With 2013 in the books, the ETF industry looks to be gearing up for yet another year of growth and innovation. Last year, investors welcomed a slew of new exchange-traded products, including several new first-to-market products: the Global X FTSE Portugal 20 ETF (PGAL), the LocalShares Nashville Area ETF (NASH), and the Global X Nigeria Index ETF (NGE). Though some new funds struggled to gain traction, other 2013 launches were quite successful; the Barclays ETN+ FI Enhanced Global High Yield ETN (FIGY) raked in more than $1.3 billion in assets, while the Barclays ETN+ FI Enhanced Europe 50 ETN (FEEU) saw $1 billion in inflows [see The Most Successful New ETFs of 2013].
Democratization remains a driving theme in the ETF universe and investors have been quick to take advantage of cost-efficient products offering access to increasingly popular asset classes. And though 2014 has just begun, ETF issuers are already filling the product pipelines. Below, we take a look at seven ETFs investors should be excited for in 2014:
International BuyBack Achievers Portfolio
After launching its highly successful PowerShares Buyback Achievers Portfolio (PKW) in 2006, Invesco PowerShares announced that it will be debuting its international version of the fund sometime this year. The International BuyBack Achievers Portfolio will track the NASDAQ International BuyBack Achievers Index, a broad-based index that invests in foreign companies classified as “BuyBack Achievers.” To be included in the index, companies must have reduced, through repurchases, the number of their outstanding shares by at least 5% in the past 12 months. [see 14 Rapid Fire ETF Ideas for 2014].
The main appeal behind this strategy is relatively straightforward: if a company is buying back its own stock, management must believe that shares are undervalued, which can be interpreted as a signal to the market that shares are mispriced as they are likely discounted. In other words, a stock repurchase program can be seen as a sign of confidence, which may potentially bolster the stock price higher as more and more investors take notice.
International Hedged Dividend Growth Fund
WisdomTree announced in 2013 that it plans to add another currency hedged ETF to its lineup this year, but this time with a focus on international dividends. The International Hedged Dividend Growth Fund will track the WisdomTree International Hedged Dividend Growth Index, which is designed to provide exposure to dividend-paying common stocks with growth characteristics of companies in the industrialized world, excluding Canada and the United States, while at the same time neutralizing exposure to fluctuations of the value of foreign currencies relative to the U.S. dollar.
The fund will consist of roughly 300 companies from WisdomTree’s DEFA Index (Dividend index of Europe, Far East Asia, and Australia), and will be ranked by certain growth and quality factors. The fund will feature exposure to 15 developed countries, including Australia, Belgium, Denmark, Israel, Japan, Australia, and Singapore .
Market Vectors All China ETF
All China ETF
Van Eck filed regulatory paperwork with the SEC for permission to create a passively managed equity ETF that would hold every kind of share class of Chinese companies. The All China ETF will track a market-cap weighted index (which is currently unnamed), that consists of Chinese companies that are traded in a variety of share classes, including China A-Shares, China B-Shares, China H-Shares, China Red Chips, and China P-Chips, along with Chinese companies listed in the United States and Singapore.