Nearly 200 exchange traded funds have debuted this year, bringing the number of U.S.-listed exchange traded products north of 1,600. It is safe to bet that issuers are not close to bringing new products to market, but competition is increasingly fierce.
At the end of the third quarter, 155 new ETFs had come to market this year, but just 16 topped $75 million in assets under management while 11 have crossed $100 million in AUM, according to Morningstar data. [Another Decent Year for New ETFs]
Following robust inflows to ETFs in October and November, the number of ETFs launched this year that have reached milestones such as $75 million and $100 million has increased, but just two rookie funds – the First Trust Dorsey Wright Focus 5 ETF (NasdaqGM: FV) and the First Trust Enhanced Short Maturity Fund (NasdaqGM: FTSM) — have topped $1 billion in AUM.
Just 44 ETFs launched in the past two years have surpassed $100 million in assets, according to S&P Capital IQ.
One of the more successful launches over that period is the $698.1 million iShares MSCI USA Quality Factor ETF (NYSEArca: QUAL). QUAL, which is not yet a year and a half old, has been on a torrid asset-gathering pace having added almost $210 million in assets over just the past 90 days.
QUAL tracks the MSCI USA Quality Index. That index emphasizes return on equity, earnings variability and debt-to-equity in the selection of large- and mid-cap U.S. stocks. [Different Quality ETFs]
“While quality can be in the eye of the beholder, this MSCI index based ETF holds 127 stocks based on a company’s return on equity, earnings variability, and debt-to-equity ratio. The ETF ranks favorably to S&P Capital IQ for its bullish technical trends, holding of companies with above-average S&P Capital IQ Quality Rankings and investment-grade Standard & Poor’s Credit Ratings, and modest 0.15% expense ratio,” said S&P Capital IQ in a new research note.
S&P Capital IQ rates QUAL overweight.
For the investor looking for sector exposure with rock-bottom annual fees, Fidelity’s suite of 10 sector funds launched in October 2013 demands attention. At the end of October, seven of those 10 ETFs had over $100 million in assets under management, including nearly $273 million for the Fidelity MSCI Information Technology Index ETF (NYSEArca: FTEC). [Fidelity’s Rapid Rise]
Like the other Fidelity sector ETFs, FTEC charges just 0.12% per year, making the Fidelity sector ETFs less expensive than even their Vanguard rivals.
“FTEC offers more exposure to semiconductors and data processing & outsourced services companies and no exposure to integrated telecom services stocks,” according to S&P Capital IQ, which rates the ETF overweight.
Another interesting feature of FTEC is its weight to Apple, which at 15.7% is among the largest of all ETFs.
Fidelity MSCI Information Technology Index ETF
Tom Lydon’s clients own shares of Apple.