ETF trading activity, as measured by dollar volume, exploded in October to more than $2.3 trillion. This is a 71% increase over September and the highest level in more than three years. Assets under management increased 3.4% from the prior month to end at $1.91 trillion, establishing a new month-end record. Although this is just 0.1% above the previous high set two months ago, it only takes a penny to set a new record.
The quantity of listed products increased by two, finishing at 1,652 (1,441 ETFs and 211 ETNs), for the largest month-end count ever. Not to be left out, the quantity of actively managed ETFs also soared to a new high of 118 with nine new additions for the month.
Launch activity was strong with 22 products coming to market. All but one of the new offerings were ETFs, as ETN release activity continues to lag.
Closures were high for the month, and 20 ETFs are no longer with us. Eighteen of the closing funds wore the iShares brand. Many of these newly closed funds had significant asset levels, granting them a hall pass when it comes to compiling the monthly ETF Deathwatch list. Four of the ETFs had assets north of $50 million each, levels many ETFs can only dream about, and implies iShares has redefined ETF survivability.
The number of funds with more than $10 billion in assets increased from 41 to 43 and hold 56% of all ETP assets. Products above $1 billion grew from 235 to 241 and account for about 89% of assets. The cumulative assets of the 824 smallest products account for just 1% of industry assets, and it takes the 1,378 smallest products (83%) to equal the assets of SPDR S&P 500 (NYSEARCA:SPY). SPY is the largest ETF by far, and it single-handedly accounts for 9.6% of all ETP assets.
October had 23 trading days, which helped boost trading activity to more than $2.3 trillion. However, that is only about 10% more days than the 21 in September, so something else is responsible for the 71% surge. Looking at the daily volume data, it is easy to see the bulk of trading activity occurred mid-month. As you may recall, the market was selling off sharply, and the Ebola scare created some panic selling. Therefore, we can attribute the trading spike to fear.
The number of products averaging more than $1 billion a day in trading climbed from seven to thirteen, and they accounted for more than 62% of all ETP dollars traded. Products averaging more than $100 million per day jumped from 75 to 102 and accounted for nearly 91% of trading activity. Turnover was heavy, and the monthly turnover ratio (total dollar volume / assets under management) jumped to 1.22 from 0.74 in September.
|October 2014 Month End
|Currently Listed U.S.
|Listed as of 12/31/2013
|New Introductions for Month
|Delistings/Closures for Month
|Net Change for Month
|New Introductions 6 Months
|New Introductions YTD
|Net Change YTD
|Assets Under Mgmt ($ billion)
|% Change in Assets for Month
|Qty AUM > $10 Billion
|Qty AUM > $1 Billion
|Qty AUM > $100 Million
|% with AUM > $100 Million
|Monthly $ Volume ($ billion)
|% Change in Monthly $ Volume
|Avg Daily $ Volume > $1 Billion
|Avg Daily $ Volume > $100 Million
|Avg Daily $ Volume > $10 Million
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 October (sorted by launch date):
- Arrow DWA Tactical ETF (NASDAQ:DWAT), launched 10/1/14, is an actively managed fund-of-funds ETF that will invest in global market strategies based on their relative strength. Exposure may be across U.S. equities, international equities, fixed income, commodities, and currencies. In down markets, the fund can invest up to 30% in inverse U.S. securities. The fund’s expense ratio will be capped at 1.40% until 12/1/15 (DWAT overview).
- Compass EMP Developed 500 Enhanced Volatility Weighted Index ETF (NASDAQ:CIZ), launched 10/1/14, will invest in 500 non-U.S. companies in developed countries that have displayed net positive earnings for four quarters. Constituents are then weighted by standard deviation. The fund’s current dividend yield is about 2.2% when fully invested. The ETF has the ability to hedge by taking part of the portfolio to cash. If the index has a 10% decline, the fund will liquidate 75% of its holdings. The fund will be reinvested in full if it recoups the loss or in 25% increments each time it loses an additional 10%. The expense ratio will be capped at 0.78% through 10/31/15 (CIZ overview).
- ETRACS Monthly Pay 2xLeveraged US High Dividend Low Volatility ETN (NYSEARCA:HDLV), launched 10/1/14, is an exchange traded note designed to provide significant monthly income, which was calculated at an annual rate of 9.2% as of 9/24/14. The underlying index selects companies based on comparatively high forecasted dividend yields and relatively lower volatility. The payout will be linked to 2 times cash distributions and paid monthly. The fund sports a 0.85% expense ratio (HDLV overview).
- Falah Russell-IdealRatings U.S. Large Cap ETF (FIA), launched 10/2/14, is designed to be a portfolio of well-known American companies that have passed screenings for their ethical and financial dealings based on Islamic beliefs. There are currently 440 holdings, with the majority coming from the Technology and Health Care sectors. Investors will pay 0.70% annually to own this fund (FIA overview).
- InfraCap MLP ETF (NYSEARCA:AMZA), launched 10/2/14, is an actively managed ETF structured as a C-corporation that will invest in companies in the business of gathering, processing, transporting, and storing energy products. This is the first fund that attempts to follow my How to Build an MLP ETF That Does Not Lag Its Index. In this case, the leverage at just 1.3x is too low to accomplish the goal, although being actively managed, it doesn’t have an index to track. Even so, it is good to see someone is listening, and the fund will be a 1940 Act fund. The fund’s expense ratio is 0.95% (AMZA overview).
- ProShares Managed Futures Strategy (NYSEARCA:FUTS), launched 10/2/14, seeks to profit in both rising and falling markets by establishing long and short positions in futures contracts. The product will hold 24 contracts in asset classes such as commodities, currencies, and fixed income. It will issue a K-1 instead of a 1099 for tax reporting. The expense ratio is 0.75% (FUTS overview).
- Renaissance International IPO ETF (NYSEARCA:IPOS), launched 10/7/14, seeks to give investors exposure to newly listed international companies soon after their launch on non-U.S. exchanges. Companies are added to the fund on the fifth day of trading if they are considered ‘sizable’, while the rest are added on quarterly reviews. Companies are removed after two years. The fund sports a 0.80% expense ratio (IPOS overview).
- Fidelity Corporate Bond ETF (NYSEARCA:FCOR), launched 10/9/14, is an actively managed ETF seeking to provide current income by purchasing investment-grade corporate bonds and other corporate debt securities. As of 11/3, the effective duration is 6.9 years, but the website does not currently list any yield information. The ETF has an expense ratio of 0.45% (FCOR overview).
- Fidelity Limited Term Bond ETF (NYSEARCA:FLTB), launched 10/9/14, is an actively managed ETF seeking to generate current income by purchasing investment-grade debt securities of all types. As of 11/3, the effective duration is 2.9 years, but the website does not currently list any yield information. Investors will pay 0.45% to own this fund (FLTB overview).
- Fidelity Total Bond ETF (NYSEARCA:FBND), launched 10/9/14, is an actively managed ETF seeking to provide current income by purchasing debt securities of all types. As of 11/3, the effective duration is 5.2 years, but the website does not currently list any yield information. The fund sports a 0.45% expense ratio (FBND overview).
- ProShares Morningstar Alternatives Solution ETF (NYSEARCA:ALTS), launched 10/9/14, will provide diversified exposure to alternative asset classes through a fund-of-funds approach. The underlying ETFs utilize non-traditional strategies such as long/short, market neutral, managed futures, hedge fund replication, and others. The fund’s expense ratio will be capped at 0.95% until 9/30/16 (ALTS overview).
- iShares Commodities Select Strategy ETF (NASDAQ:COMT), launched 10/16/14, is an actively managed fund that provides exposure to a broad range of commodities through futures and commodity producer stocks. Energy futures represent over half of the fund. COMT will utilize a strategypioneered by First Trust Global Tactical Commodity Strategy Fund(NASDAQ:FTGC) of using an offshore wholly owned subsidiary to manage the futures trading and avoid the need to issue a K-1 tax form. Investors will pay 0.48% annually to own this fund (COMT overview).
- iShares MSCI Emerging Markets Horizon ETF (BATS:EMHZ), launched 10/16/14, will hold large- and mid-cap companies located in the 25% smallest (by market cap) emerging market countries. Securities from the BRIC (Brazil, China, India, and Russia) countries are excluded. The fund has an expense ratio of 0.50% (EMHZ overview).
- Vident Core U.S. Bond Strategy ETF (NASDAQ:VBND), launched 10/16/14, is attempting to add value to a basic bond fund by trying to improve credit and duration risks through enhanced diversification and risk management. It will attempt to diversify interest rate risks across all core U.S. bond sectors, over- or under-weight various bond sectors based on macroeconomics, and screen corporate bonds for relatively stronger leadership, governance, and creditworthiness factors. The website states yield information will not be available until 1/2/15. The fund sports a 0.45% expense ratio (VBND overview).
- First Trust Eurozone AlphaDEX ETF (NASDAQ:FEUZ), launched 10/22/14, will select stocks from the NASDAQ Eurozone Index universe using a rules-based methodology that scores stocks on three growth factors and three value factors. Growth factors are 3, 6, and 12-month price appreciation, sales to price, and one-year sales growth. The value factors are book value to price, cash flow to price, and return on assets. These factors make up a stock’s selection score, and the top 150 are included. The fund’s expense ratio is 0.80% (FEUZ overview).
- ValueShares U.S. Quantitative Value ETF (BATS:QVAL), launched 10/22/14, is an actively managed ETF that will generally invest in 50 mid- to large-cap U.S. stocks that it views as cheap, yet high quality. Its quantitative screens include forensic accounting to analyze financial statements for signs of financial distress, valuation for low enterprise values relative to operating earnings, and quality for long-term business fundamentals and current financial strength. Investors will pay 0.79% annually to own this fund (QVAL overview).
- Global X JPMorgan Efficiente Index ETF (NYSEARCA:EFFE), launched 10/23/14, is a fund-of-funds that will vary its holdings among 5 asset classes and 13 sub-classes, while targeting annual volatility less than 10%. Current holdings include iShares 20+ Years Treasury (NYSEARCA:TLT), Vanguard REIT (NYSEARCA:VNQ), Vanguard Emerging Markets (NYSEARCA:VWO), Vanguard S&P 500 (NYSEARCA:VOO), and iShares Core Small-Cap 600 (NYSEARCA:IJR). The fund has an expense ratio of 0.86% (EFFE overview).
- Global X JPMorgan US Sector Rotator Index ETF (NYSEARCA:SCTO), launched 10/23/14, is a fund-of-funds that will utilize a momentum-based sector rotation strategy in rising markets and can move fully or partially to short-term fixed income in falling or volatile markets. Current holdings are Dow Jones REIT SPDR (NYSEARCA:RWR), Consumer Staples SPDR (NYSEARCA:XLP), Utilities SPDR (NYSEARCA:XLU), Health Care SPDR (NYSEARCA:XLV), and Industrial SPDR (NYSEARCA:XLI). The fund sports a 0.86% expense ratio (SCTO overview).
- Recon Capital DAX Germany ETF (NASDAQ:DAX), launched 10/23/14, will invest in the 30 largest and most liquid companies listed on the German equities market, known as the DAX Index. This is not the first ETF to track this index. That honor goes to NETS DAX Index ETF (R.I.P. 2/9/09)which also used the ticker symbol DAX. The fund’s expense ratio is 0.45% (DAX overview).
- ALPS STOXX Europe 600 ETF (NYSEARCA:STXX), launched 10/31/14, will hold 600 of the largest developed market equities of the STOXX Europe Total Market Index. The United Kingdom accounts for about 29% of the fund and other country allocations include France 15%, Switzerland 14%, and Germany 13%. Investors will pay 0.25% annually to own this ETF (STXX overview).
- ARK Genomic Revolution Multi-Sector ETF (NYSEARCA:ARKG), launched 10/31/14, is an actively managed ETF that will be concentrated in the health care sector. Securities selected are expected to benefit from extending and enhancing the quality of life by incorporating advancements in genomics. This may be accomplished by offering new products and services relying on genomic sequencing, analysis, synthesis, or instrumentation. The fund’s expense ratio is capped at 0.95% until 9/30/15 (ARKG overview).
- ARK Innovation ETNETS DAX Index ETF (NYSEARCA:ARKK), launched 10/31/14, is an actively managed fund that will hold companies expected to benefit from development of new products or services related to scientific advancements and disruptive technologies. Unlike ARK’s other funds, it will not concentrate in a single industry but can be spread among health care, industrials, and technology. The fund’s expense ratio will be capped at 0.95% until 9/30/15 (ARKK overview).
Product closures/delistings in October:
- iShares MSCI Far East Financials ETF (NASDAQ:FEFN) [iShares Raises the Bar on ETF Survivability]
- iShares MSCI Emerging Markets Financials ETF (NASDAQ:EMFN)
- iShares MSCI Emerging Markets Materials ETF (NASDAQ:EMMT)
- iShares Retail Real Estate Capped ETF (NYSEARCA:RTL)
- iShares Industrial/Office Real Estate Capped ETF (NYSEARCA:FNIO)
- iShares Global Nuclear Energy ETF (NASDAQ:NUCL)
- iShares NYSE 100 ETF (NYSEARCA:NY)
- iShares NYSE Composite ETF (NYSEARCA:NYC)
- iShares Target Date 2010 ETF (NYSEARCA:TZD)
- iShares Target Date 2015 ETF (NYSEARCA:TZE)
- iShares Target Date 2020 ETF (NYSEARCA:TZG)
- iShares Target Date 2025 ETF (NYSEARCA:TZI)
- iShares Target Date 2030 ETF (NYSEARCA:TZL)
- iShares Target Date 2035 ETF (NYSEARCA:TZO)
- iShares Target Date 2040 ETF (NYSEARCA:TZV)
- iShares Target Date 2045 ETF (NYSEARCA:TZW)
- iShares Target Date 2050 ETF (NYSEARCA:TZY)
- iShares Target Date Retirement Income ETF (NYSEARCA:TGR)
- Global X Canada Preferred (NYSEARCA:CNPF) [press release]
- Global X Pure Gold Miners (NYSEARCA:GGGG)
Product changes in October:
- ProShares added the word “Dividend” to the name of the ProShares Dividend Aristocrats ETF (NYSEARCA:NOBL) effective October 1.
- PIMCO added the word “Active” to all of its actively managed ETFs effective October 31.
Announced Product Changes for Coming Months:
- ProShares will perform a reverse split on 10 ETFs effective November 6.
- First Trust Enhanced Short Maturity ETF (NASDAQ:FTSM) will perform a 1-for-2 reverse split effective November 10, and it reduced the capped expense ratio from 0.35% to 0.25% effective October 29.
Previous monthly ETF statistics reports are available here.
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