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ETF Stats For March 2016: 17 Births, 17 Deaths

The 17 fund closures cancelled out the 17 product launches of March, leaving the quantity of current listings unchanged at 1,863. The product mix consists of 1,659 exchange-traded funds (“ETFs”) and 204 exchange-trade notes (“ETNs”). The number of actively managed ETFs decreased by one to 136. If you are having any doubts about the industry shift toward smart-beta products, the fact that all 17 of the March introductions carry a smart-beta designation should remove some of those doubts. In addition to the popular factors of yield, momentum, value, quality, and volatility, the new ETF strategies include security selection and weighting schemes involving gender diversification, “drone score,” and sustainable pricing power. Our database currently has 594 ETFs, or 32% of all listings, tagged as following a smart-beta strategy. Assets under management (“AUM”) jumped by 7.4% to a new record of $2.17 trillion, slightly surpassing the previous record of $2.14 trillion established 10 months ago. Inflows were quite strong at $33.1 billion; however, they only accounted for 22% of March’s AUM increase. The vast majority of the $149.3 billion jump in assets was produced by the $116.2 billion in market gains. The asset boost improved the overall health of the industry. The quantity of ETFs holding more than $10 billion in assets grew from 53 to 56, and they control 62.8% of the assets. Funds with $1 billion or more in assets jumped from 246 to 257, and they have a 90.0% market share. A whopping 430 ETFs and ETNs cannot muster even $10 million in assets, and half of all listings hold less than the median asset level of $66.7 million. Despite the stellar market gains, trading activity declined another 10.1% in March. The $1.68 trillion in dollar volume for the month is 22.6% below the level of January. The quantity of funds averaging $1 billion or more in daily trading activity dropped from 15 to 11. However, this small handful of ETFs still accounted for the majority (52.3%) of overall dollar volume. At the other end of the spectrum, 23 funds went the entire month without a single trade, and 277 (14.9%) registered zero volume on the last day of the month. March 2016 Month End ETFs ETNs Total Currently Listed U.S. 1,659 204 1,863 Listed as of 12/31/2015 1,644 201 1,845 New Introductions for Month 17 0 17 Delistings/Closures for Month 17 0 17 Net Change for Month 0 0 0 New Introductions 6 Months 101 12 113 New Introductions YTD 37 6 43 Delistings/Closures YTD 22 3 25 Net Change YTD +15 +3 +18 Assets Under Management $2,149 B $21.1 B $2,170 B % Change in Assets for Month +7.4% +9.1% +7.4% % Change in Assets YTD +2.5% -1.6% +2.4% Qty AUM > $10 Billion 56 0 56 Qty AUM > $1 Billion 253 4 257 Qty AUM > $100 Million 781 33 814 % with AUM > $100 Million 47.1% 16.2% 43.7% AUM Flows for Month $32.67 B $0.47 B $33.14 B AUM Flows YTD $35.80 B $0.83 B $36.63 B Monthly $ Volume $1,612 B $68.0 B $1,680 B % Change in Monthly $ Volume -9.9% -13.8% -10.1% Avg Daily $ Volume > $1 Billion 10 1 11 Avg Daily $ Volume > $100 Million 92 5 97 Avg Daily $ Volume > $10 Million 325 12 337 Actively Managed ETF Count (w/ change) 136 -1 mth -1 ytd Actively Managed AUM $24.7 B +1.7% mth +7.7% ytd Data sources: Daily prices and volume of individual ETPs from Norgate Premium Data. Fund counts and all other information compiled by Invest With An Edge. New products launched in March (sorted by launch date): Vanguard International Dividend Appreciation ETF (NASDAQ: VIGI ) , launched 3/2/16, seeks to track the NASDAQ International Dividend Achievers Select Index, a benchmark that measures the investment return of non-U.S. companies that have a history of increasing dividends. Its universe includes both developed and emerging markets. The ETF employs a passively managed, full-replication strategy, with an expense ratio of 0.25% ( VIGI overview ). Vanguard International High Dividend Yield ETF (NASDAQ: VYMI ) , launched 3/2/16, seeks to track the FTSE All-World ex US High Dividend Yield Index, a benchmark that measures the investment return of non-U.S. developed and emerging-market companies characterized by a high dividend yield. It has an expense ratio of 0.30% ( VYMI overview ). Goldman Sachs ActiveBeta Europe Equity ETF (NYSEMKT: GSEU ) , launched 3/4/16, seeks to track the Goldman Sachs ActiveBeta Europe Equity Index, which uses a performance-seeking methodology that invests in issuers across 15 developed market countries in Europe. The multifactor strategy targets good value, strong momentum, high quality, and low volatility, and has an expense ratio of 0.25% ( GSEU overview ). Goldman Sachs ActiveBeta Japan Equity ETF (NYSEMKT: GSJY ) , launched 3/4/16, seeks to track the Goldman Sachs ActiveBeta Japan Equity Index. The multifactor strategy seeks to capture common sources of active equity returns, including value (the security’s price compared to market value), momentum (performance history), quality (profitability relative to total assets), and volatility (consistency of returns). The ETF is reconstituted and rebalanced quarterly and carries an expense ratio of 0.25% ( GSJY overview ). SPDR SSGA Gender Diversity Index ETF (NYSEARCA: SHE ) , launched 3/8/16, seeks to track the performance of U.S. large-capitalization companies that are “gender diverse,” which are defined as companies that exhibit gender diversity in their senior leadership positions. The methodology begins with the largest 1,000 U.S. companies, segregated into 10 sectors. The methodology ranks these stocks by gender diversification within each sector, and then weights them by float-adjusted market cap to arrive at 10% sector weightings. The new ETF has an expense ratio of 0.20% ( SHE overview ). PureFunds Drone Economy Strategy ETF (NYSEARCA: IFLY ) , launched 3/9/16, seeks to track the Reality Shares Drone Index. Drone technology has seen rapid growth in recreational use by consumers and enthusiasts in addition to numerous commercial applications in agriculture, construction, real estate, energy, media, and government markets. The underlying index categorizes companies as either primary or secondary, and then caps the overall weights for each category based on the drone component of their business. Within each category, a committee determines the individual stock weightings based on their “drone score.” The eligible universe includes all countries, and the ETF has an expense ratio of 0.75% ( IFLY overview ). PureFunds Video Game Tech ETF (NYSEARCA: GAMR ) , launched 3/9/16, seeks to provide investment results of the EEFund Video Game Tech Index, a benchmark of companies involved in the video game technology industry, including game developers, console and chip manufacturers, and game retailers. Constituent companies (from both developed and emerging markets) are segmented into pure play, not pure, or conglomerate, with the conglomerate exposure limited to 10%. Stocks are then equal weighted within each segment. The ETF has an expense ratio of 0.75% ( GAMR overview ). PowerShares DWA Tactical Multi-Asset Income Portfolio (NASDAQ: DWIN ) , launched 3/10/16, is a fund-of-funds ETF tracking an index designed to select investments from a universe of income strategy ETFs. The criteria for inclusion are based on a combination of relative strength and current yield. Positions are evaluated monthly for potential rebalancing and reconstitution, with five ETFs being selected from a universe of seven segments plus a cash component. The ETF has a management fee of 0.25% plus acquired fund fees and expenses of 0.44% for a total expense ratio of 0.69% ( DWIN overview ). First Trust Dorsey Wright Dynamic Focus 5 ETF (NASDAQ: FVC ) , launched 3/18/16, is a fund-of-funds tracking the Dorsey Wright Dynamic Focus Five Index. The underlying index provides targeted exposure to five sector and industry ETFs sponsored by First Trust, along with a cash component. The sector rotation strategy is based on momentum, with the underlying relative strength analysis conducted twice monthly. The portfolio is rebalanced at each constituent change, with each ETF position being equally weighted. The cash portion can vary between 0% and 95%, and cash changes are capped at 33% at each twice-monthly evaluation. The ETF has a management fee of 0.30% plus acquired fund fees and expenses of 0.49% for a total expense ratio of 0.79% ( FVC overview ). Principal Price Setters Index ETF (NASDAQ: PSET ) , launched 3/22/16, tracks an index of mid- and large-capitalization U.S. stocks of companies with sustainable pricing power, consistent sales growth, high/stable margins, quality earnings, low leverage, and high levels of profitability. These characteristics are determined by a series of quantitative and qualitative factors, and the top-ranked securities are weighted by a proprietary methodology. The ETF has an expense ratio of 0.40% ( PSET overview ). Principal Shareholder Yield Index ETF (NASDAQ: PY ) , launched 3/22/16, tracks an index of mid- and large-capitalization U.S. stocks with sustainable shareholder yield, strong cash flow generation, and the capacity to increase dividends and/or buybacks. The universe of securities is screened by a series of quantitative and qualitative factors, and the top-ranked securities are weighted by a proprietary weighting methodology. PY comes with an expense ratio of 0.40% ( PY overview ). Victory CEMP Emerging Market Volatility Wtd Index ETF (NASDAQ: CEZ ) , launched 3/23/16, tracks a volatility-weighted index of emerging-market stocks with consistent positive earnings. The methodology begins with all publicly traded stocks from emerging-market countries. It then screens for consistent net positive earnings over four consecutive quarters, selects the 500 largest, and inversely weights them based on their 180-day standard deviation. The ETF is reconstituted every March and September, and its expense ratio is capped at 0.50% ( CEZ overview ). John Hancock Multifactor Consumer Staples ETF (NYSEARCA: JHMS ) , launched 3/29/16, tracks a Dimensional Fund Advisors (“DFA”) developed index targeting a wide range of U.S. consumer staples stocks. The multifactor approach emphasizes the three characteristics of smaller capitalization, lower relative price, and higher profitability. The expense ratio is capped at 0.50% ( JHMS overview ). John Hancock Multifactor Energy ETF (NYSEARCA: JHME ) , launched 3/29/16, tracks a DFA developed index targeting a wide range of U.S. energy stocks. The multifactor approach emphasizes the characteristics of smaller capitalization, lower relative price, and higher profitability. The expense ratio is capped at 0.50% ( JHME overview ). John Hancock Multifactor Industrials ETF (NYSEARCA: JHMI ) , launched 3/29/16, tracks a DFA developed index targeting a wide range of U.S. industrial stocks. The multifactor approach emphasizes the characteristics of smaller capitalization, lower relative price, and higher profitability. The expense ratio is capped at 0.50% ( JHMI overview ). John Hancock Multifactor Materials ETF (NYSEARCA: JHMA ) , launched 3/29/16, tracks a DFA developed index targeting a wide range of U.S. materials stocks. The multifactor approach emphasizes the characteristics of smaller capitalization, lower relative price, and higher profitability. The expense ratio is capped at 0.50% ( JHMA overview ). John Hancock Multifactor Utilities ETF (NYSEARCA: JHMU ) , launched 3/29/16, tracks a DFA developed index targeting a wide range of U.S. utilities stocks. The multifactor approach emphasizes the characteristics of smaller capitalization, lower relative price, and higher profitability. The expense ratio is capped at 0.50% ( JHMU overview ). Product closures in March and last day of listing : ETFS Physical White Metal Basket Shares (NYSEARCA: WITE ) 3/2/16 Recon Capital FTSE 100 (NASDAQ: UK ) 3/10/16 MAXIS Nikkei 225 (NYSEARCA: NKY ) 3/11/16 PowerShares China A-Share (NYSEARCA: CHNA ) 3/18/16 PowerShares Fundamental Emerging Markets Local Debt (NYSEARCA: PFEM ) 3/18/16 PowerShares KBW Capital Markets (NYSEARCA: KBWC ) 3/18/16 PowerShares KBW Insurance (NYSEARCA: KBWI ) 3/18/16 ProShares Managed Futures Strategy (NYSEARCA: FUTS ) 3/18/16 Direxion Value Line Conservative Equity (NYSEARCA: VLLV ) 3/23/16 Direxion Value Line Mid- and Large-Cap High Dividend (NYSEARCA: VLML ) 3/23/16 Direxion Value Line Small- and Mid-Cap High Dividend (NYSEARCA: VLSM ) 3/23/16 ALPS Sector Leaders (NYSEARCA: SLDR ) 3/24/16 ALPS Sector Low Volatility (NYSEARCA: SLOW ) 3/24/16 ALPS STOXX Europe 600 (NYSEARCA: STXX ) 3/24/16 Global Commodity Equity (NYSEARCA: CRBQ ) 3/24/16 iShares iBonds Mar 2016 Term Corp ex-Financials (NYSEARCA: IBCB ) 3/29/16 iShares iBonds Mar 2016 Term Corporate (NYSEARCA: IBDA ) 3/29/16 Product changes in March and prior months: Compass EMP ETFs were renamed Victory CEMP ETFs effective October 28, 2015. EGShares Emerging Markets Domestic Demand ETF (NYSEARCA: EMDD ) became EGShares EM Strategic Opportunities ETF (EMSO) and reduced its expense ratio to 0.65% effective March 1. Despite the name and ticker change, the underlying index still claims to be “a 50-stock free-float market-capitalization-weighted index designed to measure the performance of companies in emerging markets that are tied to domestic demand.” Global X FTSE Greece 20 ETF (NYSEARCA: GREK ) changed its underlying index and its name to Global X MSCI Greece ETF effective March 1. The names of the iShares iBonds target maturity ETFs were changed to include “Term”, and the “AMT-Free” funds were renamed “Muni Bond” ETFs effective March 1. VelocityShares performed a 1-for-10 reverse split of UWTI and 1-for-25 reverse split of UGAZ ( press release ) effective March 14. SPDR executed 1-for-2 reverse splits of TFI and SHM ( press release ) effective March 15. Deutsche X-trackers FTSE Developed ex US Enhanced Beta ETF (NYSE: DEEF ) was renamed Deutsche X-trackers FTSE Developed Ex US Comprehensive Factor ETF, and Deutsche X-trackers Russell 1000 Enhanced Beta ETF (NYSE: DEUS ) was renamed Deutsche X-trackers Russell 1000 Comprehensive Factor ETF effective March 16. Invesco PowerShares changed the names and underlying indexes on four ETFs , with two receiving new ticker symbols, effective March 21. PowerShares S&P Emerging Markets High Beta ETF (NYSEARCA: EEHB ) became PowerShares S&P Emerging Market Momentum ETF (EEMO). PowerShares S&P International Developed High Beta Portfolio ETF (NYSEARCA: IDHB ) became PowerShares S&P International Developed Momentum ETF (IDMO). PowerShares S&P International Developed High Quality ETF (NYSEARCA: IDHQ ) became PowerShares S&P International Developed Quality ETF. PowerShares S&P 500 High Quality Portfolio ETF (NYSEARCA: SPHQ ) became PowerShares S&P 500 Quality Portfolio ETF. United States 12 Month Natural Gas ETF (NYSEARCA: UNL ) became a “broken product” on March 21 when it suspended its ability to create new shares . United States Short Oil ETF (NYSEARCA: DNO ) became a “broken product” on March 21 when it suspended its ability to create new shares . Direxion performed reverse splits on GUSH , GASL , INDL , LABU , BRZU , LBJ , EDC , and RUSL and forward splits on YANG and OTCQB:DRIO ( press release ) effective March 24. Announced product changes for coming months: Highland will close its three hedge-fund replication ETFs. April 11 will be the last day of trading for Highland HFR Equity Hedge ETF (NYSEARCA: HHDG ), Highland HFR Global ETF (NYSEARCA: HHFR ), and Highland HFR Event-Driven Activist ETF (NYSEARCA: DRVN ). ProShares 30 Year TIPS/TSY Spread (NYSEARCA: RINF ) will become ProShares Inflation Expectations ETF, with a new underlying index effective April 15 . Global X GF China Bond ETF (NYSEARCA: CHNB ) will close and liquidate, with its last day of trading set for April 18. Barclays is seeking shareholder approval to add an early termination trigger to the iPath S&P GSCI Crude Oil Total Return ETN (NYSEARCA: OIL ) and reduce the investor fee from 0.75% to 0.70% effective April 29. Horizons Korea KOSPI 200 ETF (NYSEARCA: HKOR ) will close and liquidate, with its last day of trading being April 29 . Van Eck Global intends to unite all of its investment products under the VanEck brand . As part of this effort, the entire lineup of Market Vector ETFs will become VanEck Vectors ETFs effective May 1. Previous monthly ETF statistics reports are available here . Disclosure: Author has no positions in any of the securities, companies, or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) is received from, or on behalf of, any of the companies or ETF sponsors mentioned.

Smart Beta ETFs Not So Smart?

Smart beta ETFs that were on fire for quite some time now appear to be losing some momentum. Smart beta strategy helps to exploit market anomalies by adding extra selection criteria to the market cap or rules-based indices. These include among other strategies value – stocks trading cheap but performing better than stocks trading at a higher value, momentum – based on ongoing trend, dividend – stocks paying high dividend perform better in the long run and volatility – stable stocks perform better any day (read: How to Play the Choppy Market with Cheap Smart Beta ETFs ). In fact, the popularity of smart beta has soared to such a point, where a Create-Research survey has found that smart beta ETFs make up for around 18% of the U.S. ETF market. The U.S. markets are experiencing extreme volatility and the factors responsible for it are global growth concerns, escalating geopolitical tensions, a surge in the U.S. dollar and uncertainty over the timing of the next interest rate hike. Against this backdrop, investors look for smart stock-selection strategies to alleviate market risks. But nothing works forever, not even smart strategies. This is as true for smart beta ETFs as for market anomalies. Per a report by Research Affiliates’ analysts, one of the primary reasons why smart beta strategies have been performing well is because of their growing popularity, which led to higher valuations rather than structural alpha. The latter is the quality of the strategy and its potential to beat the benchmark on a sustainable and repeatable basis. This does not mean that one should reject smart beta ETFs altogether. If any inefficiency is spotted in the market, smart beta ETFs enable investors to exploit it at a cheap cost. However, it should be noted that not all smart beta ETFs have fulfilled their promise of delivering market-beating returns (read: Smart Beta ETFs That Stood Out Amid Market Volatility ). Below we have highlighted a few ‘Smart Beta’ options that underperformed the broader U.S. market ETF SPDR S&P 500 ETF (NYSEARCA: SPY ), which has gained about 1.6% so far this year (as of March 30, 2016) First Trust Dorsey Wright Focus 5 ETF (NASDAQ: FV ) This ETF tracks the Dorsey Wright Focus Five Index, which provides targeted exposure to the five First Trust sector and industry-based ETFs that Dorsey, Wright & Associates (DWA) believes have the highest potential to outperform other ETFs in the selection universe. It is a popular ETF with AUM of $4.6 billion and trades in solid volumes of around 2.2 million shares a day on average. The fund charges a higher 89 bps in fees. The ETF has lost 8.2% in the year-to-date period (as of March 30). Guggenheim S&P SmallCap 600 Pure Growth ETF (NYSEARCA: RZG ) This fund tracks the S&P SmallCap 600 Pure Growth Index. The product has a wide exposure across 146 stocks with each holding less than 2% share while healthcare and financials are the top two sectors accounting for over 20% share each. The ETF has AUM of $192 million but trades in light volume of about 28,000 shares a day on average. It charges 35 bps in annual fees and fell 2.4% in the year-to-date period. SPDR Russell 1000 Momentum Focus ETF (NYSEARCA: ONEO ) The fund tracks the Russell 1000 Momentum Focused Factor Index and holds a broad basket of 903 securities that are widely diversified with none holding more than 0.82% of assets. ONEO has accumulated $340.2 million in its asset base. It charges a lower fee of 20 bps per year and trades in solid volume of around 137,000 shares. The ETF fell 0.5% in the year-to-date period (read: 5 Very Successful ETF Launches of 2015 ). Original Post

The BRICs To Consider Now

Once considered the darlings of the emerging market world, the BRICs have faced economic and political challenges lately. However, certain BRICs still offer opportunities for investors. BlackRock’s Terry Simpson explains. artpixelgraphy_studio / Shutterstock Many BlackRock fund managers have raised their emerging market (EM) allocations lately, and we’ve warmed up in general to the asset class after a long underweight . EM valuations overall, as measured by the MSCI Emerging Markets Index, look cheap, and we see value for long-term investors. A Fed on hold and a weaker dollar are good news for the asset class (see the chart below), and there are signs of progress on structural reforms in certain EM countries. Click to enlarge Which BRIC country do you like best? Join in. You may be wondering, however, what we think of the so-called BRIC countries in particular – otherwise known as Brazil, Russia, India, and China – especially given the recent political scandal and slowing growth headlines surrounding some of these countries. Despite the economic and political challenges facing these one-time darlings of the EM world, we still see long-term opportunities within the BRIC universe. We like Brazil The words impeachment, corruption, bribery, and recession are all too synonymous with Brazil these days. And perhaps with justification, Brazilian gross domestic product (( GDP )), on the decline since 2010, finally entered negative territory in 2015 at -3.0 percent. Economists expect to again see negative economic activity in Brazil this year, with growth at -3.4 percent, according to Bloomberg data. Local inflation remains high, forcing the Brazilian central bank to leave its policy rate unchanged since July 2015. With so much bad news emanating from Brazil, one might ask what’s there to like about this BRIC? We believe Brazil offers value, as there’s potential for a significant turnaround story. Much of the bad news about Brazil appears already priced into the market. Brazilian equities, as measured by the MSCI Brazil Index, are 20 percent cheaper than their 2014 highs on a price to book basis. This means we could see Brazilian stocks move higher if confidence in the market is restored. We think sentiment toward Brazil has just begun to turn, as many long-term investors remain on the sidelines. In addition, lower real wages and declining labor costs are making the country more attractive for foreign business when measured against regional Latin American peers. However, an investor confidence recovery ultimately will rest on whether we’ll see real political change and reforms. We’re neutral toward Russia Undoubtedly, Russia is the BRIC member with the most to gain from recovering oil prices. Russia reaped the benefits of the oil price boom starting in the early 2000s, averaging 7.1 percent GDP for the six years ending in 2008. Last year, oil revenue accounted for 45 percent of Russian government revenue, according to an analysis of data accessible via Bloomberg. But Russia’s economy has suffered more recently, following declining oil prices and economic sanctions imposed by the U.S. and Eurozone. The country entered a recession in 2015 and is expected to produce negative growth again in 2016, based on consensus forecasts available via Bloomberg. A flexible currency has allowed Russia to quickly adjust to economic difficulties, and Russian markets are receiving inflows following rebounding oil prices. However, we need to see sustained economic momentum and a more sustainable long-term economic growth model not so dependent on oil. Thus, in the context of an EM portfolio, we advocate remaining neutral this BRIC. We favor India India is a bright spot within the BRICs and stands out in a world where economic growth is sparse. In 2014 and 2015, the country expanded at 6.9 percent and 7.3 percent, respectively. According to the IMF, India’s 2016 GDP is forecasted to grow at 7.5 percent. Yet even with this rosy economic picture, India’s market performance has waned since reaching a post-crisis peak in January 2015, weighed down by a rising U.S. dollar and slow progress on fiscal reforms. Looking forward, we are encouraged that the Indian government has committed to keeping the fiscal deficit in check. Furthermore, the government is expected to spend 0.3 percent of GDP on public infrastructure that should support growth. As such, we’re likely to see fiscal and monetary policy makers working in unison to spur growth. This, combined with a reasonable valuation for the S&P BSE Sensex Index, bodes well for Indian stocks into 2017. We like China Sentiment toward China began deteriorating in August of 2015, with the domestic stock market crash and less transparent currency management . Long-term issues remain, and the country’s reforms have slowed due to cyclical pressures. However, the reforms that have been implemented are ones that are supportive to growth. In addition, the Fed’s delay has eased pressure on China, and we’re encouraged by the slowing of capital outflows from the country. Finally, Chinese stocks (measured by the Shanghai Stock Exchange Composite Index) have trailed their Brazilian counterparts (measured by the Ibovespa Index) and moved in lock step with Russian equities (represented by the MICEX Index) since late January, based on Bloomberg data, and their low valuations are poised to potentially rise in a risk-on environment. Looking forward, we could see Chinese multiples increase as investors regain confidence in the country’s outlook. Within China, we prefer the offshore market vs. the domestic market, as well as domestic sectors and companies that could benefit from expected Chinese structural reform. The main takeaway from all of this: Investors should be cognizant that EM is no longer a homogenous asset class, and each market faces its own challenges. Even within the BRICs, there is growing heterogeneity across countries. This post , originally appeared on the BlackRock Blog