3000 IWV 0.20 3,840.1 15.87 13.04 1.16
iShares S&P 1500 ISI 0.20 362.3 15.71 13.15 1.21
iShares MSCI USA EUSA 0.15 143.8 15.49 - -
FlexShares Morningstar U.S. Market Factor Tilt Index TILT 0.27 125.4 15.03 - -
WisdomTree Total Dividend DTD 0.28 300.1 13.54 14.73 1.14
iShares MSCI USA Minimum Volatility USMV 0.15 365.5 12.65 - -
WisdomTree Dividend Ex-Financials DTN 0.38 1,268.4 11.53 18.47 2.60
U.S. EqUITY: TOTAl mARKET gROwTh
Fidelity NASDAQ Composite ONEQ 0.31 184.1 19.83 14.53 3.75
iShares Russell 3000 Growth IWZ 0.25 356.3 16.32 14.46 3.01
U.S. EqUITY: TOTAl mARKET vAlUE
iShares Russell 3000 Value IWW 0.25 335.5 15.38 11.53 -0.87
U.S. EqUITY: ExTEnDED CAp
Vanguard Extended Market VXF 0.14 1,394.1 14.92 14.05 2.74
PowerShares FTSE RAFI US 1500 SmMid PRFZ 0.39 450.9 13.83 12.09 4.74
U.S. EqUITY: lARgE CAp
Guggenheim Russell Top 50 XLG 0.20 621.7 19.20 12.90 0.91
iShares S&P 100 OEF 0.20 4,991.8 18.26 13.14 0.81
Vanguard Mega Cap 300 MGC 0.12 455.5 16.97 13.05 -
Vanguard S&P 500 VOO 0.05 5,530.4 16.46 - -
SPDR S&P 500 SPY 0.09 118,000.0 16.43 13.14 0.98
iShares S&P 500 IVV 0.09 31,521.2 16.33 13.08 0.96
Vanguard Large-Cap VV 0.10 3,566.4 16.30 13.22 1.33
Vanguard Russell 1000 VONE 0.12 170.7 16.22 - -
iShares Russell 1000 IWB 0.15 6,533.0 16.20 13.14 1.12
iShares Morningstar Large Core JKD 0.20 290.6 16.19 12.66 2.19
Schwab US Large-Cap SCHX 0.04 931.0 16.18 - -
RevenueShares Large Cap RWL 0.49 159.1 15.74 12.90 -
PowerShares FTSE RAFI US 1000 PRF 0.39 1,450.0 14.26 11.37 1.95
Guggenheim S&P Equal Weight RSP 0.40 2,836.5 14.06 13.50 2.47
WisdomTree LargeCap Dividend DLN 0.28 1,275.6 13.76 14.75 0.78
iShares MSCI KLD 400 Social DSI 0.50 171.8 12.39 10.87 0.82
SPDR DJ Industrial Average Trust DIA 0.17 11,729.8 12.06 14.27 1.99
First Trust Large Core AlphaDEX FEX 0.70 340.5 11.55 12.91 1.63
PowerShares S&P 500 Low Volatility SPLV 0.25 2,475.1 11.06 - -
iShares MSCI USA ESG Select Social KLD 0.50 176.8 10.12 10.94 0.40
Barclays ETN+ S&P Veqtor ETN VQT 0.95 364.1 3.61 - -
U.S. EqUITY: lARgE CAp gROwTh
PowerShares QQQ QQQ 0.20 34,766.4 23.65 18.47 6.62
iShares Morningstar Large Growth JKE 0.25 470.9 20.81 14.87 2.65
Vanguard Mega Cap 300 Growth MGK 0.12 926.5 19.37 15.03 -
Vanguard Growth VUG 0.10 8,334.8 18.32 15.12 3.50
PowerShares Dyn Large Cap Growth PWB 0.61 174.7 18.21 13.42 0.84
Schwab US Large-Cap Growth SCHG 0.07 501.0 17.97 - -
iShares Russell Top 200 Growth IWY 0.20 367.2 17.54 14.99 -
iShares S&P 500 Growth IVW 0.18 7,336.8 16.86 14.77 3.40
SPDR 500 Growth SPYG 0.20 235.8 16.68 15.29 3.90
iShares Russell 1000 Growth IWF 0.20 16,586.2 16.62 14.54 2.99
Guggenheim S&P 500 Pure Growth RPG 0.35 341.0 14.00 16.70 5.52
First Trust Large Growth AlphaDEX FTC 0.70 127.7 8.46 11.74 -0.15
U.S. EqUITY: lARgE CAp vAlUE
iShares S&P 500 Value IVE 0.18 4,487.1 15.65 11.22 -1.65
iShares Russell 1000 Value IWD 0.20 12,991.1 15.61 11.63 -1.01
SPDR S&P 500 Value Index SPYV 0.20 103.6 15.59 11.45 -1.36
PowerShares Dyn Large Cap Value PWV 0.59 452.5 15.26 14.14 3.34
Vanguard Mega Cap 300 Value MGV 0.12 424.3 14.82 11.05 -
Schwab US Large-Cap Value SCHV 0.07 413.8 14.50 - -
Vanguard Value VTV 0.10 6,599.1 14.08 11.35 -1.01
iShares Morningstar Large Value JKF 0.25 248.4 13.43 10.92 -2.64
First Trust Large Cap Value AlphaDEX FTA 0.70 262.1 13.25 13.73 2.68
U.S. EqUITY: mID CAp
iShares Russell Midcap IWR 0.21 6,178.1 13.82 14.10 2.13
SPDR S&P MidCap 400 MDY 0.25 10,111.3 13.65 14.03 3.47
iShares S&P 400 MidCap IJH 0.21 12,318.4 13.64 14.12 3.68
iShares Morningstar Mid Core JKG 0.25 157.6 13.19 15.62 3.09
Schwab US Mid-Cap SCHM 0.07 222.5 13.02 - -
Vanguard Mid-Cap VO 0.10 3,773.9 12.83 13.95 1.89
WisdomTree MidCap Dividend DON 0.38 383.5 11.82 15.41 3.62
WisdomTree MidCap Earnings EZM 0.38 154.8 11.39 15.13 5.29
First Trust Mid Cap Core AlphaDEX FNX 0.70 304.4 10.18 14.21 4.84
RevenueShares Mid Cap RWK 0.54 110.0 8.79 11.55 -
U.S. EqUITY: mID CAp gROwTh
Guggenheim S&P MidCap 400 Pure Growth RFG 0.35 529.1 14.67 17.91 9.65
iShares Morningstar Mid Growth JKH 0.30 170.2 14.38 14.99 1.48
iShares S&P Mid Cap 400 Growth IJK 0.25 3,091.0 14.05 15.75 5.03
Vanguard Mid-Cap Growth VOT 0.10 1,183.3 13.80 14.89 1.38
iShares Russell Mid Cap Growth IWP 0.25 3,296.2 13.68 14.55 2.34
U.S. EqUITY: mID CAp vAlUE
iShares Russell Midcap Value IWS 0.28 3,427.1 13.85 13.58 1.60
iShares S&P MidCap 400 Value IJJ 0.27 2,173.1 13.28 12.51 2.29
Vanguard Mid-Cap Value VOE 0.10 1,058.9 12.13 12.96 2.03
U.S. EqUITY: SmAll CAp
WisdomTree SmallCap Dividend DES 0.38 385.8 15.68 14.30 2.82
Schwab US Small-Cap SCHA 0.10 674.8 15.11 - -
Vanguard Small-Cap VB 0.16 4,423.1 15.06 14.36 3.51
iShares Russell 2000 IWM 0.23 18,200.1 14.49 13.06 2.27
RevenueShares Small Cap RWJ 0.54 120.4 14.38 13.47 -
Vanguard Russell 2000 VTWO 0.22 160.5 14.23 - -
iShares S&P SmallCap 600 IJR 0.22 7,960.2 13.89 15.08 3.21
SPDR S&P SmallCap 600 Index SLY 0.20 211.2 13.43 15.18 4.16
iShares Morningstar Small Core JKJ 0.25 135.5 12.86 12.60 2.54
First Trust Small Cap Core AlphaDEX FYX 0.70 159.5 12.71 14.41 3.46
WisdomTree SmallCap Earnings EES 0.38 154.1 12.70 13.11 5.42
U.S. EqUITY: SmAll CAp gROwTh
Vanguard Small-Cap Growth VBK 0.10 2,118.7 15.57 15.91 4.22
iShares Russell 2000 Growth IWO 0.25 3,866.3 14.25 14.35 3.11
SPDR S&P SmallCap 600 Growth SLYG 0.25 176.0 13.13 16.84 5.01
iShares S&P SmallCap 600 Growth IJT 0.25 1,651.6 13.10 16.60 3.90
U.S. EqUITY: SmAll CAp vAlUE
SPDR S&P SmallCap 600 Value Index SLYV 0.25 136.5 14.85 13.58 3.57
Vanguard Small-Cap Value VBR 0.21 2,128.3 14.78 12.66 2.65
iShares S&P SmallCap 600 Value IJS 0.29 1,876.1 14.58 13.65 2.51
iShares Russell 2000 Value IWN 0.37 4,227.5 14.42 11.64 1.32
FUND NAME TICkER ExP RATIO % AUM ($M) YTD % 3YR % 5YR %
U.s.-listed etfs by asset Class and year-to-date retUrn
› Data as of 09/30/2012› Exp Ratio is annual expense ratio› AUM is net assets in $US millions› YTD is year-to-date› 3YR and 5YR returns are annualized› Includes all U.S.-listed ETFs and ETNs
with assets of $100 million and above› Source: Morningstar
ETFDATA
iShares Morningstar Small Value JKL 0.30 176.3 13.65 13.92 4.86
U.S. EqUITY: mICRO CAp
iShares Russell Microcap IWC 0.69 470.2 19.60 11.49 -0.66
U.S. EqUITY: BASIC mATERIAlS
First Trust Materials AlphaDEX FXZ 0.70 175.3 16.17 12.83 3.78
Vanguard Materials VAW 0.19 667.3 13.36 11.30 0.97
Materials Select SPDR XLB 0.18 2,346.8 11.44 8.66 -0.18
iShares DJ US Basic Materials IYM 0.47 505.0 6.62 9.21 0.00
SPDR S&P Metals and Mining XME 0.35 995.5 -10.36 -0.69 -6.40
U.S. EqUITY: COnSUmER CYClICAlS
iShares DJ US Home Construction ITB 0.47 1,374.4 63.40 17.04 0.51
SPDR S&P Homebuilders XHB 0.35 1,914.3 46.42 19.78 4.58
PowerShares Dynamic Media PBS 0.63 153.2 25.57 16.32 1.62
iShares DJ US Consumer Services IYC 0.47 316.0 22.10 19.68 6.24
Vanguard Consumer Discr VCR 0.19 554.6 21.31 21.03 6.01
Consumer Discr Select SPDR XLY 0.18 3,343.2 21.12 21.26 6.69
SPDR S&P Retail XRT 0.35 809.4 20.30 24.02 11.42
First Trust Consumer Discr AlphaDEX FXD 0.70 461.1 11.52 15.96 4.22
U.S. EqUITY: COnSUmER nOn-CYClICAlS
Vanguard Consumer Staples VDC 0.19 1,137.4 12.41 15.37 7.89
Consumer Staples Select SPDR XLP 0.18 6,117.9 12.40 15.26 7.98
iShares DJ US Consumer Goods IYK 0.47 376.2 10.47 14.70 5.52
PowerShares Dyn Food & Beverage PBJ 0.63 114.2 5.90 14.55 4.65
First Trust Consumer Staples AlphaDEX FXG 0.70 357.2 3.31 13.09 5.37
U.S. EqUITY: EnERgY
PowerShares Dynamic Energy PXI 0.65 118.7 11.45 19.91 4.94
JPMorgan Alerian MLP ETN AMJ 0.85 5,219.3 7.82 23.95 -
Energy Select SPDR XLE 0.18 7,784.1 7.62 12.73 1.24
iShares Dow Jones US Energy IYE 0.47 1,092.1 7.20 11.50 0.82
ETRACS MLP Infrastructure ETN MLPI 0.85 394.7 6.81 - -
SPDR S&P Oil/Gas Expl & Production XOP 0.35 936.0 6.34 13.80 4.19
Vanguard Energy VDE 0.19 1,974.2 6.12 11.85 1.10
iShares DJ US Oil/Gas Expl & Production IEO 0.47 339.5 4.88 8.63 2.10
Alerian MLP AMLP 0.85 4,195.9 4.25 - -
Credit Suisse Cushing 30 MLP ETN MLPN 0.85 291.2 4.24 - -
First Trust Energy AlphaDEX FXN 0.70 136.8 1.66 8.11 -1.66
iShares DJ US Oil Equipment & Services IEZ 0.47 364.0 0.59 8.64 -3.56
PowerShares Dyn Oil & Gas Services PXJ 0.63 131.1 0.20 6.31 -5.82
SPDR S&P Oil/Gas Equipment & Services XES 0.35 304.0 -1.54 7.71 -2.49
First Trust ISE-Revere Natural Gas FCG 0.60 441.9 -4.01 1.85 -2.60
PowerShares WilderHill Clean Energy PBW 0.70 131.2 -14.94 -26.03 -27.95
U.S. EqUITY: fInAnCIAlS
PowerShares KBW Bank Portfolio KBWB 0.35 129.5 27.52 - -
iShares DJ US Financial Services IYG 0.47 273.4 24.19 1.02 -13.09
iShares Dow Jones US Regional Banks IAT 0.47 149.3 22.17 8.53 -8.83
Financial Select SPDR XLF 0.18 7,970.5 21.38 2.87 -12.64
iShares DJ US Financial IYF 0.47 469.6 20.26 4.96 -10.06
Vanguard Financials VFH 0.23 792.0 20.23 5.01 -9.65
PowerShares KBW High Div Yld Financial KBWD 1.32 157.1 19.97 - -
SPDR KBW Bank KBE 0.35 1,685.4 19.89 1.45 -12.86
SPDR KBW Regional Banking KRE 0.35 1,318.8 18.74 12.09 -5.84
First Trust Financials AlphaDEX FXO 0.70 184.4 16.13 9.15 -1.56
SPDR KBW Insurance KIE 0.35 107.9 14.98 7.12 -4.16
U.S. EqUITY: hEAlTh CARE
Market Vectors Biotech BBH 0.35 132.3 48.50 - -
First Trust NYSE Arca Biotechnology FBT 0.60 257.7 42.07 18.34 12.97
SPDR S&P Biotech XBI 0.35 682.8 40.68 20.30 10.35
iShares NASDAQ Biotechnology IBB 0.48 2,415.7 37.20 20.97 11.68
PowerShares Dyn Pharmaceuticals PJP 0.63 322.8 23.12 26.72 14.15
First Trust Health Care AlphaDEX FXH 0.70 626.4 21.09 19.14 9.98
PowerShares Dyn Biotech/Genome PBE 0.63 139.1 20.44 12.41 4.90
iShares DJ US Healthcare IYH 0.47 655.4 19.70 14.65 5.30
Vanguard Health Care VHT 0.19 975.0 19.60 14.87 5.48
iShares DJ US Pharmaceuticals IHE 0.47 438.9 18.97 21.11 12.26
SPDR S&P Pharmaceuticals XPH 0.35 418.2 18.05 20.87 13.54
Health Care Select SPDR XLV 0.18 5,022.5 17.44 14.11 4.59
iShares DJ US Medical Devices IHI 0.47 299.1 17.34 11.27 2.90
iShares DJ US Healthcare Providers IHF 0.47 226.1 16.90 17.92 3.11
PowerShares S&P SmallCap Health Care PSCH 0.29 132.1 16.54 - -
Market Vectors Pharmaceutical PPH 0.35 173.9 12.78 - -
U.S. EqUITY: InDUSTRIAlS
iShares DJ US Industrial IYJ 0.47 557.5 12.27 13.78 0.37
Vanguard Industrials VIS 0.19 498.4 11.24 13.44 -0.42
Industrial Select SPDR XLI 0.18 3,230.9 9.96 13.85 -0.03
First Trust Industrials/Producer Durables AlphaDEX FXR 0.70 117.7 7.82 11.27 0.30
iShares DJ Transportation Average IYT 0.47 526.6 -1.84 9.71 1.53
U.S. EqUITY: TEChnOlOgY
Technology Select SPDR XLK 0.18 10,696.9 22.48 15.57 4.21
Vanguard Information Technology VGT 0.19 2,586.3 19.60 14.43 4.56
iShares DJ US Technology IYW 0.47 1,866.5 19.35 14.10 4.43
iShares S&P North Amer Software IGV 0.48 633.5 17.89 13.59 5.09
First Trust DJ Internet FDN 0.60 482.0 17.43 18.27 7.95
iShares S&P North American Technology IGM 0.48 547.5 17.18 12.77 3.42
SPDR Morgan Stanley Technology MTK 0.50 170.3 16.88 9.32 1.11
Guggenheim S&P Equal Weight Technology RYT 0.50 123.4 10.43 10.13 1.00
First Trust Technology AlphaDEX FXL 0.70 237.3 7.59 10.14 -0.30
First Trust NASDAQ-100 Technology QTEC 0.60 123.9 7.50 10.96 2.54
iShares PHLX SOX Semiconductor SOXX 0.48 225.6 5.92 6.12 -4.26
Market Vectors Semiconductor SMH 0.35 282.4 3.98 - -
iShares S&P North Am Multimedia Netwrk IGN 0.48 233.8 -0.14 0.63 -5.47
U.S. EqUITY: TElECOmmUnICATIOnS
iShares DJ Telecommunications IYZ 0.47 640.4 23.78 14.01 -2.36
Vanguard Telecommunication Svcs VOX 0.19 555.0 20.72 14.50 0.89
U.S. EqUITY: UTIlITIES
First Trust Utilities AlphaDEX FXU 0.70 149.4 8.05 12.34 3.05
Vanguard Utilities VPU 0.19 1,150.7 4.36 12.38 2.48
Utilities Select SPDR XLU 0.18 6,158.9 4.11 11.96 2.19
iShares DJ US Utilities IDU 0.47 666.6 4.05 12.24 2.00
U.S. EqUITY: REAl ESTATE
iShares DJ US Real Estate IYR 0.47 4,877.9 16.24 19.09 1.12
Vanguard REIT VNQ 0.10 14,420.9 14.75 20.48 2.70
First Trust S&P REIT FRI 0.50 394.7 14.58 19.84 1.43
SPDR Dow Jones REIT RWR 0.25 1,928.2 14.24 20.25 1.56
Schwab U. S. REIT SCHH 0.07 379.4 14.12 - -
iShares Cohen & Steers Realty Majors ICF 0.35 2,855.4 13.36 20.67 0.54
iShares FTSE NAREIT Residential Plus REZ 0.48 226.0 9.05 22.48 4.47
U.S EqUITY: ThEmE
iShares FTSE NAREIT Mortgage Plus REM 0.48 900.3 29.59 11.27 -3.10
PowerShares Water Resources PHO 0.62 805.6 16.57 6.10 -1.30
U.S. EqUITY: AlphA-SEEKIng
PowerShares DWA Technical Leaders PDP 0.67 647.2 15.88 16.11 0.98
PowerShares Buyback Achievers PKW 0.71 185.4 13.57 16.57 4.42
U.S. EqUITY: hIgh DIvIDEnD YIElD
Vanguard High Dividend Yield VYM 0.13 4,088.4 13.90 14.49 1.59
Guggenheim Multi-Asset Income CVY 0.78 760.2 13.67 15.72 3.18
WisdomTree Equity Income DHS 0.38 570.5 13.33 16.48 -0.12
iShares High Dividend Equity HDV 0.40 2,223.7 12.75 - -
First Trust Mstar Dividend Leaders FDL 0.45 645.2 12.29 17.75 0.65
PowerShares Dividend Achievers PFM 0.60 282.0 12.20 13.96 0.83
Schwab US Dividend Equity SCHD 0.07 514.6 11.99 - -
Vanguard Dividend Appreciation VIG 0.13 11,890.5 10.94 12.76 2.91
First Trust Value Line Dividend FVD 0.70 501.7 10.69 14.59 3.83
SPDR S&P Dividend SDY 0.35 9,428.4 10.39 13.39 3.33
iShares DJ Select Dividend DVY 0.40 11,176.5 10.28 15.99 0.44
PowerShares HiYld Equity Div Achievers PEY 0.60 311.7 7.63 13.01 -3.74
glOBAl EqUITY
Vanguard Total World Stock VT 0.22 1,383.2 12.57 7.07 -
iShares MSCI ACWI ACWI 0.34 3,052.1 12.29 6.83 -
iShares MSCI All Country World Minimum Volatility ACWV 0.35 623.4 11.20 - -
iShares S&P Global 100 IOO 0.40 1,036.1 9.68 5.11 -2.64
glOBAl EqUITY Ex-U.S.
Vanguard FTSE All-World ex-US SmCap VSS 0.28 1,012.0 13.70 5.93 -
SPDR S&P World ex-US GWL 0.34 411.3 11.21 2.84 -4.37
Vanguard FTSE All-World ex-US VEU 0.18 7,349.7 10.33 2.97 -3.95
FUND NAME TICkER ExP RATIO % AUM ($M) YTD % 3YR % 5YR % FUND NAME TICkER ExP RATIO % AUM ($M) YTD % 3YR % 5YR % FUND NAME TICkER ExP RATIO % AUM ($M) YTD % 3YR % 5YR %
27november 201226 IndexUniverse.com/ETFReport
EACH ISSUE OF ETF REPORT FEATURES:
P U B L I S H E D BY
25april 201424 ETF.com/ETF Report
First Trust International
Multi-Asset Diversified
Income (YDIV)
ETRACS Monthly Pay
2xLeveraged Closed-End
ETN (CEFL)
ETRACS Monthly Pay
2xLeveraged Diversified
High Income ETN (DVHL)
ISSUERUBS
AUM$25 million
EXPENSE RATIO0.84%
SEGMENTAsset Allocation:
Target Outcome
FInaLISTS
dETaILS
First Trust Morningstar
Managed Futures
Strategy (FMF)
ISSUERALPS
AUM$53 million
EXPENSE RATIO0.95%
SEGMENTInverse Alternatives:
Volatility
There were so few new alternatives ETFs launched in 2013—just two for the whole year—that we almost eliminated this as an award category. But the category win-ner—the ALPS U.S. Equity High Volatil-ity Put Write ETF (HVPW)—stands out enough to deserve the nod. HVPW is designed to provide consistent and high income for investors—something that’s harder and harder to find in today’s mar-ket. It does this by writing puts against the 20-highest-volatility large-cap stocks, rotating those positions every 60 days. The fund aims to pay out 1.5 percent of its net asset value in cash at the end of each 60-day period, creating a targeted
Everything, including the kitchen sink. That’s the philosophy behind the new Etracs Diversified High Income ETN (DVHI). The note tracks the performance of the NYSE Diversified High Income In-dex, which covers 138 publicly traded securities that “typically pay high divi-dends or distributions.”
That exceptionally broad definition means that, subject to a few limits like liquidity, any security with a high yield gets in. The resulting multi-asset-class portfolio includes business development corporations, master limited partner-ships, REITs, stocks, muni bonds, high-yield debt, emerging markets debt, pre-
income yield of 9 percent per year. So far it’s done just that, paying out income like clockwork.
Perhaps because of its unique strate-gy, which may seem complicated to some investors, HVPW has yet to truly catch on in the market: Fund assets sit around $50 million. But inflows have picked up recently, with $15 million flowing into the fund in February 2014 alone. If the fund continues to hit its payout target, we’d expect more investors to arrive as well. Nine percent yields are nothing to sneeze at these days, and a more estab-lished track record may be all it takes to attract more assets.
ferred stock and more. The underlying index yields more than 7 percent and is designed with a diversification benefit in mind. With just about $25 million in as-sets, it may not look like a blockbuster, but it offers two key features that inves-tors are craving right now.
Yes, it’s an ETN, so you’re dealing with credit risk. But as we often point out, the intraday liquidity of ETNs miti-gates that risk substantially. As long as you’re willing to read the newspaper—or keep your eye on ETF.com, where we monitor the credit risk of every ETN—DVHI provides a real alternative in a yield-hungry world.
ETRaCS diversified High Income ETn (dVHI)
muLti-ASSet
ALteRnAtiveS
BeSt neW
BeSt neW
etF
etF
FInaLIST
dETaILS
aLpS u.S. Equity High Volatility put Write Index Fund (HVpW)
WisdomTree was one of the most success-ful ETF issuers last year, pulling in more than $14 billion in net fund flows on the back of spectacular growth of its Wisdom-Tree Japan Hedged Equity ETF (DXJ|B-51). This growth—and the spectacular head-lines that surrounded DXJ’s success—dis-tracted from WisdomTree’s other achieve-ment: being the most innovative ETF issuer of the year.
Headlining that innovation was the ex-pansion of WisdomTree’s currency-hedged equity lineup, with the launch of funds tied to Germany, South Korea, the United Kingdom and more. WisdomTree has brought currency hedging into the light
KraneShares offers proof that niche exper-tise can pay dividends in the ETF space.
The firm is devoted to offering investors improved access to the economic growth of China. And though opinions vary on China’s outlook, our Voting Committee thought enough of KraneShares’ new funds to call it the best new ETF issuer of the year.
The firm’s most popular new ETF—the KraneShares CSI China Internet ETF (KWEB)—ended 2013 with slightly more than $20 million in assets, but absolutely spectacular performance. From its launch in late July, KWEB rose more than 44% by year-end, while broad-based China ETFs were essentially flat. Investors caught on,
for ETF investors, and supported this with smart product introductions.
But currency wasn’t the only place WisdomTree pushed the envelope. The WisdomTree Bloomberg US Dollar Bullish Fund (USDU)—winner of best new cur-rency ETF of 2013—brought a much-need-ed update to funds tracking the calcified U.S. Dollar Index. The firm also broke new ground with zero- and negative-duration fixed-income products, designed perfectly to meet the needs of investors scared by the prospect of rising rates.
With its coffers buoyed by spectacu-lar asset growth, it will be exciting to see where WisdomTree goes in 2014.
and by March 1, the fund had more than $67 million in assets.
KraneShares’ second ETF—the Krane-Shares CSI China Five Year Plan ETF (KFYP)—has just $3 million in assets, but it’s well-designed for long-term investors. The fund invests in specific industries iden-tified by the government as growth areas in its five-year plan. Following the plan is a tried-and-true strategy for China investors, and KFYP could catch on yet.
For giving investors better tools for investing in one of the world’s most in-teresting economies, KraneShares earns the award of best new issuer of the year for 2013.
WisdomTree Investments
KraneShares
innovAtive etFmOSt
iSSueR OF the YeAR
etf iSSueRBeSt NeW
Deutsche Bank
FlexShares
Global X
ProShares
Cambria Funds
Horizons ETFs
HEADQUARTERSNew York
AUM$34 billion
HEADQUARTERSNEW YORK
AUM$68 million
FInaLISTS
FInaLISTS
dETaILS
dETaILS
Bloomberg Dollar Spot
FTSE Beyond BRIC
MSCI Emerging Market IMI
S&P 500 Stock Covered Call
Bloomberg
CRSP
EDHEC
FTSE
MSCI is arguably the most well-respected and well-established index provider in the world. With a dominant position among U.S. institutional investors—and a lead-ing position in ETFs—it’s known for well-designed, well-thought-out indexes.
It’s long been among the most innova-tive index providers, with 2013 in particu-lar featuring three such examples.
First, MSCI has been a voice of reason and leadership in the “smart beta” revolu-tion. Through its research and its bench-marks, it’s been at the forefront of estab-lishing what factor indexes really are and how they can be used in a portfolio.
Second, MSCI has been pushing people to stretch toward more complete exposure.
By focusing on revenue and business expo-sure rather than country of incorporation, MSCI’s new economic exposure index series go a long way toward clarifying the true sources of risk and return for international investors. This lets investors make country-by-country investments with greater preci-sion than ever before.
Consider an age-old question: Is Coca-Cola a U.S. company, because it is located here? Or is it global, considering the bulk of its revenue comes from abroad? Is Samsung really “South Korean” when most of its sales take place in the U.S. and Europe?
MSCI’s economic exposure indexes look through the earnings reports of leading com-
From emphasizing a transition from do-mestic benchmarks to the ACWI IMI (All-Country World Index – Investable Markets Index) to pushing for deeper exposure to small-caps in emerging market strategies, MSCI knows that investors have a world at their fingertips … and it’s there to help.
Finally, MSCI has been on the cutting edge of one of the most exciting avenues of index development: economic exposure indexes. Instead of looking at where each company is listed, these indexes look at where each company derives the bulk of its revenue.
These three items point to an index provider that understands its role in help-ing investors achieve their goals.
panies and apportion a firm’s market cap to specific countries based on how much rev-enue they derive in each.
The specific award-winning index—MSCI World with EM Exposure—looks at those companies deriving the majority of their revenue and growth from emerging mar-kets. The resulting index looks much differ-ent than a traditional (incorporation-based) emerging markets index, which is made up of companies that derive the majority of their revenues from developed countries.
Although there currently aren’t any ex-change-traded products tied to these bench-marks on the market, investors likely can expect to see some launching soon.
index prOvidermSCI
mSCI World with Emerging markets (Em) Exposure Index
index YeAROF THe
OF the YeAR
FInaLISTS
FInaLISTS
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26 ETF.com/ETF Report
/EFA
The World’s Leading Authority on Exchange-Traded Funds
29april 201428 ETF.com/ETF Report
E-Trade
Interactive Brokers
TD Ameritrade
Citigroup
Goldman Sachs
KCG
Jane Street
WallachBeth has grown from a relatively small player in the options market into a market-making giant whose innovative and consultative approach has been game-changing for the ETF industry.
While many firms share credit for helping ETF inves-tors understand ETF liquid-ity, few have been more dedicated to the task of edu-cating clients and improving outcomes than WallachBeth.
The prototypical agency broker, it uses strong Street connections to source liquidity for cli-ents, allowing the world’s best market
Our Voting Committee chose two winners for best online broker for ETF-focused inves-tors, and that makes sense: Both Charles Schwab and Fidelity are doing amazing things for ETF investors these days that are worthy of acknowledgment.
When Charles Schwab first launched its ETFs in November 2009, it came to market with a fantastic value proposition: the low-est-cost ETFs on the market, traded com-mission free. Commission-free trading was a game changer, opening up an entire new channel for ETFs with smaller investors.
Charles Schwab has expanded its lead by launching its ETF OneSource program, which offers commission-free trading on
makers to compete for each order. The agency approach—where WallachBeth is always on the side of the client—seems to resonate with advisors, who often
need hand-holding when they enter the fast-moving world of ETF trading.
Despite rising competi-tion in the agency space—and strong competitive pressure all around—Wal-lachBeth continues to gar-ner both solid client feed-back and a growing book of
business. If you’re trading ETFs, they’re worth a call.
more than 100 ETFs from six different issu-ers. It also offers market-leading ETF edu-cation and novel innovations like ETF-only 401(k) plans.
Not to be outdone, Charles Schwab’s chief competitor—Fidelity—has expanded its own series of ETFs and (more important-ly) has partnered with BlackRock’s iShares to offer commission-free trading on 65 dif-ferent iShares ETFs. By partnering with a market leader, Fidelity lets investors build incredible portfolios at extraordinarily low costs and rebalance them … for free.
This is a golden era for retail ETF inves-tors, and firms like Charles Schwab and Fi-delity deserve a lot of the credit.
WallachBeth
TIE: Charles Schwab and Fidelity
OnlineBRokeRAge
mARket MaKer
BeSt
Best etf
FOr ETF-FOCuSEd inveStOrS
FInaLISTS
FInaLISTS
As with the award for Best Online Broker, our Voting Committee deadlocked in its vote for best ETF research team: broker-dealer community. Maybe it’s because the two firms do very different—but equally interesting and important—work.
Credit Suisse’s work is widely consid-ered a must-read by everyone in the ETF industry. Under the leadership of Phil Mackintosh and Victor Lin, Credit Suisse publishes best-in-class ETF-trading-re-lated research. The firm also excels (and seems to relish) myth-busting in the ETF industry, with cogent writing and clear-headed thinking that separates fact from fiction in ETFs.
From its earliest days, iShares has in-vested heavily in making its website easy to use, powerful and well designed. That tradition didn’t waver, even when Black-Rock acquired Barclays Global Investors in 2009, with the firm maintaining an independent iShares website separate from the BlackRock parent—a testament to BlackRock’s restraint in managing a complex acquisition.
The iShares website wins praise from all sides. Whether you’re an individual in-vestor, financial advisor or institution, the information you need is at your fingertips. That includes detailed holdings and portfo-lio information as well as insightful white
Morgan Stanley—under the leadership of Michael Jabara—is equally widely read, with insightful fund-specific research and great connections to macroeconomic trends that can be leveraged by ETF inves-tors. Morgan Stanley has long been a giant in ETF research, and seems reticent to give up that lead.
At ETF.com, we read both firms reli-giously. The results from the Voting Com-mittee suggest everyone else does too.
Note: One member of our Voting Committee—Credit Suisse’s Phil Mackin-tosh—recused himself from voting on this award, as required by the ETF.com Awards methodology.
papers and fact sheets that are the envy of the industry. The site also offers multiple ways to search the firm’s lineup of more than 300 ETFs to find the right fund for the job, from simply entering a ticker or key-word into a search function to narrowing down the choices by asset class, exposure, fundamentals, performance or yield.
Not afraid to innovate with blogs, videos, animation and other methods of reaching its audience, www.ishares.com stands alone as a model for the industry … and a boon for investors. For these reasons, we have selected BlackRock’s iShares unit as the ETF issuer with the best website.
TIE: Credit Suisse and morgan Stanley
iShares by BlackRock
etf ReSeARchBeSt
TEam: BrOker-Dealer cOmmunity
etF iSSueRBeSt
WeBSite
Wells Fargo
PIMCO
PowerShares
SSgA (SPDRs.com)
Vanguard
FInaLISTS
FInaLIST
Few market makers have been more dedicated to the task of educating
clients and improving outcomes
30 ETF.com/ETF Report
State Street Global Advisors
(SSgA)
Vanguard
WisdomTree
Deutsche Bank Indexes
ERI Scientific Beta
FTSE
Russell Indexes
Historically, index providers had terrible websites: clunky designs, complicated registration walls and limited data. Try-ing to pull information from index pro-vider sites was a nightmare.
That’s changing. Over the past few years, index providers have invested heavily in making their websites easier to use and more powerful.
S&P Dow Jones has led the pack, with a website that receives wide praise for its design and navigability. The firm puts enormous amounts of data within easy reach, including full index returns, detailed methodology documents, ro-
Often imitated but never equaled. That’s the message from our Voting Committee on BlackRock’s iShares’ Capital Markets Desk.
The ETF giant pioneered the con-cept of staffing a dedicated capital mar-kets desk focused on helping investors achieve the best possible execution in its funds. The firm is willing to help in-vestors of all sizes, whether by linking them up with the best possible execut-ing broker, negotiating a tweak into a creation basket or working through the trading challenges that investors face in-side captive desks.
bust search capabilities and more. When you add in market-leading research— including the f lagship SPIVA (S&P Index Versus Active) scorecard—you have an awesome tool that helps investors do real work.
Index providers don’t have the sort of direct relationship that ETF issuers have with investors. But they increas-ingly realize that connecting with inves-tors matters. S&P Dow Jones has been a pioneer in informing and reaching out to the end user via its website. Let’s hope that trend continues throughout the index industry.
Beyond individual support, however, BlackRock’s iShares earns plaudits for its pioneering work in, among other things, ETF liquidity education, producing white papers and stand-alone talks that have improved investor outcomes for years.
ETF.com considers ETF issuer capital markets desks to be an investor’s best friend. After all, when it comes to trad-ing, ETF issuers’ interests are completely aligned with the end investor. They want investors to have a great experience when buying or selling a fund because that’s what will make them come back.
index ProVIDer
CapITaL marketS
S&p dow Jones Indices
iShares by BlackRock
WeBSite
deSk
BeSt
BeSt etf iSSueR
FInaLISTS
FInaLISTS
steP 1The awards process began with an open nominations process. ETF.com solicited nominations from more than 15,000 members of the ETF community, including issuers, index providers, advisors, institutional investors, ETF strategists and more.
steP 2Following the public nominations process, the ETF.com ETF Awards Nominating Committee—made up of senior members of the ETF.com Editorial and Analytics teams—voted to select up to five finalists in each category. Votes were cast on a majority basis, and ties were broken where possible with head-to-head runoff votes.
The members of the Nominating Committee are:
• Paul Baiocchi, Vice President, Analytics
• Paul Britt, Senior ETF Specialist
• Matt Hougan, President, Analytics & Publications
• Elisabeth Kashner, Director of Research
• Olivier Ludwig, Managing Editor
• Dave Nadig, Chief Investment Officer
steP 3Winners among these finalists were selected by a majority vote of the ETF.com ETF Awards Selec-tion Committee, a group of independent ETF experts from throughout the ETF community. Com-mittee members recused themselves from voting in any category in which they or their firms appeared as finalists. Ties were decided where possible with head-to-head runoff votes.
The members of the Selection Committee are:
• Jim Wiandt, Founder and CEO, ETF.com
• Phil Mackintosh, Managing Director, Trading Strategy, Credit Suisse
• Kim Arthur, Founding Partner, Main Management
• Mike Vogelzang, President and Chief Investment Officer, Boston Advisors
• Benjamin Blaisdell, Managing Director and Investment Solutions Executive, US Trust
• Jason Nicastro, Senior Research Analyst, LPL Financial
mETHOdOLOGyWiNNerS OF THe aWardS are SelecTed iN a THree-parT prOceSS deSiGNed TO leveraGe
THe iNSiGHTS aNd OpiNiONS OF leaderS THrOuGHOuT THe eTF iNduSTrY.
WInnERS
LIfETIME AcHIEvEMENTKathleen Moriarty
ETf Of THE YEARWisdomTree Japan Hedged Equity Fund (DXJ)
BEST NEW ETfSPDR Blackstone / GSO Senior Loan ETF (SRLN)
MOST GROUNDBREAKING NEW ETfdb X-trackers Harvest CSI 300 China A-Shares Fund (ASHR)
BEST NEW U.S. EQUITY ETf iShares MSCI USA Quality Factor ETF (QUAL)
BEST NEW INTERNATIONAL/GLOBAL EQUITY ETfdb X-trackers Harvest CSI 300 China A-Shares Fund (ASHR)
BEST NEW fIXED-INcOME ETfSPDR Blackstone / GSO Senior Loan ETF (SRLN)
BEST NEW cOMMODITY ETfFirst Trust Global Tactical Commodity Strategy Fund (FTGC)
BEST NEW cURRENcY ETfWisdomTree Bloomberg U.S. Dollar Bullish Fund (USDU)
BEST NEW ALTERNATIvES ETfALPS U.S. Equity High Volatility Put Write Index Fund (HVPW)
BEST NEW MULTI-ASSET ETfETRACS Diversified High Income ETN (DVHI)
ETf ISSUER Of THE YEARThe Vanguard Group
MOST INNOvATIvE ETf ISSUER Of THE YEARWisdomTree Investments
NEW ETf ISSUER Of THE YEARKraneShares
INDEX PROvIDER Of THE YEARMSCI
INDEX Of THE YEARMSCI World with Emerging Markets (EM) Exposure Index
ETf MARKET MAKER Of THE YEARWallachBeth
BEST ONLINE BROKERAGETIE: Charles Schwab & Fidelity
BEST ETf RESEARcH TEAMTIE: Credit Suisse & Morgan Stanley
BEST ETf ISSUER WEBSITEiShares by BlackRock
BEST INDEX PROvIDER WEBSITES&P Dow Jones Indices
BEST ETf ISSUER cAPITAL MARKETS DESKiShares by BlackRock
ETf STRATEGIST Of THE YEARWealthfront Investment Management
Note: AUM data in the gray sidebars is provided by ETF.com, as of 3/4/2014.
31april 2014
inflows totaling slightly more than $5 billion and virtually all funds making gains. Health care continues to lead the charge, with 56% of flows and average returns above 5.5%. Consumer cyclical stocks were the best performers during the month, gaining 7%. Unfortunately, investors didn’t have much confidence in the space, as the sector saw the worst outflows, totaling a bit more than $1 billion, the bulk of which came from the Consumer Discretionary Select SPDR’s (XLY|A-91) $944 million loss. Telecommunications was hit hardest and the only sector to end up in the red, but even that was a mild loss. Technology took a surprising hit in the Technology Select SPDR (XLK|A-77). Despite the fund gaining 4.04% in February, it topped our leaderboard for most outflows, exceeding $1.5 billion. 2014 continues to be a better year for the real estate industry, finishing February 4.81% higher on average, and with the highest net inflows of any U.S. sector ETF going to the Vanguard REIT ETF (VNQ|A-88) at slightly more than $1 billion.
february saw sectors rise, with net
BASIC MATERIALS CONS. CYCL. CONS. NON-CYCL. ENERGY FINANCIAL HEALTH CARE INDUSTRIAL REAL ESTATE TECH TELECOM UTILITIES
broadXLB
6.88%
broadXLY
6.21%
broadXLP
3.79%
broadXLe
5.06%
broadXLF
3.11%
broadXLV
6.13%
broadXLI
4.13%
broadIYR
4.68%
broadXLk
4.04%
broadIYZ
-0.03%
broadXLU
3.38%
miNiNGXMe
4.07%
HomEbldXHB
7.58%
foodPBJ
6.23%
EQUiPIeZ
8.24%
baNKSkBwB2.71%
biotEcHIBB
7.65%
dEfENSEPPa
5.17%
broadVnq
4.94%
iNtErNEtFdn
7.23%
broadVoX
-0.66%
broadVPU
3.27%
mEdiaPBs
5.49%
EXPlorXoP
5.80%
baNK & iNIaI
3.45%
mEd dEVIHI
4.92%
traNSPoIYt
1.10%
SEmiSXsd
9.64%
rEtailXRt
7.33%
iNSUraNcEkBwI4.20%
PHarmaIHe
9.12%
ENGiNEErPkB
5.39%
SoftwarEIgV
5.59%
lEiSUrEPeJ
8.46%
SErVicESIYg
2.79%
EQUiPmENtXHe
2.22%
SErVicESIHF
3.56%
sector performance JAnuARy 2014
///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////
≤-5
.0-3
.0 ≤
-4.9
-1.0
≤-2
.9-0
.1 ≤
-0.9 0
0.1
≤ 0
.91.
0 ≤
2.9
3.0
≤ 4
.9≥
5.0
Key:
+
Source: Bloomberg. Data from 1/31/2014 to 2/28/2014. ETFs chosen to represent each sector based on the most liquid ETF in each segment of the ETF.com ETF Classification System.
-
IN reVIeW
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |Top Outflows
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |Top InflowstIcKer net FLows aum ($m)
Vanguard REIT Vnq 1,028.90 20,419.80 Real Estate
Financial Select SPDR xlf 764.29 17,190.40 Financials
iShares U.S. Healthcare iyH 643.88 2,798.20 Health Care
Health Care Select SPDR xlV 540.96 9,815.74 Health Care
iShares U.S. Technology iyW 509.17 3,785.60 Technology
tIcKer net FLows aum ($m)
Technology Select SPDR xlK -1,561.70 12,138.54 Technology
Consumer Discretionary Select SPDR xly -943.68 5,410.13 Cons Cycl.
Consumer Staples Select SPDR xlP -872.93 5,603.65 Cons Non-Cycl.
iShares U.S. Industrials iyJ -406.21 1,292.16 Industrials
SPDR S&P Regional Banking KRe -302.87 2,355.11 Financials
By stacey Brorup
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32 ETF.com/ETF Report
An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, which contains this and other information, call 1-866-SECTOR-ETF or visit www.sectorspdrs.com. Read the prospectus carefully before investing.The S&P 500, SPDRs, and Select Sector SPDRs are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use. The stocks included in each Select Sector Index were selected by the compilation agent. Their composition and weighting can be expected to differ to that in any similar indexes that are published by S&P. The S&P 500 Index is an unmanaged index of 500 common stocks that is generally considered representative of the U.S. stock market. The index is heavily weighted toward stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. Investors cannot invest directly in an index. The S&P 500 Index figures do not reflect any fees, expenses or taxes. Ordinary brokerage commissions apply. ETFs are considered transparent because their portfolio holdings are disclosed daily. Liquidity is characterized by a high level of trading activity.Select Sector SPDRs are subject to risks similar to those of stocks, including those regarding short-selling and margin account maintenance. All ETFs are subject to risk, including possible loss of principal. Funds focusing on a single sector generally experience greater volatility. Diversification does not eliminate the risk of experiencing investment losses. ALPS Portfolio Solutions Distributor, Inc., a registered broker-dealer, is distributor for the Select Sector SPDR Trust.
Potential benefits of adding Sector SPDR ETFs to your portfolio include:
• Undiluted exposure to a specific sector of the S&P 500
• The all-day tradability of stocks
• The diversification of mutual funds
• Total transparency
• Liquidity Visit www.sectorspdrs.com or call 1-866-SECTOR-ETF
Time For A Stock Alternative
TAKE A NEW LINE WITH YOUR EQUITY
Health Care Sector SPDR ETF
1 Johnson & Johnson JNJ 11.38%2 Pfizer PFE 9.11%3 Merck MRK 7.29%4 Gilead Sciences GILD 5.56%5 Amgen AMGN 4.09%6 Bristol-Myers Squibb BMY 3.90%7 Biogen Idec BIIB 3.60%8 AbbVie ABBV 3.55%9 Unitedhealth Group UNH 3.43%10 Celgene CELG 2.90%
Company Name Symbol Weight
XLV - HEALTH CARE
* Components and weightings as of 2/28/14. Please see website for daily updates. Holdings subject to change.
Top Ten Holdings*
Consumer Discretionary - XLY Consumer Staples - XLP Energy - XLE Financial - XLF Health Care - XLV Industrial - XLI Materials - XLB Technology - XLK Utilities - XLU
What ETF has your attention right now?One of the topical issues right now is what to do about this widely predicted rise in interest rates. There are certain sectors of the sovereign bond market I wouldn’t want in the portfolio. Noncorrelative returns in this globalized financial world are the “dim sum” of the bond market. So the answer is the PowerShares Chi-nese Yuan Dim Sum Bond Portfolio (DSUM|B).
Why DSUM, and not another fund that cherry-picks that pocket of the bond universe?DSUM is definitely the flagship dim-sum bond ETF right now. There’s only one other competitor right now, and DSUM has the most assets by far, prob-ably about 95% of total assets. And the tradability is decent. For an ETF strategist like us, we definitely have to use a liquidity provider for the exposure. It’s sort of the only option.
How long have you held DSUM? And how, exactly, do you use it? We started purchasing it in the middle of last year. We use it within the context of our core balanced portfolios. As macro investors, we want to be ahead of the big tectonic shifts that are measured in years and not quarters. And I think with the Chinese renminbi, we’re all in the foothills of a long journey—the currency appreciation is going to be with us for some time.
And by the way, the Chinese currency has appreciated steadily from the start of the float in 2005. It’s actually never had a losing year versus the dollar since 2005. But there’s not been a lot of fanfare around there because it’s been so measured.
But I think the volatility is going to increase over time, because if China wants to move forward in the global economy, then it’s going to introduce more currency
volatility. But it’s considered a trade-off. It’s a rich irony that, in many ways, China is trying to stem its credit expansion in a world where a lot of the major advanced economies are addicted to near-zero inter-est rate policies.
And it’s especially rich since the global investors continue to reward those markets where monetary settings continue to ensure that there’s going to be currency depreciation, while China has actually taken some steps in the right direction.
It sounds like DSUM is a long-term holding for you.Yes. Given our macro view, it is a long-term holding. We’re not expecting huge returns over this. But if you get a couple points of currency appreciation, plus the yield, that’s a decent return. And it’s provided through a noncorrelated stream. So, yes, I’d label it a strategic holding.
Would you say the way you’re using it at Hahn is any different from the way other investment managers might make use of this security?I think it’s very underutilized as a return source. And the assets in DSUM are only $210 million right now. So it’s not a very popular ETF. I’ve predicted it will be more popular in the future.
In other words, this is a viable security in a prospec-tive part of the financial markets that will only become more visible in the coming years because of the secular Chinese story?Yes. As China rises, I think so will these funds. You can put it that simply.
DSUM
strateGY
PowerShares Chinese Yuan Dim Sum Bond Portfolio
I ownWhy
FIrm: Hahn investment stewards
LocatIon: toronto
FounDeD: 2001
aum: $500 million
aLL etFs? yes
TyLER mORdyPresident and Co-Chief Investment officer
Powershares Chinese Yuan Dim sum Bond Portfolio (DsUM)
segment: fixed income: china – Broad market intermediate
Issuer: invesco Powershares
LegaL structure: open-ended fund
expense ratIo: 0.45%
aum: $210.1 million
aD$v (30-Day): $4.47 million
avg. spreaD: 0.09%
competIng FunD: cHlc
Sources: Bloomberg, ETF.com. Data as of 2/28/2014.
6
5
4
3
2
1
0
-1
RetuRn%
3.96%
m A m J J A s o n d J f2014
By olly ludwig
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34 ETF.com/ETF Report
Before investing visit www.f lexshares.com/prospectus to obtain a prospectus that includes the investment objectives, risks, fees, expenses and other information you should read carefully and consider carefully. Foreside Fund Services, LLC, distributor.
Investment in FlexShares Ready Access Variable Income Fund (RAVI) is subject to numerous risks including possible loss of principal. Highlighted risks: active management; interest rate/maturity (value of underlying assets may fall due to changing interest rates); debt extension & prepayment (an issuer may exercise its right to pay principal on an obligation later or sooner than expected); concentration (may invest more than 25% of assets into securities of a single developed market). See prospectus for full description of risks.
FlexShares Ready Access Variable Income Fund is actively managed and does not seek to replicate a specified index. Additionally, the Fund may invest without limitation in the fixed income and debt securities of foreign issuers in both developed and emerging markets. The Fund is at increased credit and default risk, where there is an inability or unwillingness by the issuer of a fixed income security to meet its financial obligations; debt extension risk, where an issuer may exercise its right to pay principal on an obligation later than expected; as well as interest rate/maturity risk, where the value of the Fund’s fixed income assets will decline because of rising interest rates. The Fund may also be subject to increased concentration risk as it may invest more than 25% of its assets into the securities of a single developed market. The Fund may invest without limitation in mortgage or asset-backed securities, which puts it at increased risk for interest rate/maturity risk, debt extension risk, and prepayment (or call) risk. The Fund is “non-diversified” under the Investment Company Act of 1940, and may invest more of its assets in fewer issuers than diversified funds. Liquidity is the degree to which an asset or security can be bought or sold in the market without affecting the asset’s price. Assets that can be easily bought or sold are known as liquid assets.
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nt1323_ETFR_8.75x10.75.indd 1 12/3/13 1:05 PM
37april 201436 ETF.com/ETF Report
u.s. equIty: totaL marKet
ishares msci usA momentum factor mtum 0.15 228.2 4.25 - -
fidelity nAsdAq composite tracking stock oneq 0.21 373.0 3.21 16.90 26.76
AlPs Barron's 400 BfoR 0.65 221.6 1.86 - -
Vanguard total stock market Vti 0.05 41,089.3 1.54 14.62 23.99
flexshares mstar us market factor tilt tilt 0.27 591.3 1.44 - -
schwab u.s. Broad market scHB 0.04 3,094.4 1.40 14.58 -
ishares Russell 3000 iWV 0.20 5,476.8 1.37 14.32 23.65
sPdR Russell 3000 tHRK 0.10 579.4 1.36 14.42 23.49
ishares dow Jones u.s. iyy 0.20 875.1 1.35 12.29 21.24
ishares msci usA minimum Volatility usmV 0.15 2,416.7 1.21 - -
ishares core s&P total u.s. stock market itot 0.07 1,101.9 0.98 14.27 23.27
Wisdomtree total dividend dtd 0.28 411.5 0.12 14.53 23.56
flexshares quality dividend qdf 0.38 386.0 0.03 - -
u.s. equIty: totaL marKet growtH
ishares Russell 3000 Growth iWZ 0.25 580.4 2.17 14.89 24.04
ishares msci usA quality factor quAl 0.15 286.7 0.50 - -
u.s. equIty: totaL marKet vaLue
ishares Russell 3000 Value iWW 0.26 577.3 0.57 13.73 22.97
u.s. equIty: extenDeD cap
Vanguard extended market Vxf 0.14 3,420.9 3.52 15.44 28.32
Powershares ftse RAfi us 1500 small-mid PRfZ 0.39 955.0 0.85 14.43 32.69
u.s. equIty: Large cap
first trust nAsdAq-100 equal Weighted qqeW 0.60 498.6 5.50 16.10 28.45
Powershares qqq qqq 0.20 47,142.6 3.13 17.50 28.09
RBs nAsdAq-100 trendpilot etn tndq 1.00 275.6 3.12 - -
Guggenheim s&P 500 equal Weight RsP 0.40 6,791.3 2.22 14.93 28.33
first trust large cap core Alphadex fex 0.66 866.3 1.94 14.06 25.85
Powershares s&P 500 BuyWrite PBP 0.75 226.9 1.93 1.54 7.05
Powershares s&P 500 High Beta sPHB 0.25 520.8 1.83 - -
ishares msci usA esG select Kld 0.50 250.0 1.80 12.32 21.65
ishares msci Kld 400 social dsi 0.50 344.2 1.56 14.59 22.47
ishares Russell 1000 iWB 0.15 8,712.3 1.42 14.45 23.47
schwab u.s. large-cap scHx 0.04 2,485.9 1.23 14.31 -
Vanguard Russell 1000 Vone 0.12 271.8 1.21 14.50 -
Vanguard large-cap VV 0.10 4,806.8 1.17 14.34 23.21
Powershares s&P 500 low Volatility sPlV 0.25 3,707.5 1.12 - -
Proshares large cap core Plus csm 0.45 239.9 0.99 13.95 -
ishares core s&P 500 iVV 0.07 50,014.4 0.91 14.25 22.85
Vanguard s&P 500 Voo 0.05 16,093.3 0.87 14.28 -
sPdR s&P 500 sPy 0.09 158,138.0 0.87 14.20 22.86
RBs us large cap trendpilot etn tRnd 1.00 262.8 0.83 10.34 -
Vanguard mega cap mGc 0.12 680.4 0.65 14.32 22.38
Powershares s&P 500 High quality sPHq 0.29 328.8 0.49 13.93 18.48
Powershares ftse RAfi us 1000 PRf 0.39 3,012.6 0.37 14.24 27.60
ishares morningstar large-cap JKd 0.20 444.6 0.28 15.81 22.80
Barclays s&P Veqtor etn Vqt 0.95 603.6 0.20 9.07 -
Wisdomtree largecap dividend dln 0.28 1,755.1 -0.20 14.39 22.73
Revenueshares large cap RWl 0.49 212.7 -0.29 14.57 23.92
ishares s&P 100 oef 0.20 3,864.2 -0.30 13.49 21.19
AlPs sector dividend dogs sdoG 0.40 532.2 -0.41 - -
sPdR dow Jones industrial Average trust diA 0.17 11,612.5 -1.13 12.82 21.23
Guggenheim Russell top 50 mega cap xlG 0.20 513.9 -1.24 13.15 19.73
u.s. equIty: Large cap growtH
Guggenheim s&P 500 Pure Growth RPG 0.35 1,345.0 6.56 18.56 31.01
first trust large cap Growth Alphadex ftc 0.70 282.2 3.71 13.02 22.60
Powershares dynamic large cap Growth PWB 0.59 285.4 2.98 16.49 22.59
ishares morningstar large-cap Growth JKe 0.25 527.0 2.65 15.43 23.17
schwab u.s. large-cap Growth scHG 0.07 1,225.0 2.61 14.86 -
Vanguard Growth VuG 0.10 13,738.2 2.39 15.57 23.99
Vanguard s&P 500 Growth VooG 0.15 221.1 2.15 15.66 -
ishares s&P 500 Growth iVW 0.18 9,836.9 2.13 13.77 21.03
ishares Russell 1000 Growth iWf 0.20 22,872.0 2.07 14.79 23.80
Vanguard Russell 1000 Growth VonG 0.15 236.5 2.03 14.77 -
sPdR s&P 500 Growth sPyG 0.20 340.2 1.92 15.56 24.08
Vanguard mega cap 300 Growth mGK 0.12 1,260.6 1.70 16.02 23.37
ishares Russell top 200 Growth iWy 0.20 459.4 1.09 14.85 -
u.s. equIty: Large cap vaLue
first trust large cap Value Alphadex ftA 0.67 729.0 0.58 14.53 28.52
ishares Russell 1000 Value iWd 0.21 20,827.1 0.54 13.77 22.86
Vanguard Russell 1000 Value VonV 0.15 190.4 0.46 13.89 -
Guggenheim s&P 500 Pure Value RPV 0.35 586.0 0.26 19.30 38.65
Vanguard Value VtV 0.10 12,678.9 0.13 13.20 22.63
schwab u.s. large-cap Value scHV 0.07 864.2 -0.12 13.69 -
Vanguard mega cap Value mGV 0.12 686.5 -0.13 12.81 21.63
ishares s&P 500 Value iVe 0.18 6,485.7 -0.37 12.67 22.75
Powershares dynamic large cap Value PWV 0.59 752.5 -0.74 13.22 19.48
ishares morningstar large-cap Value JKf 0.25 271.5 -0.85 10.89 18.97
u.s. equIty: mID cap
ishares morningstar mid-cap JKG 0.25 263.2 4.28 15.85 28.31
schwab u.s. mid-cap scHm 0.07 1,006.2 3.78 15.48 -
ishares Russell mid-cap iWR 0.22 9,792.3 3.77 14.91 27.60
Vanguard mid-cap Vo 0.10 7,230.5 3.53 14.36 27.23
ishares core s&P mid-cap iJH 0.15 20,618.4 2.68 14.05 26.69
Wisdomtree midcap dividend don 0.38 956.0 2.57 15.83 28.89
sPdR s&P midcap 400 mdy 0.25 15,854.5 2.53 13.87 26.46
Vanguard s&P mid-cap 400 iVoo 0.16 300.1 2.51 14.07 -
Wisdomtree midcap earnings eZm 0.38 484.8 1.98 16.88 31.10
first trust mid cap core Alphadex fnx 0.66 745.2 1.15 14.35 28.16
u.s. equIty: mID cap growtH
Vanguard mid-cap Growth Vot 0.10 2,035.8 4.35 13.05 26.28
ishares morningstar mid-cap Growth JKH 0.30 201.4 4.27 13.61 26.13
ishares Russell mid-cap Growth iWP 0.25 4,905.1 3.86 14.62 27.18
ishares s&P mid-cap 400 Growth iJK 0.25 4,678.5 2.71 13.92 27.22
Vanguard s&P mid-cap 400 Growth iVoG 0.20 259.9 2.58 13.86 -
Guggenheim s&P midcap 400 Pure Growth RfG 0.35 841.3 1.34 15.06 31.99
u.s. equIty: mID cap vaLue
ishares Russell mid-cap Value iWs 0.28 5,672.0 3.50 14.91 27.75
ishares s&P mid-cap 400 Value iJJ 0.27 3,694.5 2.68 14.02 26.05
Vanguard mid-cap Value Voe 0.10 2,418.1 2.67 15.46 28.05
u.s. equIty: smaLL cap
Vanguard small-cap VB 0.10 8,617.8 2.92 15.32 29.11
schwab u.s. small-cap scHA 0.08 2,055.5 2.84 15.67 -
ishares morningstar small-cap JKJ 0.25 218.0 2.00 13.14 27.94
ishares Russell 2000 iWm 0.24 27,064.9 1.87 14.43 26.45
Vanguard Russell 2000 VtWo 0.21 365.6 1.80 14.47 -
Powershares dWA smallcap momentum dWAs 0.60 643.9 1.59 - -
ishares core s&P small-cap iJR 0.17 14,130.6 0.54 16.79 27.80
FUND NAME TICkER ExP RATIO % AUM ($M) YTD % 3YR % 5YR %
u.s.-lIsteD etfs BY asset Class aND Year-to-Date returN
› data as of 02/28/2014› exp Ratio is annual expense ratio› Aum is net assets in $us millions› ytd is year-to-date› 3yR and 5yR returns are annualized› includes all u.s.-listed etfs and etns
with assets of $190 million and above› source: etf.com
ETFDATA
Revenueshares small cap RWJ 0.54 256.7 0.28 16.95 32.67
sPdR s&P smallcap 600 sly 0.23 448.7 0.05 16.68 29.83
Wisdomtree smallcap dividend des 0.38 1,032.8 -0.23 15.70 29.15
first trust small cap core Alphadex fyx 0.70 550.7 -0.55 16.45 30.03
Wisdomtree smallcap earnings ees 0.38 414.6 -1.32 15.91 32.39
u.s. equIty: smaLL cap growtH
Vanguard small-cap Growth VBK 0.10 3,907.3 3.93 15.22 29.37
ishares Russell 2000 Growth iWo 0.25 6,521.2 3.08 16.09 27.98
ishares s&P small-cap 600 Growth iJt 0.26 2,855.3 0.24 17.18 28.37
sPdR s&P smallcap 600 Growth slyG 0.31 375.6 -0.07 17.33 31.00
u.s. equIty: smaLL cap vaLue
Vanguard small-cap Value VBR 0.10 3,999.9 2.04 14.66 28.12
ishares morningstar small-cap Value JKl 0.30 348.8 1.83 14.76 30.60
ishares s&P small-cap 600 Value iJs 0.30 3,141.0 0.95 16.31 27.24
sPdR s&P smallcap 600 Value slyV 0.31 262.8 0.62 16.33 29.14
ishares Russell 2000 Value iWn 0.36 5,825.6 0.50 12.66 24.91
u.s. equIty: mIcro cap
ishares micro-cap iWc 0.72 1,051.5 4.10 14.83 26.23
u.s. equIty: BasIc materIaLs
first trust materials Alphadex fxZ 0.70 734.4 2.55 10.25 29.59
Vanguard materials VAW 0.14 1,154.5 2.11 9.49 24.72
materials select sPdR xlB 0.16 4,881.5 1.86 8.47 22.42
ishares u.s. Basic materials iym 0.46 839.0 1.55 3.49 24.12
sPdR s&P metals and mining xme 0.35 635.1 -1.35 -15.61 13.34
u.s. equIty: consumer cycLIcaLs
ishares u.s. Home construction itB 0.46 1,817.8 5.92 26.04 29.52
Powershares dyn leisure/entertainment PeJ 0.63 195.3 3.28 23.38 34.69
sPdR s&P Homebuilders xHB 0.35 2,231.4 2.19 24.99 31.05
first trust consumer discretionary Alphadex fxd 0.70 863.5 1.64 16.75 33.03
ishares u.s. consumer services iyc 0.46 462.5 1.61 21.76 29.34
Vanguard consumer discretionary VcR 0.14 1,443.4 0.47 21.25 33.82
consumer discretionary select sPdR xly 0.16 5,443.5 0.01 21.08 32.75
Powershares dynamic media PBs 0.63 321.1 -0.75 20.13 33.34
sPdR s&P Retail xRt 0.35 1,023.3 -2.80 21.61 35.61
u.s. equIty: consumer non-cycLIcaLs
first trust consumer staples Alphadex fxG 0.70 775.0 1.85 17.62 22.92
Powershares dynamic food & Beverage PBJ 0.63 312.7 1.56 13.28 18.81
consumer staples select sPdR xlP 0.16 5,548.6 -1.47 15.74 19.10
ishares u.s. consumer Goods iyK 0.46 452.7 -1.48 15.30 21.89
Vanguard consumer staples Vdc 0.14 1,616.2 -1.64 16.21 19.90
u.s. equIty: energy
ishares u.s. oil equipment & services ieZ 0.46 520.9 2.42 0.95 22.93
first trust north Amer energy infrastructure emlP 0.95 468.8 1.92 - -
sPdR s&P oil & Gas equipment/services xes 0.35 317.8 1.78 2.04 23.06
first trust ise-Revere natural Gas fcG 0.60 474.4 1.74 -3.70 15.26
sPdR s&P oil & Gas exploration/Production xoP 0.35 1,161.8 1.69 5.25 22.87
credit suisse cushing 30 mlP etn mlPn 0.85 701.4 1.23 9.12 -
yorkville High income mlP ymlP 0.82 265.6 0.71 - -
etRAcs Alerian mlP etn Amu 0.80 226.7 0.64 - -
ishares u.s. oil & Gas exploration/Production ieo 0.46 409.4 0.44 5.35 21.16
first trust energy Alphadex fxn 0.70 496.9 0.20 1.67 21.99
Barclays etn+ select mlP etn AtmP 0.95 193.2 0.17 - -
etRAcs Alerian mlP infrastructure etn mlPi 0.85 1,688.9 0.13 7.50 -
JPmorgan Alerian mlP etn AmJ 0.85 5,568.5 0.11 7.08 -
Alerian mlP AmlP 4.85 7,605.8 -0.58 8.21 -
Vanguard energy Vde 0.14 2,725.8 -0.90 4.81 18.52
energy select sPdR xle 0.16 8,311.1 -0.97 5.53 18.43
ishares u.s. energy iye 0.46 2,031.3 -1.13 5.19 17.12
u.s. equIty: FInancIaLs
Powershares KBW High div yld financial KBWd 1.48 240.8 2.84 10.84 -
ishares u.s. Regional Banks iAt 0.46 445.3 1.24 12.18 20.01
Vanguard financials VfH 0.19 1,899.0 0.20 10.99 24.38
ishares u.s. financials iyf 0.46 1,521.0 -0.09 11.57 24.24
sPdR s&P Bank KBe 0.35 2,444.0 -0.51 9.56 24.07
ishares u.s. Broker-dealers iAi 0.46 266.7 -0.70 9.59 19.43
financial select sPdR xlf 0.16 17,122.0 -0.73 10.65 25.42
first trust financials Alphadex fxo 0.70 867.4 -0.92 11.69 27.03
ishares u.s. financial services iyG 0.46 625.1 -1.16 12.72 24.30
sPdR s&P Regional Banking KRe 0.35 2,365.0 -1.77 16.41 19.17
sPdR s&P capital markets Kce 1.86 208.5 -3.39 9.27 20.01
sPdR s&P insurance Kie 0.35 298.7 -3.42 12.13 30.76
u.s. equIty: HeaLtH care
sPdR s&P Biotech xBi 0.35 1,465.3 25.75 37.99 28.94
Powershares dynamic Biotech & Genome PBe 0.63 451.2 21.86 28.98 29.37
first trust nyse Arca Biotechnology fBt 0.60 1,248.2 20.61 29.27 35.60
ishares nasdaq Biotechnology iBB 0.48 5,742.5 16.45 41.08 33.50
market Vectors Biotech BBH 0.35 680.0 15.57 - -
sPdR s&P Pharmaceuticals xPH 0.35 907.8 12.77 31.48 33.25
ishares u.s. Pharmaceuticals iHe 0.46 659.9 11.78 28.92 29.93
Powershares dynamic Pharmaceuticals PJP 0.63 1,180.4 11.56 36.98 34.59
first trust Health care Alphadex fxH 0.70 1,939.7 9.82 24.37 31.39
Vanguard Health care VHt 0.14 3,036.5 7.92 24.83 24.65
ishares u.s. Healthcare iyH 0.46 2,773.1 7.74 24.56 23.84
Health care select sPdR xlV 0.16 9,830.6 7.22 24.47 23.33
ishares u.s. medical devices iHi 0.46 693.1 5.94 16.03 23.30
ishares u.s. Healthcare Providers iHf 0.46 404.0 3.11 17.53 26.50
u.s. equIty: InDustrIaLs
ishares u.s. Aerospace & defense itA 0.46 367.2 3.75 22.16 29.39
first trust industr/Producer dur Alphadex fxR 0.70 750.9 2.78 14.84 28.25
ishares transportation Average iyt 0.46 876.5 -0.12 14.02 25.82
Vanguard industrials Vis 0.14 1,660.1 -0.13 15.11 28.22
industrial select sPdR xli 0.16 9,031.9 -0.38 14.45 27.73
ishares u.s. industrials iyJ 0.46 1,292.2 -0.40 14.76 27.65
u.s. equIty: tecHnoLogy
ishares north Amer multimedia networking iGn 0.48 264.4 8.53 -1.31 19.03
first trust dow Jones internet fdn 0.60 2,321.6 7.45 21.90 35.81
Powershares nAsdAq internet Pnqi 0.60 396.4 6.41 25.73 39.22
first trust technology Alphadex fxl 0.70 778.7 6.06 8.30 26.87
first trust nAsdAq-100-technology qtec 0.60 215.9 5.76 11.56 27.73
ishares north American tech-software iGV 0.48 1,269.9 5.63 12.60 24.78
ishares PHlx semiconductor soxx 0.48 333.9 5.56 8.52 24.35
Guggenheim s&P equal Weight technology Ryt 0.40 488.4 4.10 12.00 26.65
sPdR morgan stanley technology mtK 0.50 223.4 3.84 11.01 24.85
market Vectors semiconductor smH 0.35 295.5 2.88 - -
Powershares s&P smallcap infotech Psct 0.29 240.0 2.87 13.85 -
ishares u.s. technology iyW 0.46 3,785.6 2.87 11.02 23.30
ishares north American tech iGm 0.48 714.2 2.82 13.64 24.81
Vanguard information technology VGt 0.14 5,032.3 2.40 13.01 24.79
technology select sPdR xlK 0.16 12,145.7 1.71 12.94 22.82
u.s. equIty: teLecommunIcatIons
ishares u.s. telecommunications iyZ 0.46 495.5 -3.20 7.58 13.95
Vanguard telecommunication services Vox 0.14 598.2 -3.42 10.75 18.43
u.s. equIty: utILItIes
utilities select sPdR xlu 0.16 5,414.6 6.53 12.42 14.42
Vanguard utilities VPu 0.14 1,509.4 6.16 12.74 15.39
ishares u.s. utilities idu 0.46 609.9 6.04 12.28 15.28
u.s. equIty: reaL estate
ishares Residential Real estate capped ReZ 0.48 248.2 11.19 9.33 27.99
ishares mortgage Real estate capped Rem 0.48 1,187.7 10.33 4.91 13.32
ishares cohen & steers Reit icf 0.35 2,607.9 9.93 7.97 28.96
Vanguard Reit Vnq 0.10 20,377.3 9.56 7.20 25.29
sPdR dow Jones Reit RWR 0.25 2,312.9 9.32 9.08 29.15
schwab u. s. Reit scHH 0.07 786.8 9.26 9.22 -
ishares u.s. Real estate iyR 0.46 4,419.3 8.35 8.09 27.30
u.s. equIty: aLpHa-seeKIng
first trust us iPo fPx 0.60 487.7 4.87 25.43 32.07
Powershares dWA momentum PdP 0.74 1,295.2 4.01 15.58 25.76
Guggenheim Raymond James sB-1 equity RyJ 0.83 279.4 2.04 15.01 30.73
Guggenheim spin-off csd 0.65 745.7 1.40 24.60 34.37
Guggenheim insider sentiment nfo 0.65 210.5 0.87 11.96 27.85
Powershares Buyback Achievers PKW 0.71 2,894.0 0.65 19.85 28.10
market Vectors Wide moat moAt 0.49 607.7 0.45 - -
FUND NAME TICkER ExP RATIO % AUM ($M) YTD % 3YR % 5YR % FUND NAME TICkER ExP RATIO % AUM ($M) YTD % 3YR % 5YR % FUND NAME TICkER ExP RATIO % AUM ($M) YTD % 3YR % 5YR %
39april 201438 ETF.com/ETF Report
FUND NAME TICkER ExP RATIO % AUM ($M) YTD % 3YR % 5YR %FUND NAME TICkER ExP RATIO % AUM ($M) YTD % 3YR % 5YR % FUND NAME TICkER ExP RATIO % AUM ($M) YTD % 3YR % 5YR %FUND NAME TICkER ExP RATIO % AUM ($M) YTD % 3YR % 5YR %
u.s. equIty: HIgH DIvIDenD yIeLD
first trust Value line dividend fVd 0.70 807.9 1.07 14.06 21.03
ishares select dividend dVy 0.40 12,825.1 0.90 15.93 23.98
first trust morningstar dividend leaders fdl 0.45 665.7 0.78 14.37 25.01
sPdR s&P dividend sdy 0.35 12,529.7 0.61 14.64 23.66
Wisdomtree dividend ex-financials dtn 0.38 1,115.5 0.56 15.66 27.40
Wisdomtree equity income dHs 0.38 768.2 0.51 15.32 26.33
Powershares Hiyld eq dividend Achievers Pey 0.57 367.5 0.43 14.51 24.95
Vanguard dividend Appreciation ViG 0.10 18,712.7 -0.36 13.21 20.36
Vanguard High dividend yield Vym 0.10 7,400.3 -0.53 15.36 23.48
ishares High dividend HdV 0.40 3,468.6 -0.67 - -
schwab us dividend equity scHd 0.07 1,577.5 -0.74 - -
Powershares dividend Achievers Pfm 0.58 343.8 -0.85 12.97 19.85
gLoBaL equIty
Vanguard total World stock Vt 0.18 3,287.9 0.54 8.66 20.02
ishares msci AcWi AcWi 0.34 5,571.0 0.33 8.23 19.77
ishares Global 100 ioo 0.40 1,586.0 -0.09 8.15 17.91
ishares msci All country World min Volatility AcWV 0.34 1,114.8 -0.19 - -
gLoBaL equIty ex-u.s.
Vanguard ftse All-World ex-us small cap Vss 0.20 1,806.8 4.39 5.37 -
sPdR msci AcWi ex-us cWi 0.34 533.7 0.00 3.41 17.56
Vanguard total international stock Vxus 0.14 2,473.1 -0.11 3.94 -
ishares core msci total international stock ixus 0.16 580.1 -0.15 - -
Vanguard ftse All-World ex-us Veu 0.15 11,701.4 -0.49 3.90 17.73
ishares msci AcWi ex u.s. AcWx 0.34 1,588.9 -0.73 3.37 17.14
Vident international equity Vidi 0.75 509.6 -2.46 - -
InternatIonaL equIty: BLenDeD DeveLopment
first trust europe Alphadex feP 0.80 628.1 7.33 - -
ishares msci All country Asia ex Japan AAxJ 0.67 2,519.8 -3.58 0.77 17.33
ishares Asia 50 AiA 0.50 261.1 -5.40 2.15 17.81
InternatIonaL equIty: DeveLopeD
Wisdomtree europe smallcap dividend dfe 0.58 1,216.8 8.31 17.07 28.73
Global x ftse Greece 20 GReK 0.61 193.8 8.21 - -
ishares msci italy capped eWi 0.50 1,110.7 6.48 -3.36 7.28
ishares msci switzerland capped eWl 0.51 1,085.1 3.73 10.01 19.50
ishares msci eAfe small-cap scZ 0.40 3,774.5 3.45 9.96 24.25
schwab international small-cap equity scHc 0.19 367.5 3.29 6.55 -
Wisdomtree intl smallcap dividend dls 0.58 884.9 3.02 11.21 23.83
ishares msci spain capped eWP 0.53 1,319.7 2.90 -1.39 7.79
Vanguard ftse europe VGK 0.12 15,714.3 2.43 8.57 19.81
ishares msci Australia eWA 0.51 1,745.2 2.38 3.64 22.56
ishares europe ieV 0.60 3,285.2 2.28 8.02 18.95
ishares msci france eWq 0.51 391.7 2.11 5.71 16.43
ishares msci eAfe minimum Volatility efAV 0.20 1,045.1 1.85 - -
ishares msci sweden eWd 0.51 528.0 1.84 8.41 27.71
ishares msci united Kingdom eWu 0.51 4,386.1 1.82 8.44 19.84
sPdR s&P international small cap GWx 0.59 883.7 1.67 5.74 21.34
ishares msci emu eZu 0.50 10,127.4 1.52 6.14 17.11
Wisdomtree defA dWm 0.48 570.0 1.33 7.32 17.58
flexshares mstar dev mkts ex-us factor tilt tltd 0.42 522.5 1.25 - -
sPdR stoxx europe 50 feu 0.29 235.5 1.14 6.94 16.82
ishares msci eAfe Value efV 0.40 2,521.8 1.01 5.84 18.04
Wisdomtree intl largecap dividend dol 0.48 311.7 0.92 6.71 16.41
ishares core msci eAfe iefA 0.14 1,653.5 0.92 - -
ishares msci Kokusai toK 0.25 490.3 0.80 10.58 20.61
ishares msci eAfe efA 0.34 54,577.6 0.62 6.40 17.73
Powershares ftse RAfi dev mkts ex-us Pxf 0.45 763.2 0.61 4.29 18.72
sPdR s&P World ex-us GWl 0.34 853.8 0.51 5.61 17.84
iShares MSCI Pacific ex Japan ePP 0.50 2,844.0 0.47 4.18 22.01
Vanguard ftse developed markets VeA 0.10 20,507.2 0.43 3.35 14.75
sPdR euro stoxx 50 feZ 0.29 5,296.3 0.38 5.22 15.85
ishares msci canada eWc 0.51 3,081.2 0.07 -2.50 16.36
schwab international equity scHf 0.09 2,072.7 0.00 5.39 -
ishares msci Germany eWG 0.51 6,344.9 -0.16 9.46 21.47
ishares msci eAfe Growth efG 0.40 1,800.5 -0.17 6.60 17.34
Wisdomtree europe Hedged equity HedJ 0.58 953.5 -0.48 7.53 -
db x-trackers msci eAfe Hedged equity dBef 0.35 360.3 -0.55 - -
ishares msci netherlands eWn 0.53 313.3 -0.89 7.12 19.63
Wisdomtree Japan smallcap dividend dfJ 0.58 281.1 -1.98 4.94 13.08
ishares msci Hong Kong eWH 0.51 2,193.3 -2.04 5.63 19.26
Vanguard FTSE Pacific VPl 0.12 2,601.9 -3.07 3.12 15.26
ishares msci singapore eWs 0.53 982.5 -3.80 3.05 21.51
ishares msci Japan eWJ 0.50 13,969.2 -4.36 1.99 11.29
Wisdomtree Japan Hedged equity dxJ 0.48 12,154.9 -6.16 7.98 11.51
db x-trackers msci Japan Hedged equity dBJP 0.45 447.6 -7.85 - -
InternatIonaL equIty: emergIng
ishares msci indonesia eido 0.61 402.0 11.91 -1.07 -
market Vectors indonesia idx 0.59 196.1 8.75 -3.27 27.93
ishares msci Philippines ePHe 0.61 307.0 8.16 16.72 -
Powershares Golden dragon china PGJ 0.70 327.5 6.04 7.68 22.29
ishares msci Poland capped ePol 0.61 309.4 3.87 -2.68 -
ishares msci thailand capped tHd 0.61 458.3 0.32 3.97 26.22
ishares msci All Peru capped ePu 0.61 303.6 -0.71 -8.70 -
sPdR s&P emerging markets small cap eWx 0.65 630.1 -0.99 -0.68 20.30
ishares india 50 indy 0.93 443.9 -1.83 -4.77 -
Wisdomtree emrg mkts smallcap dividend dGs 0.63 1,744.9 -1.97 -0.08 19.54
ishares msci india indA 0.67 493.1 -2.02 - -
SPDR S&P Emerging Asia Pacific Gmf 0.59 393.8 -2.09 0.46 17.73
iPath msci india etn inP 0.89 339.4 -2.18 -5.03 16.10
Guggenheim china small cap HAo 0.75 254.6 -2.44 -1.78 17.74
ishares msci taiwan eWt 0.61 2,797.6 -2.50 1.09 18.27
Wisdomtree india earnings ePi 0.83 834.6 -3.10 -8.40 12.68
ishares msci malaysia eWm 0.51 785.9 -3.10 6.05 20.38
Powershares india Pin 0.81 349.0 -3.12 -8.02 10.15
ishares msci south Africa eZA 0.61 456.4 -3.63 -0.71 18.87
sPdR s&P china Gxc 0.59 777.3 -4.72 1.71 16.12
ishares msci emerging markets min Volatility eemV 0.25 2,069.4 -4.84 - -
ishares core msci emerging markets iemG 0.18 3,622.9 -4.88 - -
BldRs emerging markets 50 AdR AdRe 0.30 205.7 -5.39 -6.55 10.17
flexshares mstar emrg mkts factor tilt tlte 0.65 212.5 -5.45 - -
sPdR s&P emerging markets Gmm 0.59 191.3 -5.46 -2.79 16.51
Vanguard ftse emerging markets VWo 0.15 41,138.6 -5.47 -3.34 15.57
ishares msci emerging markets eem 0.67 30,907.3 -5.54 -2.92 15.28
ishares msci south Korea capped eWy 0.61 4,151.9 -5.55 2.19 23.23
schwab emerging markets equity scHe 0.14 860.5 -5.73 -3.69 -
ishares msci china mcHi 0.61 1,008.2 -6.12 - -
Powershares s&P emrg mkts low Volatility eelV 0.29 213.6 -6.33 - -
ishares msci BRic BKf 0.67 420.9 -7.14 -8.04 12.32
Powershares ftse RAfi emerging markets PxH 0.49 339.8 -7.71 -7.41 12.38
ishares msci chile capped ecH 0.61 284.6 -7.83 -14.40 5.53
ishares msci Brazil capped eWZ 0.61 4,130.8 -8.24 -17.61 3.96
ishares latin America 40 ilf 0.50 805.1 -8.69 -10.79 10.61
ishares msci turkey tuR 0.61 514.1 -10.45 -8.31 16.01
ishares msci mexico capped eWW 0.50 2,515.6 -11.29 1.11 22.10
market Vectors Russia Rsx 0.62 802.8 -15.34 -15.04 16.71
ishares msci Russia capped eRus 0.61 262.7 -15.89 -12.42 -
InternatIonaL equIty: FrontIer
market Vectors Vietnam Vnm 0.76 482.3 16.34 -2.31 -
ishares msci frontier 100 fm 0.79 547.0 3.53 - -
gLoBaL equIty: sector
market Vectors Junior Gold miners GdxJ 0.55 2,022.0 33.14 -33.28 -
Guggenheim solar tAn 0.70 516.5 32.75 -11.99 0.99
Global x silver miners sil 0.65 263.8 24.73 -19.09 -
market Vectors Gold miners Gdx 0.52 8,025.7 22.48 -24.14 -4.77
Global x uranium uRA 0.69 210.1 18.07 -33.72 -
Powershares WilderHill clean energy PBW 0.70 235.4 14.87 -9.61 4.00
market Vectors Pharmaceutical PPH 0.35 323.8 12.07 - -
ishares Global Healthcare ixJ 0.48 1,133.1 7.47 22.44 22.86
first trust ise cloud computing sKyy 0.60 222.4 6.33 - -
ishares Global utilities Jxi 0.48 230.6 5.43 3.90 9.03
sPdR dow Jones Global Real estate RWo 0.50 1,050.9 5.27 7.79 25.24
Powershares Global Water Pio 0.75 270.7 4.74 6.98 18.79
Guggenheim s&P Global Water cGW 0.70 322.9 4.67 13.75 22.20
ishares Global infrastructure iGf 0.48 753.6 3.24 6.63 16.41
Powershares Global listed Private equity PsP 2.19 542.0 2.31 6.27 23.67
Powershares Water Resources PHo 0.62 1,011.5 2.25 10.91 19.03
market Vectors oil services oiH 0.35 1,432.5 1.56 - -
ishares Global timber & forestry Wood 0.48 341.0 1.43 5.50 22.98
first trust ise Water fiW 0.60 193.4 1.27 15.79 22.99
ishares Global tech ixn 0.48 704.6 1.15 10.46 21.67
flexshares mstar Glb upstr natural Resources GunR 0.48 2,812.4 1.11 - -
Guggenheim timber cut 0.70 288.4 1.08 7.27 27.30
ishares Global materials mxi 0.48 381.2 0.83 -3.30 16.04
ishares north American natural Resources iGe 0.48 2,215.1 0.74 -0.48 16.35
ishares Global consumer discretionary Rxi 0.48 280.7 -0.30 16.21 27.50
ishares Global industrials exi 0.48 347.5 -0.46 9.91 23.93
first trust nasdaq technology dividend tdiV 0.50 394.9 -0.56 - -
ishares Global energy ixc 0.48 1,022.7 -0.67 1.70 13.95
sPdR Global natural Resources GnR 0.40 503.2 -0.72 -5.30 -
ishares Global financials ixG 0.48 339.6 -1.25 6.44 22.39
ishares Global consumer staples Kxi 0.48 626.6 -1.47 13.41 18.96
ishares Global telecom ixP 0.48 531.8 -2.94 8.03 14.26
market Vectors Agribusiness moo 0.55 3,808.3 -3.08 -0.59 16.14
gLoBaL ex-u.s. equIty: sector
sPdR dow Jones international Real estate RWx 0.59 4,238.7 0.68 6.57 22.34
Vanguard Global ex-u.s. Real estate Vnqi 0.27 1,291.4 -1.56 6.15 -
ishares international developed Real estate ifGl 0.48 744.2 -1.77 5.57 20.98
InternatIonaL equIty: DeveLopeD sector
ishares msci europe financials eufn 0.48 489.6 2.11 4.87 -
InternatIonaL equIty: emergIng sector
eGshares emerging markets consumer econ 0.85 1,220.2 -4.84 6.14 -
gLoBaL equIty: HIgH DIvIDenD yIeLD
Global x superdividend sdiV 0.58 846.4 3.33 - -
Barclays etn+ fi enhanced Global Hiyld etn fiGy 0.80 1,434.3 2.31 - -
first trust dow Jones Global select dividend fGd 0.60 461.7 1.37 3.89 20.13
gLoBaL ex-u.s. equIty: HIgH DIvIDenD yIeLD
sPdR s&P international dividend dWx 0.45 1,344.3 0.80 0.14 18.87
Powershares international dividend Achievers Pid 0.56 1,113.4 -0.33 7.73 21.23
InternatIonaL equIty: HIgH DIvIDenD yIeLD
Wisdomtree intl dividend ex-financials doo 0.58 359.3 2.80 6.20 18.26
ishares international select dividend idV 0.50 3,435.1 1.58 7.92 24.46
Wisdomtree defA equity income dtH 0.58 299.2 1.54 7.58 17.90
sPdR s&P emerging markets dividend ediV 0.59 446.7 -6.81 -5.47 -
Wisdomtree emerging mkts equity income dem 0.63 4,020.3 -6.90 -2.67 15.61
gLoBaL equIty: aLpHa seeKIng
cambria shareholder yield syld 0.59 200.9 2.28 - -
InternatIonaL equIty: aLpHa seeKIng
Powershares dWA developed markets momentum PiZ 0.80 695.0 3.59 9.37 21.65
Powershares dWA emrg mkts momentum Pie 0.90 276.4 -3.19 1.54 19.42
u.s. FIxeD Income: BroaD marKet - BroaD maturItIes
schwab u.s. Aggregate Bond scHZ 0.05 552.4 2.17 - -
sPdR Barclays Aggregate Bond lAG 0.16 699.4 2.08 3.77 4.77
Vanguard total Bond market Bnd 0.10 18,741.2 2.03 3.69 4.82
ishares core total u.s. Bond market AGG 0.08 15,979.7 1.92 3.67 4.74
u.s. FIxeD Income: BroaD marKet - sHort-term
ishares short maturity Bond neAR 0.25 218.4 0.24 - -
Pimco enhanced short maturity strategy mint 0.35 4,099.4 0.12 0.92 -
u.s. FIxeD Income: government/creDIt - sHort-term
Vanguard short-term Bond BsV 0.10 14,148.8 0.68 1.81 2.62
u.s. FIxeD Income: government/creDIt - IntermeDIate
Vanguard intermediate-term Bond BiV 0.10 3,337.8 3.00 5.14 6.78
ishares intermediate Govt/credit Bond GVi 0.20 1,270.5 1.14 2.95 3.87
u.s. FIxeD Income: government/creDIt - Long-term
Vanguard long-term Bond BlV 0.10 603.5 6.01 8.57 9.09
u.s. FIxeD Income: government
Vanguard short-term Government Bond VGsH 0.12 396.2 0.17 0.69 -
u.s. FIxeD Income: treasury - sHort term
ishares 1-3 year treasury Bond sHy 0.15 11,820.1 0.24 0.72 1.08
schwab short-term u. s. treasury scHo 0.08 470.6 0.18 0.73 -
sPdR Barclays 1-3 month t-Bill Bil 0.13 1,016.2 0.02 0.16 0.10
ishares short treasury Bond sHV 0.15 2,623.5 0.01 0.04 0.10
u.s. FIxeD Income: treasury - IntermeDIate
ishares 7-10 year treasury Bond ief 0.15 4,241.0 3.43 5.29 4.51
schwab intermediate-term u.s. treasury scHR 0.10 282.9 1.82 3.69 -
ishares 3-7 year treasury Bond iei 0.15 6,301.0 1.43 3.11 3.19
u.s. FIxeD Income: treasury - Long-term
ishares 20+ year treasury Bond tlt 0.15 3,147.1 6.86 8.91 4.86
ishares 10-20 year treasury Bond tlH 0.15 239.9 4.64 6.61 5.48
u.s. FIxeD Income: agencIes
ishares Agency Bond AGZ 0.20 380.5 1.38 2.13 2.41
u.s. FIxeD Income: agency mBs
ishares mBs mBB 0.27 5,548.9 2.23 2.62 3.60
Vanguard mortgage-Backed securities VmBs 0.12 379.4 2.02 2.81 -
u.s. FIxeD Income: tIps
schwab u.s. tiPs scHP 0.07 411.9 2.77 3.92 -
sPdR Barclays tiPs iPe 0.18 614.5 2.65 3.85 5.88
ishares tiPs Bond tiP 0.20 12,516.7 2.55 3.93 5.99
flexshares iBoxx 5-year target duration tiPs tdtf 0.20 318.7 1.37 - -
ishares 0-5 year tiPs Bond stiP 0.20 568.2 0.60 1.24 -
Pimco 1-5 year u.s. tiPs stPZ 0.20 1,301.8 0.59 1.32 -
Vanguard Short-Term Inflation-Protected Sec VtiP 0.10 1,093.9 0.45 - -
flexshares iBoxx 3-year target duration tiPs tdtt 0.20 2,062.0 0.36 - -
u.s. FIxeD Income: munIcIpaL - BroaD marKet
Powershares insured national municipal Bond PZA 0.28 563.7 4.83 6.34 6.43
ishares california Amt-free muni Bond cmf 0.25 249.5 4.72 7.59 5.76
ishares national Amt-free muni Bond muB 0.25 3,160.9 3.64 5.21 4.87
sPdR nuveen Barclays municipal Bond tfi 0.23 944.7 3.50 5.52 4.97
u.s. FIxeD Income: munIcIpaL - sHort-term
market Vectors short municipal smB 0.20 229.3 1.04 3.14 2.97
sPdR nuveen Barclays short term municipal Bond sHm 0.20 2,147.8 0.73 2.24 2.21
ishares short-term natl Amt-free muni Bond suB 0.25 820.4 0.31 1.69 1.71
u.s. FIxeD Income: munIcIpaL - IntermeDIate
market Vectors intermediate municipal itm 0.24 597.4 4.29 5.80 5.19
Pimco intermediate municipal Bond strategy muni 0.35 195.9 1.89 3.43 -
u.s. FIxeD Income: munIcIpaL - HIgH yIeLD
sPdR nuveen s&P High yield municipal Bond HymB 0.45 195.8 7.14 - -
market Vectors High-yield municipal Hyd 0.35 818.5 6.30 7.38 9.03
u.s. FIxeD Income: munIcIpaL - BuILD amerIca BonDs
Powershares Build America Bond BAB 0.28 615.1 5.71 9.68 -
u.s. FIxeD Income: corporate - Investment graDe - BroaD maturItIes
Pimco investment Grade corporate Bond coRP 0.20 190.8 3.21 5.78 -
ishares iBoxx $ investment Grade corp Bond lqd 0.15 16,815.8 3.05 6.61 9.31
ishares credit Bond cft 0.20 800.2 2.92 5.31 7.90
ishares Aaa - A Rated corporate Bond qltA 0.15 401.2 2.49 - -
u.s. FIxeD Income: corporate - Investment graDe - sHort-term
Guggenheim Bulletshares 2017 corp Bond BscH 0.24 510.3 1.25 5.47 -
Vanguard short-term corporate Bond VcsH 0.12 7,672.3 0.85 3.27 -
sPdR Barclays short term corporate Bond scPB 0.12 3,024.8 0.49 2.00 -
Guggenheim Bulletshares 2016 corp Bond BscG 0.24 542.5 0.38 4.36 -
ishares 1-3 year credit Bond csJ 0.20 13,415.4 0.28 1.80 3.44
Guggenheim Bulletshares 2015 corp Bond Bscf 0.24 530.8 0.22 3.47 -
Guggenheim Bulletshares 2014 corp Bond Bsce 0.24 473.8 -0.08 1.95 -
u.s. FIxeD Income: corporate - Investment graDe - IntermeDIate
Vanguard intermediate-term corporate Bond Vcit 0.12 3,228.1 3.29 6.09 -
sPdR Barclays intermediate term corp Bond itR 0.15 456.8 1.95 4.60 6.86
ishares intermediate credit Bond ciu 0.20 5,715.3 1.68 4.35 6.68
Guggenheim Bulletshares 2018 corp Bond Bsci 0.24 240.7 1.48 - -
u.s. FIxeD Income: corporate - Investment graDe - Long-term
ishares 10+ year credit Bond cly 0.20 283.6 5.76 8.20 -
Vanguard long-term corporate Bond Vclt 0.12 624.7 5.08 8.74 -
u.s. FIxeD Income: corporate - Investment graDe - FLoatIng rate
ishares floating Rate Bond flot 0.20 3,736.6 -0.03 - -
sPdR Barclays inv Grade floating Rate flRn 0.15 357.9 -0.22 - -
u.s. FIxeD Income: corporate - HIgH yIeLD - BroaD maturItIes
sPdR Barclays High yield Bond JnK 0.40 10,376.8 2.89 7.93 18.21
Powershares fundamental Hiyld corp Bond PHB 0.50 622.1 2.75 7.15 13.39
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FUND NAME TICkER ExP RATIO % AUM ($M) YTD % 3YR % 5YR % FUND NAME TICkER ExP RATIO % AUM ($M) YTD % 3YR % 5YR %
ishares iBoxx $ High yield corporate Bond HyG 0.50 13,524.1 2.72 7.89 15.82
Advisorshares Peritus High yield Hyld 1.25 747.5 2.55 8.83 -
u.s. FIxeD Income: corporate - HIgH yIeLD - sHort-term
Guggenheim Bulletshrs 2016 Hiyld corp Bond BsJG 0.42 482.8 1.60 - -
Guggenheim Bulletshrs 2015 Hiyld corp Bond BsJf 0.42 847.2 1.45 7.12 -
Pimco 0-5 year High yield corporate Bond Hys 0.55 4,401.0 1.21 - -
sPdR Barclays short term High yield Bond sJnK 0.40 3,372.7 1.12 - -
Guggenheim Bulletshrs 2014 Hiyld corp Bond BsJe 0.42 524.4 -0.01 5.98 -
u.s. FIxeD Income: corporate - HIgH yIeLD - IntermeDIate
Guggenheim Bulletshrs 2018 Hiyld corp Bond BsJi 0.42 193.8 1.92 - -
Guggenheim Bulletshrs 2017 Hiyld corp Bond BsJH 0.42 260.7 1.84 - -
u.s. FIxeD Income: corporate - convertIBLes
sPdR Barclays convertible securities cWB 0.40 2,376.4 5.93 9.88 -
u.s. FIxeD Income: corporate - Loans
Powershares senior loan BKln 0.66 7,008.9 0.63 - -
u.s. FIxeD Income: corporate - preFerreD stocK
sPdR Wells fargo Preferred stock PsK 0.45 228.7 6.60 4.12 -
Powershares Preferred PGx 0.50 2,007.6 5.65 6.39 18.69
ishares u.s. Preferred stock Pff 0.48 8,685.3 5.31 5.66 23.67
Powershares financial Preferred PGf 0.64 1,422.1 4.92 6.08 27.69
gLoBaL FIxeD Income
Pimco total Return Bond 0.55 3,460.9 1.82 - -
Riverfront strategic income RiGs 0.22 219.0 1.63 - -
Guggenheim enhanced short duration Bond Gsy 0.28 573.1 0.28 1.09 0.67
sPdR Blackstone / Gso senior loan sRln 0.90 615.7 0.27 - -
InternatIonaL FIxeD Income: BLenDeD DeveLopment
sPdR Barclays international treasury Bond BWx 0.50 2,070.4 2.69 2.39 5.79
sPdR Barclays international corporate Bond iBnd 0.55 271.4 2.27 5.81 -
Vanguard total international Bond Bndx 0.20 833.9 1.91 - -
SPDR DB Intl Govt Inflation-Prot Bond WiP 0.50 947.5 1.59 2.89 9.00
Wisdomtree Asia local debt Ald 0.55 512.8 0.14 - -
InternatIonaL FIxeD Income: DeveLopeD
ishares international treasury Bond iGoV 0.35 524.8 2.76 2.12 4.61
Powershares international corporate Bond PicB 0.50 196.6 2.02 6.24 -
sPdR Barclays short term intl treasury Bond BWZ 0.35 266.8 0.84 -0.50 3.72
InternatIonaL FIxeD Income: emergIng
Powershares emrg mkts sovereign debt Pcy 0.50 1,832.6 2.83 6.80 11.83
ishares J.P. morgan usd emerging mkts Bond emB 0.60 3,706.3 2.60 6.38 11.63
market Vectors emerging markets Hiyld Bond Hyem 0.40 213.8 2.20 - -
ishares emrg mkts local currency Bond lemB 0.60 562.8 -0.32 - -
Wisdomtree emerging markets local debt eld 0.55 963.9 -1.34 -0.14 -
Powershares chinese yuan dim sum Bond dsum 0.45 210.8 -1.34 - -
market Vectors emrg mkt local currency Bond emlc 0.47 838.4 -1.51 0.39 -
ishares china large-cap fxi 0.73 5,579.9 -7.77 -3.46 10.10
commoDItIes: BroaD marKet
GreenHaven continuous commodity Gcc 1.03 343.3 8.29 -7.65 5.98
iPath dJ-uBs commodity etn dJP 0.75 1,630.0 7.02 -7.89 4.30
elements Rogers intl commodity etn RJi 0.75 789.8 4.04 -4.96 8.43
united states commodity usci 1.03 548.2 3.33 -6.49 -
ishares s&P Gsci commodity GsG 0.62 1,063.6 2.49 -2.95 6.50
Powershares dB commodity tracking dBc 0.88 5,683.7 1.83 -4.20 6.46
commoDItIes: agrIcuLture
Powershares dB Agriculture dBA 0.96 1,350.6 12.87 -7.84 2.99
elements Rici Agriculture etn RJA 0.75 250.0 6.52 -9.73 4.91
commoDItIes: energy
united states natural Gas unG 1.00 831.1 23.30 -16.05 -28.71
iPath s&P Gsci crude oil etn oil 0.75 222.7 4.37 -2.27 6.66
united states oil uso 0.76 636.6 4.02 -2.13 6.31
Powershares dB oil dBo 0.74 310.0 3.42 -1.53 9.62
Powershares dB energy dBe 0.73 248.2 1.17 -0.53 9.92
commoDItIes: InDustrIaL metaLs
Powershares dB Base metals dBB 0.73 299.7 -3.44 -13.72 6.94
commoDItIes: precIous metaLs
ishares Gold trust iAu 0.25 7,030.9 10.02 -2.33 6.76
etfs Physical swiss Gold sGol 0.39 1,138.6 9.92 -2.50 -
sPdR Gold Gld 0.40 34,400.5 9.90 -2.49 6.62
ishares silver trust slV 0.50 7,164.4 8.77 -14.98 9.58
etfs Physical silver siVR 0.30 394.3 8.49 -14.87 -
etfs Physical Platinum PPlt 0.60 754.5 5.32 -7.72 -
etfs Physical Palladium PAll 0.60 475.5 4.14 -3.00 -
currency: BLenDeD DeveLopment
Powershares dB us dollar index Bullish uuP 0.80 696.3 -0.65 -1.08 -4.19
currency: DeveLopeD
currencyshares swiss franc trust fxf 0.40 264.2 1.37 1.44 5.45
currencyshares Australian dollar fxA 0.40 313.8 -0.10 -1.86 9.83
currencyshares canadian dollar trust fxc 0.40 273.1 -4.07 -4.16 2.77
currency: emergIng
Wisdomtree chinese yuan cyB 0.45 197.3 -0.69 1.18 0.94
asset aLLocatIon
Powershares cef income composite Pcef 1.73 513.0 3.28 6.92 -
First Trust Multi-Asset Diversified Income mdiV 0.68 564.8 2.78 - -
ishares Growth Allocation AoR 0.30 266.8 1.12 8.55 14.62
ishares moderate Allocation Aom 0.31 218.7 1.11 6.61 10.73
ishares Aggressive Allocation AoA 0.30 229.9 1.08 10.26 19.80
Guggenheim multi-Asset income cVy 0.82 1,211.6 1.05 11.54 27.17
aLternatIves: aBsoLute return
iq Hedge multi-strategy tracker qAi 0.94 672.9 1.31 3.89 -
Global x Guru GuRu 0.75 575.9 -1.64 - -
aLternatIves: tactIcaL tooLs
iPath s&P 500 Vix short-term futures etn Vxx 0.89 843.1 3.10 -28.64 -52.09
LeverageD
direxion daily Gold miners Bull 3x nuGt 1.14 722.8 72.97 -70.43 -
Proshares ultra nAsdAq Biotech BiB 0.95 374.1 34.03 89.64 -
Velocityshares 3x long natural Gas etn uGAZ 1.65 198.5 27.08 - -
Proshares ultra Real estate uRe 0.95 324.9 17.37 11.67 45.08
Proshares ultra silver AGq 1.98 547.3 16.80 -41.75 -2.02
Proshares ultraPro qqq tqqq 0.95 590.8 8.07 45.46 -
Proshares ultra 7-10 year treasury ust 0.95 2,950.8 6.65 9.72 -
Proshares ultra qqq qld 0.95 782.1 5.76 32.34 56.51
Proshares ultraPro Russell 2000 uRty 0.98 235.3 4.27 26.83 -
Proshares ultra midcap 400 mVV 0.95 1,944.8 4.11 22.60 50.53
direxion daily small cap Bull 3x tnA 1.02 869.7 3.80 25.51 68.20
Proshares ultra Russell 2000 uWm 0.98 210.9 3.29 23.23 48.68
uBs AG fi enhanced Big cap Growth etn fBG 0.60 979.8 3.15 - -
Barclays etn+ fi enhanced europe 50 etn feeu 1.00 1,100.4 2.37 - -
direxion daily s&P 500 Bull 3x shares sPxl 0.99 356.2 1.55 32.19 73.98
Proshares ultraPro s&P 500 uPRo 0.95 645.3 1.47 34.65 -
Proshares ultra s&P 500 sso 0.90 1,619.4 1.17 25.28 44.13
Proshares ultra financials uyG 0.95 845.7 -0.78 17.57 40.25
etRAcs 2x monthly lev long mlP infrastr etn mlPl 0.85 217.3 -1.13 25.08 -
Proshares ultra Vix short-term futures uVxy 1.56 251.7 -1.52 - -
direxion daily financial Bull 3x fAs 1.10 1,333.6 -1.97 17.75 45.96
Proshares ultra dow30 ddm 0.95 311.2 -2.60 22.92 41.32
direxion daily emerging markets Bull 3x edc 1.14 348.1 -18.01 -26.18 22.99
Inverse
Proshares short msci emerging markets eum 0.95 370.5 4.98 -4.46 -20.61
Proshares ultrashort dow 30 dxd 0.95 212.7 1.46 -27.56 -38.19
Proshares short dow30 doG 0.95 270.2 0.73 -14.23 -20.54
Proshares ultrashort euro euo 0.93 406.2 -0.94 -3.64 -7.47
Proshares short s&P 500 sH 0.90 1,700.8 -1.23 -15.50 -21.93
direxion daily financial Bear 3x fAZ 1.01 376.4 -1.95 -48.49 -72.06
Proshares ultrashort s&P 500 sds 0.90 1,577.3 -2.43 -30.00 -40.71
Proshares short Russell 2000 RWm 0.95 449.4 -2.43 -18.46 -27.23
Proshares ultraPro short s&P 500 sPxu 0.93 439.7 -3.95 -43.66 -
Proshares ultrashort Russell 2000 tWm 0.95 234.5 -5.20 -36.50 -50.07
Proshares ultrashort 7-10 year treasury Pst 0.95 305.0 -6.83 -12.63 -12.90
Proshares short 20+ year treasury tBf 0.95 1,501.8 -6.84 -11.64 -
Proshares ultrashort qqq qid 0.95 335.1 -7.00 -35.12 -46.34
Proshares ultrashort yen ycs 0.95 411.8 -7.12 11.52 -2.41
direxion daily small cap Bear 3x tZA 1.01 610.9 -8.49 -53.57 -68.27
Velocityshares daily inv Vix short tm etn xiV 1.35 412.2 -9.25 30.32 -
Proshares ultrashort dJ-uBs crude oil sco 0.93 321.7 -9.40 -16.56 -32.69
Proshares ultrashort 20+ year treasury tBt 0.93 4,301.5 -13.08 -22.95 -18.60
direxion daily 20 year Plus treasury Bear 3x tmV 0.98 593.8 -19.30 -35.74 -
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