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December 12, 2011 at 05:13 AM
New products introduced over the last week include a new Greece-centric ETF from Global X, a purchase fee cut on a Vanguard fund, and two new ETNs from Deutsche Bank and Invesco.
In addition, Cole launched a nonlisted REIT; two new NASDAQ-linked ETFs premiered from Global X; Matthews added a fixed-income Asia fund; Touchstone chose BNY Mellon to provide mutual fund services; and Guggenheim added three new fixed-income strategies.
Here are the latest developments of interest to advisors:
1) Global X Funds Launches First Greece ETF
Global X Funds on Thursday launched the Global X FTSE Greece 20 ETF (GREK), the first ETF listed on the New York Stock Exchange targeting Greece. It tracks the FTSE/ATHEX 20 Capped Index, designed to reflect broad-based equity market performance in Greece and comprised of the top 20 companies listed on the Athens Exchange ranked by full market capitalization. As of December 1, 2011, the Underlying Index’s three largest stocks were National Bank of Greece, Coca-Cola HBC, and Greek Organisation of Football Prognostics SA.
Since reaching a peak market capitalization of over $220 billion in 2007, the market cap of the Athens Stock Exchange has fallen nearly 90% to under $28 billion as of November 2011 (Bloomberg). While there is no guarantee that the Greek economy will recover to previous levels, current valuations may create an attractive entry point for the long-term investor.
2) Vanguard Reduces Purchase Fee on Emerging Markets Index Fund
Vanguard announced Wednesday that the purchase fee on the Investor, Admiral, Signal, Institutional, and Institutional Plus Shares of the Vanguard Emerging Markets Stock Index Fund (VEMAX, VEIEX) has been reduced from 0.50% to 0.25%. The fee reduction follows an announcement by Brazil, the second-largest country holding of the fund, that it is eliminating a tax on foreign investments in equities and certain fixed-income securities that has been in place since 2009. This tax elimination is expected to lower the fund’s transaction costs. As a result, Vanguard was able to reduce the purchase fee. The fund’s exchange-traded shares are not subject to the purchase fee.
Unlike loads or sales commissions, purchase fees are paid directly to a fund to cover the costs of purchasing securities, including brokerage commissions and market impact costs. The fees allocate the costs of investing new cash directly to the investors making the new share purchases. Without the fees, a fund’s existing shareholders would have to bear the transaction costs, and the fund could experience reduced investment performance and increased tracking error with respect to its target benchmark.
3) Deutsche Bank and Invesco PowerShares Launch ETNs Linked to Inflation or Deflation Expectations
Deutsche Bank and Invesco PowerShares Capital Management, LLC announced Tuesday the launch of two exchange-traded notes (ETNs) that provide investors with exposure to US inflation or deflation expectations. These will be the first ETNs to give investors the opportunity to take long or short exposure to changes in the market’s expectations of future inflation implied by the difference in yields between a notional long or short position in U.S. Treasury Inflation Protected Securities (TIPS), and an offsetting notional position in U.S. Treasury bonds with approximately equivalent terms to maturity.
The PowerShares DB US Inflation ETN (INFL) and PowerShares DB US Deflation ETN (DEFL) will be listed for trading on the NYSE Arca and are senior unsecured obligations issued by Deutsche Bank AG, London Branch. The price of each ETN is based on a gain or loss of $0.10 per ETN for each 1-point increase or decrease in the level of the DBIQ Duration-Adjusted Inflation Index or the DBIQ Duration-Adjusted Deflation Index, as applicable, combined with the monthly returns of the DB 3-Month T-Bill Index, less an investor fee.
4) Cole Real Estate Investments Launches Daily NAV Nonlisted REIT
Cole Real Estate Investments announced Wednesday the launch of its latest investment offering: the Cole Real Estate Income Strategy (Daily NAV), Inc. The nonlisted REIT offering, marketed as “Cole Income NAV Strategy,” will invest in commercial real estate, with a primary focus on retail, office and industrial assets. It will not be traded on an exchange, but is registered with the SEC. Shares for individual investors will be made available through RIAs and broker-dealer wrap accounts. Investors will not pay upfront selling commissions for shares.
Cole Capital Corporation, an affiliate of the sponsor, Cole Real Estate Investments, will be the dealer-manager of the offering and will offer Cole Income NAV Strategy’s shares on a best-efforts basis.
