Some New ETFs Could Be Stars in 2013
The lack of new ETF quantity has been made up for in terms of quality.
In late September, SJNK's AUM total was $289 million. A month ago, it was $433.1 million. SJNK's modified adjusted duration of 2.12 years is just under half that of its longer duration cousin, the SPDR Barclays High Yield Bond ETF (NYSEARCA:JNK). If there is a knock on SJNK, it is that its longer duration rivals have outpaced it this year.
Market Vectors International High Yield Bond ETF (NYSEARCA:IHY): Keeping with the theme of soaring inflows to bond funds this year, the Market Vectors International High Yield Bond ETF has been an unheralded beneficiary of that movement.
The simple explanation of what IHY does is that it is an international equivalent of JNK or the iShares iBoxx $ High Yield Corporate Bond Fund (NYSEARCA:HYG). IHY is 10 basis cheaper than HYG and has the same expense ratio, 0.4%, as JNK. The Market Vectors offering features a slightly higher 30-day SEC yield than its two larger rivals. Importantly, IHY has not deviated much from the performance of its US-focused rivals. Since its April debut, IHY has slightly outpaced HYG while lagging JNK by a scant amount.
For those that believe a new ETF has to have $100 million in AUM to be validated as a "good" fund, IHY does better than that. The ETF now has over $201 million in assets, implying asset growth of nearly tenfold since late September.
Market Vectors Morningstar Wide Moat Research ETF (NYSEARCA:MOAT): Upon debut, critics could have said that MOAT was too esoteric and too much of a niche play. Well, touting Warren Buffett's love of wide moat business has proven to be a smart marketing tool because MOAT has accumulated almost $99 million in AUM. Home to just 21 stocks, MOAT has jumped 6.6% since coming to market. An interesting footnote is that Facebook (NASDAQ:FB) is currently MOAT's largest holding with a weight of almost 6.7%.
First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV): The First Trust NASDAQ Technology Dividend Index Fund represents a direct play on an important theme for dividend investors: The tech sector's rise to dividend prominence. While yields are still not impressive across the board, tech is the largest dividend-paying sector in the US in dollar terms.
Add to that, with the massive cash hoards held by the likes of Microsoft (NASDAQ:MSFT), IBM (NYSE:IBM), and other familiar tech names, the sector is expected to provided dividend growth in the coming years. That is assuming the fiscal cliff is avoided and that is the one of the hurdles TDIV faces in the near term.
A unique aspect to TDIV is that it is not a straight tech play. Rather, the volatility that sector is often known for is tempered somewhat because the ETF is sure to include a 20% weight to telecommunications names at each rebalancing. That means Verizon (NYSE:VZ), AT&T (NYSE:T) and related issues are TDIV holdings.
TDIV has outperformed the Nasdaq 100 since its August debut, but both have traded lower. Still, TDIV deserves credit for being a play on an important, that being dividend growth potential, and for garnering $46.4 million in AUM to this point.
Editor's Note: This content was originally published on Benzinga.com by The ETF Professor.
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