Dow Jones Emerging Markets Financials Titans Index Fund (EFN)

Why EFN Could Be On The Move: Chinese banks start reporting results for full year and fourth quarter 2009 this week, beginning with Bank of China on Tuesday. “Profits at the 14 listed banks, some of the biggest in the world by market value, are expected by analysts to rise by more than a fifth in 2010 as China’s unwinding of its massive stimulus measures helps interest margins recover,” writes Michael Wei. In addition to analyzing recent results, investors will be looking for guidance on 2010 performance, as interest rates are expected to begin rising in the world’s fastest growing economy.

iShares Dow Jones U.S. Home Construction Index Fund (ITB)

Why ITB Could Be On The Move: This week includes multiple data releases of housing data, including existing home sales on Tuesday and new home sales on Wednesday. Both reports are highly-anticipated indicators of activity in the housing sector. Because new home sales figures are volatile and often revised later, Tuesday’s report is more likely to spur a market reaction. ITB is already up more than 12% on the year, making it one of the best-performing domestic sector ETFs.

iShares Dow Jones U.S. Healthcare Providers Index Fund (IHF)

Why IHF Could Be On The Move: After a marathon session of last minute deal making and political wrangling, the House of Representatives cast several historic votes on Sunday, bringing health care reform closer to reality. IHF tracks an index composed of health care providers, such as owners and operators of health maintenance organizations, hospitals, clinics, nursing homes, and rehabilitation centers. While this industry could see a surge in customers as a result of the new bill, the full impact of the reform remains to be seen. The outcome of the weekend’s vote was very much in doubt when markets closed on Friday, so IHF could see heavy trading volumes to start the week.

Disclosure: No positions at time of writing.

Related Stories:

• Three ETFs To Watch This Week: XLF, GXG, UUP
• Three ETFs To Watch This Week: VXX, FXA, ECH
• Three ETFs To Watch This Week: XLI, OIH, EWZ

When Are Emerging Markets Not Emerging Anymore? at Index Universe:

Interest in emerging markets has surged over the last year, as the developing economies of the world have taken the lead in the global recovery effort. There are a number of emerging markets ETFs available to ETF investors, but Olivier Ludwig notes that they’re not all identical. The most significant differences between the various options centers around the South Korea, Taiwan, and Israel, three markets considered to be “emerging” by some sources and “developed” by others. At one end of the spectrum is VWO and EEM, which allocate more than a quarter of holdings to these economies. At the other end is EEG, which avoids them altogether. And somewhere in between is GMM.

Can Copper Climb Higher? at Hard Assets Investor:

“Talk about a comeback,” writes Lara Crigger. “Since its March 2009 bottom, copper has risen more than 140%.” Crigger analyzes some of the drivers behind copper’s surge, as well as its recent stall. Copper is used widely in construction, and is a key component of electrical wiring and plumbing. In addition to dependence on the homebuilding industry, copper prices take cues from China, the world’s largest consumer of the metal. Crigger goes on to discuss several ETF options for gaining copper exposure, including JJC, DBB, and the new Copper Miners ETF from First Trust (CU).

TIP: Silver Bullet Or Steel Trap? at ETF Database:

With anxiety building over the long-term consequences of the huge increase in money supplies in recent months, investors are actively seeking out ways to protect assets from the ravages of inflation. The ETF of choice has been the Barclays TIPS Bond Fund (TIP), which invests in inflation-protected bonds issued by the U.S. government. While TIP is conceptually an effective hedge against rising prices, there’s a lot more than this fund that meets the eye. We outline three reasons to be concerned about TIP’s ability to protect against inflation, and also analyze a potentially better “inflation-proof” ETF.

Are Your Mutual Funds Creating a Tax Bill? at ETF Guide:

Ron DeLegge highlights a relatively unknown potential benefits of ETFs in this article, discussing the potential tax consequences of mutual fund investing. “Many investors are completely caught off guard by the tax consequences of their financial decisions,” writes DeLegge. “In many instances, people own investments that amount to nothing more than a big fat tax bill.” This article gives some tips for investors looking to improve their tax efficiency, noting that ETFs are a potentially superior investment vehicle.

Disclosure: No positions at time of writing.

Related Stories:

• This Week In ETFs: March 5th Edition
• This Week In ETFs: March 12th Edition
• This Week in ETFs: October 30th Edition

Boeing had been planning to ramp up production of its 777 jet from five per month to seven per month in early 2012. That move will now happen about six months earlier, in mid 2011. The planned production hike of the 747–from 1.5 jets per month to two per month–will now occur in mid-2012 instead of mid-2013. “Market improvement and our conservatively managed approach to production have put us in a position where we see it necessary to raise aircraft output,” the company said. “Increasing our rate is the right thing to do to support our customers.”

Boeing’s announcement comes less than two weeks after rival Airbus announced that it is planning to increase production of its A320 plane from 34 aircraft per month to 36 starting in December, giving investors confidence in a sector that a recovery in the airline industry is underway.

Aerospace & Defense ETFs On The Move

Boeing’s assessment of the aircraft industry sent aerospace and defense ETFs higher on Friday, one of the few bright spots on an otherwise grim day on Wall Street. The iShares Dow Jones U.S. Aerospace & Defense Index Fund (ITA) added about 1% in morning trading, while the PowerShares Aerospace & Defense Portfolio (PPA) added about 0.30%.

ITA is linked to the Dow Jones U.S. Select Aerospace & Defense Index, a benchmark that measures the performance of manufacturers, assemblers, and distributors or aircraft and parts, as well as defense providers. Boeing is ITA’s largest individual holding, accounting for about 8.2% of holdings. Among the other 31 components are United Technologies (8.1%), Lockheed Martin (6.1%), and Northrop Grumman (5.6%).

PPA is linked to the SPADE Defense Index, a benchmark tracking the performance of companies involved in development, manufacturing, operations, and support of defense, homeland security, and aerospace operations. Boeing is also the largest component of PPA, accounting for about 8% of total assets. While there is significant overlap between the holdings of PPA and ITA, these funds have a number of differences. PPA currently has about 57 holdings, compared to 32 for ITA (see Aerospace & Defense ETFs Head-to-Head: ITA vs. PPA).

Aerospace and defense ETFs have surged over the last year, boosted by a combination of continued strong demand for defense products and more recently an improved outlook for the airline industry–a sector that appeared to be on the ropes several times over the last two years. The Claymore/NYSE Arca Airline ETF (FAA) is up more than 100% over the last 52 weeks. FAA tracks the NYSE Arca Global Airline Index, a benchmark consisting of global passenger airline companies that make up the customer bases of Boeing and Airbus.

Disclosure: No positions at time of writing.

Related Stories:

• Aerospace & Defense ETFs Head-To-Head: ITA vs. PPA
• Aerospace & Defense ETFs In Focus On China, U.S. Budget
• Alcoa Boosts Materials ETFs

Adding further fuel to the fire is British Liberal Democrat leader Nick Clegg, who said recently that Britain could face massive political and social unrest on a scale similar to Greece if the next government cannot rally the public behind plans to cut the £17billion deficit. According to Clegg, if the structural deficit in the public finances is to be eliminated without further tax increases, at some point in the next eight years government spending will have to fall by as much as 10%, which could lead to a severe backlash from the public.

Some have even called for a British pound devaluation as a remedy to this situation. While this would make it easier for the country to pay its debts, it is hard to believe such a move would help the country in terms of exports. Once an industrial powerhouse, the UK is now almost entirely service-based with hardly any exporters of note. The iShares MSCI United Kingdom Index Fund (EWU) for example, allocates 22% of assets to financials, 20% to energy, and 15% to consumer staples. However, it is important to recognize that the vast majority of the energy firms either do work in the North Sea or completely outside of Britain, so a devaluation would do very little in terms of boosting demand by making British goods cheaper.

The one element that Britain has going for it is the long duration of its outstanding bonds. Unlike many other developed markets that are deeply in debt, Britain was able to issue more longer term notes, which will help it prevent a funding crisis in the near future. Britain’s weighted average maturity of government bonds is 14.2 years, significantly higher than France (7.1 years), Italy (6.9 years), Germany (6.4 years), or Japan (5.7 years). This could give the country greater flexibility in the near future.

Despite the long duration, some are growing increasingly worried that the situation in Britain is shaping up to be a repeat of “Black Wednesday,” when legendary financier George Soros famously shorted the pound and made more than $1 billion in a single day of trading. This came after the pound quickly devalued after an end to trading against the German currency in a band in the early 1990’s.  While unlikely, a similar situation could be brewing in present day Britain should the country not be able to fund its debts or if it sees a large increase in its cost of borrowing. Either situation could heavily impact FXB and send it sharply lower.

So while continental Europe’s problems may be subsiding, the worst could still be ahead for Britain. Investors considering buying British pounds should remain extra cautious while the country sorts out its budget difficulties, and consider safer currencies in the region such as the Swedish krone (FXS) instead.

For more ETF ideas, sign up for our free ETF newsletter.

Disclosure: no positions at time of writing.

Related Stories:

• Which Euro ETF Is Right For You?
• Euro ETFs Under Fire
• Five ETFs For A Tumbling Euro

As the ETF industry has continued to expand, options for gaining exposure to the financial sector have multiplied. According to the ETF screener, there are currently 33 non-leveraged, non-inverse ETF options that offer exposure to the financial sector. These funds include both ETFs targeting specific financial sub-industries (such as regional banks and broker-dealers) as well as more broad-based funds. While investors seeking exposure to the financial industry have historically gravitated towards funds focusing on U.S. stocks, more and more are seeking out ETFs focusing on other parts of the world.

Below, we profile seven ETFs that all offer exposure to the financial sector, but maintain very unique risk and return profiles (for more ETF investment ideas, sign up for our free ETF newsletter).

Financial Select Sector SPDR (XLF)

XLF is the largest and most heavily traded financial ETF, with total assets of more than $6 billion. XLF is linked to the Financial Select Sector Index, a benchmark that includes banks, insurance firms, and diversified financial services providers. XLF’s holdings read like a Who’s Who of Wall Street; JP Morgan, Bank of America, Wells Fargo, Goldman Sachs, and Citigroup in aggregate account for about 39% of total assets. XLF is currently up about 10% on the year, making it one of the top-performing sector SPDRs.

S&P Global Financials Index Fund (IXG)

For investors looking to establish exposure to the global financial industry, IXG may be an interesting option. This fund is designed to track the performance of the S&P Global Financials Sector Index, a benchmark that includes major banks, insurance companies, real estate firms, and securities brokers. Although the scope of IXG is global, it maintains a heavy tilt towards U.S. stocks, which account for about 36% of assets. After the U.S., the largest country allocations are to the UK (10%), Australia (8%), and Canada (7%).

IXG’s largest holding, HSBC, isn’t found in the Financial SPDR, but there is some significant overlap. JP Morgan, Bank of America, Wells Fargo, Berkshire Hathaway, Goldman Sachs, and Citi are all found in the top ten of both funds.

MSCI ACWI ex-U.S. Financials Sector Index Fund (AXFN)

As noted above, IXG maintains significant exposure to U.S. companies. For investors looking for financial exposure that avoids U.S. stocks altogether, AXFN is one option. This fund seeks to replicate the performance of the MSCI All Country World ex USA Financials Index, a benchmark that excludes U.S. stocks.

AXFN’s depth and breadth of exposure is impressive; this fund holds about 260 stocks from more than 35 countries, including both developed and emerging economies. The largest weights go to the UK, Australia, Canada, and Japan. AXFN is up about 8% since its inception in January.

Dow Jones Emerging Markets Financials Titans Index Fund (EFN)

For investors looking to make a play on the financial sector in developing economies, EFN may be the way to go. This ETF tracks the performance of the Dow Jones Emerging Markets Financials Titans Index, a benchmark that includes banks, insurance companies, and REITs in about eight emerging markets. Emerging markets financials present an interesting investment case because of the unique demographic trends in the developing world. Ongoing urbanization and a swelling middle class has created a rapidly-expanding customer base and growing demand for financing of “big ticket” purchases.

iShares also offers an option for exposure to emerging markets financials, the MSCI Emerging Markets Financials Sector Index Fund (EMFN). But these two ETFs aren’t as similar as their names might suggest, due to fundamental differences in the underlying indexes. Dow Jones emerging markets benchmark exclude “quasi-developed” markets like Taiwan, South Korea , and Israel; these three markets account for more than 20% of EMFN’s holdings (read more about the differences between these economies in this article from Index Universe).

Global X China Financial ETF (CHIX)

Whereas EFN offers exposure to a handful of emerging markets, CHIX focuses only on Chinese banks and financial institutions. This ETF tracks the performance of the S-BOX China Financials Index, a benchmark that includes about 25 banks, insurance companies, and real estate trusts. Major holdings in CHIX include ICBC (9.7%), China Construction Bank (9.4%), and Bank of China (9.0%); these banks are three of the largest financial institutions in the world.

CHIX has been incredibly active in 2010 as investors have carefully scrutinized any statement from Beijing that may shed light on upcoming policy decisions. The fund is down about 2% on the year.

MSCI Europe Financials Sector Index Fund (EUFN)

iShares recently launched a handful of ETFs targeting international financial sectors, including EUFN. This ETF tracks the MSCI Europe Financials Sector Index, a benchmark that consists of major European banks. Major holdings include several institutions with a major U.S. presence, such as HSBC, Barclays, Credit Suisse, and UBS.

EUFN focuses on developed economies in Europe giving the largest weightings to the UK, Spain, France, and Switzerland. In total, EUFN maintains exposure to about 100 financial firms in 15 different countries (Greek banks account for less than 3% of assets). EUFN could see some significant investor interest in coming months as Europe’s financial status continues to develop and the viability of austerity plans implemented to avoid a financial meltdown become more clear.

MSCI Far East Financials Sector Index Fund (FEFN)

This ETF is linked to the MSCI Far East Financials Index, a benchmark that measures the performance of the financial sector in the Far East region. Like most Asia Pacific ETFs, FEFN has a heavy tilt towards Japan, which makes up about 63% of fund holdings. The remaining exposure is divided between Hong Kong and Singapore.

FEFN is a relatively new fund, having launched in January 2010.

Disclosure: No positions at time of writing.

Related Stories:

• iShares Launches Five International Sector ETFs
• Global X Launches China Technology, Financial ETFs
• Financial ETFs in Focus: Obama’s Financial Regulation Overhaul

• Short FTSE/Xinhua China 25 (YXI): Linked to the FTSE/Xinhua China 25 Index
• Short Real Estate (REK): Linked to the Dow Jones U.S. Real Estate Index
• Short Basic Materials (SBM): Linked to the Dow Jones U.S. Basic Materials Index

These three funds join existing ProShares products offering 200% daily leveraged and -200% daily leveraged exposure to the same benchmarks. ProShares has now launched at least 13 new ETF products in 2010, including the company’s first 300% and -300% funds last month.

Read more about each of the new ETF offerings here.

Disclosure: No positions at time of writing.

Related Stories:

• ProShares Files For More Leveraged ETFs: China, Biotech, Real Estate, Materials
• ProShares Launches Inverse Treasury ETF
• Direxion Launches Leveraged Real Estate ETFs

The ETFdb 60 Index slipped 3.21 points, or 0.3%, to close at 1,052.63. Only 14 of the ETFdb 60’s components finished the day in positive territory.

Among the biggest losers for the day was United States Natural Gas Fund (UNG), which sunk by 4.9%. This steep slide came after the weekly storage report from the Energy Information Administration showed a pull from U.S. gas stocks of 11 billion cubic feet for the week ended March 12, well below the 28 bcf analysts and traders had predicted in a Dow Jones Newswires survey. “It was a pretty disappointing storage number,” said Cameron Horwitz, an analyst with SunTrust Robinson Humphrey in Houston. “There was almost a 20-bcf spread between the actual number and the consensus.” UNG has a history of big movements (and often on big losses) following the release of the weekly EIA numbers (see Thursdays With UNG).

The iShares Dow Jones Transportation Average Index Fund (IYT) was one of the few bright spots, finishing the day ahead by almost 1%. This was spurred by a good quarter from FedEx and an upbeat outlook from the package delivery giant. Third-quarter earnings climbed 146% to 76 cents a share from 31 cents a share a year ago. This beat Wall Street estimates of 72 cents. This strong quarter helped to buoy the rest of the transportation sector, especially railroads which were up around 1% for the day on hopes that demand would soon be increasing across the sector.

Disclosure: No positions at time of writing.

Related Stories:

• Daily ETF Roundup: IYR Falls, XLV Rises
• Daily ETF Roundup: GDX Jumps, UNG Slides
• Daily ETF Roundup: MOO Jumps, DBA Slides

“Evaluating the macroeconomic scenario and the outlook for inflation, the [Central Bank Committee] decided to hold the Selic rate at 8.75 percent a year, without bias, with five votes in favor and three votes to raise the Selic rate by 0.5 percentage point,” read a statement released yesterday. “The committee will carefully monitor the development of the macroeconomic outlook until its next meeting, to then define the next steps of its monetary policy strategy.” This suggests that there was significant disagreement among the Central Bank members, and perhaps is an indication that rates will rise in April. “The split vote is the final signal that the central bank normally gives before changing monetary policy,” said Silvio Campos Neto, chief economist at Banco Schahin in Sao Paulo.

The setback continues the rough year for EWZ which has lost 2.8% since calendars turned to 2010. In addition to overall weakness in the Brazilian economy, a stronger dollar has significantly hurt commodity producing equities, which make up a substantial portion of EWZ. In fact more than one-half of the total assets of EWZ are in the materials and energy sectors, suggesting that further weakness in commodity prices could keep the Brazilian ETF down in the near-term.

On the currency front, BZF is now down about 1% for the year after the central bank’s most recent decision did little to attract foreign investors. Central banks in many other emerging markets (and even developed economies) have begun to raise rates, putting extra pressure on Brazil to match the increases with hikes of its own. In addition, some are growing concerned that political pressure may be building on the bank to keep rates low ahead of the elections later this year. If this appears to be the case, it could lead to further weakness in the currency, which despite its recent weakness, is up more than 33% over the past 52 weeks.

For more ETF news, sign up for our free ETF newsletter.

Disclosure: Eric is long EWZ

Related Stories:

• Central Bank “March Mayhem” Puts Currency ETFs in Focus
• Van Eck Launches Small-Cap Brazil ETF
• All Eyes On Brazil ETFs

Pinpointing the exact cause of the sharp decline in sugar prices is difficult, but it appears that both fundamental and speculative forces are at work. Sugar output in India is now expected to top previous forecasts, as yields in the primary cane-growing states are on pace to exceed expectations. Farm Minister Sharad Pawar recently said that output for the 2010 fiscal year will top 17  million metric tons, higher than the 16.8 million tons estimated by the Indian Sugar Mills Association earlier this month. Increased output in India would translate into reduced import needs for the world’s largest consumer of sugar, freeing up global supplies.

Separately, an Australian growers group indicated that output could increase by as much as 7% over last season. Australia is the third-largest exporter of sugar.

The iPath Dow Jones-UBS Sugar Total Return ETN (SGG) dropped 36% between the end of January and Tuesday’s close, as speculators who had pushed prices to near record highs all began running for the exits. The pullback may have been a bit overblown, however, as SGG has staged a mini-rally. SGG bounced back on Thursday, adding nearly 4% in late afternoon trading.

SGG’s rally came after analysis firm FO Licht increased its estimate for the deficit in global sugar output, saying global consumption this year would exceed production by 7.7 metric tonnes. The previous forecast had projected a gap of only 6 million tonnes. Also on Thursday, Barclays Capital said that “considerable upside risk” to sugar prices exists, echoing comments made previously by Goldman Sachs. “Our estimates suggest the sugar market remains in substantial deficit, with little fresh supply until Brazilian exports resume from May onward,” BarCap analyst Kevin Norrish said. Signs of an uptick in physical demand globally also helped to boost futures prices.

SGG has exhibited remarkable volatility since its inception in June 2008; the average daily change in price is nearly 2%, and daily swings of 5% aren’t uncommon. For investors able to handle this volatility, SGG can be an effective diversifying agent when added to traditional stock and bond portfolios.

SGG’s trading volumes provide some insight into how this fund is used by investors. Average daily volume since the beginning of February is about 50,000 shares, or nearly 8% of total shares outstanding. So while some investors no doubt see SGG as a longer term holding, it is apparently a favorite of more active short-term traders as well.

For more ETF news, make sure to sign up for our free ETF newsletter.

Disclosure: No positions at time of writing.

Related Stories:

• Sugar ETF (SGG) Continues Freefall
• The Definitive Guide To Sugar ETF Investing
• Supply Worries Send Sugar ETF Soaring

Some analysts doubt that active management will ever really catch on, citing a number of hurdles that may be difficult to overcome. Others think that a surge in activity in the space is inevitable, eagerly anticipating a number of potential “gamechangers” that could accelerate growth. Despite the slow start, active ETFs have gained some momentum in recent months, and there’s reason to believe it’s only a matter of time before these vehicles take off. PIMCO’s foray into the active bond ETF space has been quite successful, as the three active ETFs overseen by the bond fund giant have nearly $200 million in assets.

Below, we profile the active ETF landscape, from the early leaders to the “second wave” to the dark horses who could make a splash in coming months.

The Early Leaders

PIMCO: The Newport Beach, California-based bond fund giant was a late entrant to the ETF game, but has quickly become one of the biggest players in the active arena. PIMCO currently offers three active bond ETFs, including the ultra-popular Enhanced Short Maturity Strategy Fund (MINT).

PIMCO has a sterling reputation in the field of bond fund management, and the firm’s early success in the ETF space is an indication that investors value a firm’s track record when considering an allocation to active ETFs.

Grail Advisors: Grail made headlines last year with the launch of the American Beacon Large Cap Value ETF (GVT), the first actively-managed ETF to allow manager discretion in the portfolio construction process. Since then, Grail has expanded its product line to seven funds, including five equity ETFs and two bond funds.

Grail is also pioneering a new area of the active ETF arena, working to convince existing mutual funds to covert to the ETF structure. The company is reportedly close to doing so, a move that could potentially have a huge impact on the active ETF industry.

AdvisorShares: This ETF issuer’s product line currently consists of one fund, the Dent Tactical ETF (DENT). DENT seeks long-term capital growth by utilizing proprietary economic and demographic analysis to determine the overall trend of U.S. and global economies. DENT has seen a surge in interest in recent weeks, taking in about $5 million in cash in February (total assets now stand at about $28 million).

AdvisorShares has filed with the SEC for several additional actively-managed ETFs, including the Mars Hill Global Relative Value ETF (GRV) and Peritus High Yield Debt ETF (HYLD).

PowerShares: The Wheaton, Illinois-based issuer is best known for its “intelligent” index ETFs that blur the line between active and passive management, but was an early entrant into the full-blown active space as well. PowerShares launched four funds that seek to outperform broad market benchmarks in April 2008, and followed with an active real estate ETF in November of that year.

Unlike GVT and other Grail funds, these ETFs don’t allow manager discretion, relying purely on quantitative analysis to dictate buy and sell decisions. PowerShares’ active ETFs have been slow to gain traction, although PQY recently saw a surge in activity.

WisdomTree: Most investors may be surprised to see WisdomTree on a list of active ETF providers, but the issuer best known for its fundamentally-weighted ETFs actually maintains the largest line of active ETF products. WisdomTree’s currency products, which include both single currency funds and diversified currency baskets, are all actively managed. These eight ETFs have aggregate assets in excess of $1 billion, led by the WisdomTree Dreyfus Chinese Yuan Fund (CYB), which has $600 million in assets alone.

iShares: The market leader is best known for passively-indexed ETF products, but iShares has quietly waded into the active ETF waters as well. The iShares Diversified Alternatives Trust (ALT) seeks to maximize absolute returns from investments with historically low correlation to traditional asset classes. ALT uses three primary strategies, including yield and futures curve arbitrage, technical momentum/reversal, and fundamental relative value. ALT has seen cash inflows of $20 million through the first two months of 2010, and assets have now grown to more than $30 million.

iShares has also filed for additional actively-managed ETF products, including both stock and bond funds, and an increased focus on this space by the market leader could have a huge impact on the industry’s development.

The Second Pack

Several existing ETF issuers have explored the idea of an actively-managed ETF, including a few traditionally regarded as leaders in the beta ETF space. Issuers who have filed for actively-managed ETFs include:

Vanguard: When the firm founded by legendary buy-and-hold proponent Jack Bogle filed for approval on an actively-managed TIPS ETF, many investors assumed that such a fund would never make it to market. But Vanguard seems intent on launching an active inflation-protected bond ETF this year (the proposed fund would be a separate share class of an already popular mutual fund). See an interview with Rick Genoni discussing Vanguard’s plans for active bond ETFs here.

First Trust: Similar to its Chicagoland neighbor, First Trust is perhaps best known for its enhanced index funds that fall somewhere between passively-indexed cap-weighted ETFs and actively-managed products. Now First Trust has a pair of active products in the works that would not be linked to any benchmark, including both developed markets and emerging markets equity products.

Claymore: Shortly after Grail launched its first active fund, Claymore filed for approval on several actively-managed ETFs, including global infrastructure, hard assets, and agribusiness funds. The company separately filed for an active muni bond ETF and the Claymore Laffer Macro Economic Global Equity ETF to be managed by the firm of economist Art Laffer (best known for the curve that bears his name).

Outside Looking In

While a number of existing ETF issuers have either launched active ETFs or filed for approval on active funds, the real wild cards are the numerous fund giants who are currently on the outside looking in. PIMCO’s relatively successful jump from mutual funds to ETFs has no doubt been carefully analyzed by all of the financial behemoths reportedly interested in developing actively-managed ETFs:

Legg Mason: The Baltimore-based firm had been rumored to be interested in active ETFs for some time, and recently filed for exemptive relief to launch a line of products.

T. Rowe Price: Another Baltimore fund giant has thrown its hat into the active ETF arena, recently asking for regulatory approval to launch a line of active products.

JP Morgan: This Wall Street giant has already experienced some success in the ETF industry, as the JPMorgan Alerian MLP Index ETN (AMJ) is one of the most popular exchange-traded notes available to U.S. investors. JP Morgan has now filed for SEC approval to launch both indexed and actively-managed ETF products, including an active fund that would invest in about 300 large cap stocks.

Eaton Vance: The Boston-based firm known for its expertise in closed-end funds recently filled with the SEC for approval on five actively-managed fixed income ETFs. The proposed funds are the Eaton Vance Enhanced Short Maturity ETF, the Eaton Vance Government Limited Maturity ETF, the Eaton Vance Intermediate Municipal Bond ETF, the Eaton Vance Prime Limited Maturity ETF and the Eaton Vance Short Term Municipal Bond ETF.

RiverPark: This firm is in an interesting position in the active ETF race. RiverPark already serves as a subadviser to four active funds from Grail, and is now looking to launch its own line of active funds. In a recent SEC filing, RiverPark outlined two funds, including the RP Short Term High Yield Bond ETF and RP Energy ETF.

These big names are just a few of the fund companies and financial firms interested in active ETFs, and the list could grow significantly in coming months.

For more ETF news, make sure to sign up for our free ETF newsletter.

Disclosure: No positions at time of writing.

Related Stories:

• Active ETFs: Full Steam Ahead
• Early Leaders in the Active ETF Race
• An Active ETF Gets Its Wings