Well, it has finally happened, but not as anyone expected. The whole industry has been watching for the first zero fee ETF, which just happened with SoFi, but now they are getting the first negative fee ETF. While zero fee index mutual funds debuted last year, ETFs only just got there, until the debut of the SALT Financial Low TruBeta US Market ETF. For every $10,000 invested in the new fund, the issuer will pay you $5. However, as you may have expected, there is a catch. The catch is that once the fund gets over $100m in AUM, its regular fee of 0.29% kicks in.
FINSUM: This is nothing more than a sales gimmick (and they haven’t even structured it well). However, it is indicative of the trend things are heading in.
Goldman Sachs is launching an interesting suite of new ETFs to help investors gain exposure to emerging areas of technology. The bank’s new offerings include ETFs for human genome research and robotic surgery. In total, the firm launched five new ETFs driven by a strategic partner specializing in calculating companies’ thematic beta. The other ETFs cover innovative financial, data, and manufacturing companies.
FINSUM: This could be an interesting small allocation to portfolios. Some clients are very hot on these new technologies and this might be a nice liquid way to access them. Fees are 50 basis points.
JP Morgan has plunged headlong into the ETF business since launching its first fund a few years ago. Now the asset manager has debuted a new broad equity tracker than undercuts the market on fees. JP Morgan’s new BetaBuilders US Equity ETF will track mid and large cap US stocks and will seek to track the results of the Morningstar US Target Market Exposure index. The fund costs just 0.02%, or $0.20 for every $1,000 invested per year, one basis point lower than its nearest competitor.
FINSUM: This is a good broad index tracker that costs next to nothing. We expect it will gobble up AUM nicely, but it remains to be seen how well its tracks the index versus competitors, as 1 bp is a tiny margin that could easily be eaten up by performance differences.
Where is the best place to find inexpensive income? That is a great question for any portfolio. With that in mind, here is a list of seven funds that can help investors get solid yields via inexpensive ETFs: iShares Core High Dividend ETF (HDV), SPDR Portfolio S&P 500 High Dividend ETF (SPYD), Invesco Dow Jones Industrial Average Dividend ETF (DJD), Vanguard High Dividend Yield ETF (VYM), JPMorgan U.S. Dividend ETF (JDIV), Xtrackers MSCI EAFE High Dividend Yield Equity ETF (HDEF). All the funds have expense ratios of between 0.07% and 0.20% and average yields ranging up to around 4%.
FINSUM: These are very core funds with good awareness, but always nice to have them all in one place. We particularly like the Xtrackers internationally-focused income fund because it can help get income from differing rate environments.
As our readers will know, we have been covering some of the best funds we met at February’s Inside ETFs conference. Today we want to profile a great service we found that we think would be useful to our readers. The service is a new ETF screener and research tool called ETF Action. The service was built by an experienced team from a major distributor and their experience shows in the design of the system. We were offered a free trial for their screener and found the user interface and functionality of the system very appealing. It was not only fast, but it was also useful to compare different funds side by side and search for new ones. For instance, we compared various dividends funds to help choose the best for our purposes, and the platform offered easy-to-access and multifaceted information for doing so. We preferred the system to the numerous other ETF screeners we have used. The company is building out the tool as a paid service and they have promotional pricing for advisors.
FINSUM: We really liked ETF Action and were impressed with the functionality. The management team clearly knows what they are doing and have in-depth industry experience, which is invaluable when it comes to thoughtfully building the system.