Daily ETF Watch: iBillionaire Fund Launches

Daily ETF Watch: iBillionaire Fund Launches

A cheaper version of the successful hedge-fund-replication strategy, GURU, hits the market today.

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Reviewed by: Hung Tran
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Edited by: Hung Tran

iBillionaire, the firm that created a hedge-fund replication index by the same name, today is involved in the launch of the Direxion iBillionaire Index ETF (IBLN) that is similar to the Global X Guru ETF (GURU | B-56), but cheaper.

Also, Compass EMP, a recent newcomer to the ETF space, today is launching a “smart beta” fund that targets small-cap stocks that have low-volatility profiles. The fund, the company’s fourth, is based on an index the Brentwood, Tenn.-based firm created itself. It’s the fund sponsor’s fourth ETF.

Friday’s launches will bring the year-to-date ETF rollout total to 116 new products compared with 79 new funds for the same period last year. The two new funds bring the total number of funds to 1,620 ETFs managing $1.874 trillion in assets.

iBillionaire ETF Launch

The iBillionaire security offers the prospect of outperforming the S&P 500 Index at a time when the stock benchmark is reaching new highs after surging 32 percent last year. Year-to-date, the S&P is up more than 5 percent, as investors continue to feed off of the Federal Reserve’s dovish stance on short-term interest rates.

IBLN will track the iBillionaire Index comprising 30 U.S. large- and midcap securities favored by the likes of Warren Buffett, Carl Icahn and George Soros, as stated in 13F filings.

Global X’s GURU has $500 million in assets and gathered $363.6 million last year, according to ETF.com data. The fund returned 47.3 percent in 2013. The ETF tracks an equal-weighted index that attempts to mimic concentrated equity positions taken by large hedge funds, as reported in 13F filings.

Raul Moreno, co-founder of iBillionaire, said in a previous interview with ETF.com that his company’s proposed offering is looking to have exposure to a finite number of hedge fund managers (10) with large-cap holdings, whereas GURU tracks about 75 hedge funds with small- and midcap holdings.

“It’s a finer slice of GURU because we don’t want to be labeled as an alternative investment fund,” said Moreno. “We’re really competing against the S&P 500.”

Also unlike GURU, the Direxion iBillionaire Index ETF will have an expense ratio of 0.65 percent, or $65 for every $10,000 invested, versus 0.75 percent, for GURU.

The fund’s launch was made public via an NYSE Arca electronic communique.

 

Compass EMP Launch

The Compass EMP U.S. Discovery 500 Enhanced Volatility Weighted Fund (CSF) will focus on small-cap companies with consistent positive earnings (at least its four most recent quarters) and weighted based on the volatility of each stock, according to a regulatory filing. Stocks with lower volatility receive a higher weighting, and stocks with higher volatility receive a lower weighting.

The self-indexing aspect of the ETF as well as its volatility-targeting index place Compass EMP at the center of two popular trends coursing through the rapidly growing ETF industry. Issuers are moving to self-index funds to bring their funds to market more cost efficiently and they continue to tap into investors’ appetite for funds outside of traditional market-cap-weighted offerings.

The fund sports an annual expense ratio of 0.68 percent, or $68 for every $10,000 invested. Its launch was made public via a Nasdaq electronic communique.

Compass earlier this month launched its first three funds—all volatility-targeting securities in the “smart beta” category.

Those funds, which came to market on July 2, and their expense ratios are as follows:

  • Compass EMP U.S. EQ Income 100 Enhanced Volatility Weighted Fund (CDC), 0.68 percent, or $68 for every $10,000 invested
  • Compass EMP U.S. 500 Volatility Weighted Index ETF (CFA), 0.58 percent
  • Compass EMP U.S. 500 Enhanced Volatility Weighted Index ETF (CFO), 0.68 percent

Filing

ALPS has put into registration an ETF focusing on developed countries in Europe at a time when European equities have been on a tear since European Central Bank President Mario Draghi's "whatever it takes speech" back in July 2012.

The ALPS Stoxx Europe 600 ETF will have exposure to 600 of the largest developed-market stocks of the Stoxx Europe Total Market Index, which is an aggregate of the Stoxx Total Market country indexes representing developed-market countries within Europe include Austria, Belgium and Czech Republic, among others, according to a regulatory filing.

Stocks must have a three-month average daily trading volume greater than $1.34 million to be included in the underlying Index. The stocks in the index are reviewed and rebalanced on a quarterly basis.

Associated fees and tickers are not currently available for the fund.

The eurozone’s battle against deflationary pressures includes a recent proposal for the first time calling for a negative rate on bank deposits parked overnight at the central bank. It also announced new bank loans, starting in September, targeted at spurring credit to the private sector.

 

Hung Tran is a former staff writer for etf.com.