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ETF Pulse: Launches and Closures
September 21, 2011
Global turbulence in the financial markets hasn’t stalled the issuance of new exchange-traded products (ETPs).
In the commodities space, Teucrium Trading launched three agriculture focused ETPs - the Teucrium Soybean Fund (NYSEArca: SOYB), Teucrium Sugar Fund (NYSEArca: CANE), and the Teucrium Wheat Fund (NYSEArca: WEAT).
“As the global economy and populations in emerging market countries like China, India and Brazil continue to expand faster than developed countries, the demand for and use of corn, soybeans, sugar and wheat is extraordinary, presenting the opportunity for a great investment opportunity,” said Sal Gilbertie, President of Teucrium Trading.
Each of the Teucrium ETPs uses just three futures contracts on their respective underlying commodity that are spread across different expiration dates.
Teucrium also manages a Corn Fund (NYSEArca: CORN), along with the Teucrium Natural Gas Fund (NYSEArca: NAGS) and the Teucrium WTI Crude Oil Fund (NYSEArca: CRUD), which both launched in February 2011.
CANE, SOYB and WEAT each charge 1% annually, not including the trading cost of the underlying futures contracts.
ETN Launches
Despite increasing credit risk to European banks, two firms introduced exchange-traded notes (ETNs). ETNs are debt obligations tied to the performance of an index, currency or commodity.
Credit Suisse launched the Market Neutral Equity ETN (NYSEArca: CSMN) which tracks the HS Market Neutral Index Powered by HOLT. The index contains a portfolio of 75 long stocks and 75 short stocks from a selection of global stocks using various factors including value and momentum.
"We believe market neutral strategies continue to garner interest from advisors for their risk/return profile and low correlation to market conditions. By providing the first market neutral strategy in an ETN format, we are helping investors to efficiently tap into alternative investment strategies," said Greg King, Head of Exchange Traded Products at Credit Suisse.
CSMN charges an annual fee of 1.05%.
Barclays Bank launched the iPath Inverse S&P 500 VIX Short Term Futures ETN II (NYSEArca: IVOP).
IVOP follows the S&P 500 VIX Short-Term Futures Index Excess Return which aims for an unleveraged investment in short-term futures contracts on the CBOE Volatility Index. The index offers exposure to a daily rolling long position in the first and second month VIX Index futures contracts and reflects the implied volatility of the S&P 500 Index, which provides an indication of the pattern of stock price movement in the US equities market, at various points along the volatility forward curve. The index rolls its exposure to the underlying futures contracts continuously throughout each month, targeting a constant weighted average maturity for the underlying futures contracts of one month.
The annual investor fee charged by IVOP is 0.89%.
ETF Closures
Direxion Shares announced the closure of the Direxion Airline Shares Fund (NYSEArca: FLYX). Direxion cited the fund’s low level of assets as the primary reason for FLYX’s closing. Airline stocks (NYSEArca: FAA) have taken a beating this year, falling by almost 30% in value.
Between October 10, 2011 and October 17, 2011, the fund will wind down its positions. This process will result in the fund not tracking its underlying indexes and its cash holdings will increase. Following the close of trading on Oct. 10, 2011 through Oct. 17, 2011, shareholders may only be able to sell their shares to certain broker-dealers and there is no assurance that there will be a market for the Fund during this time period.
The Boston, MA-based investment firm manages around $7 billion in ETF assets, which are linked to leverage and inverse products. |
