The focus on investing in “disruptive innovation” is a theme that has helped propel Ark Invest into the upper echelon of exchange-traded fund sponsors. Another ETF sponsor that has made a living by launching thematic products, Global X, this week debuted the Global X China Disruption ETF (KEJI) that invests in Chinese companies with the potential to disrupt and reshape both the Chinese and the global economies.

As of yesterday, KEJI had exposure to the following themes: autonomous and electric vehicles; climate change; e-commerce; fintech; 5G and the Internet of Things; health-care innovation; robotics and artificial intelligence; and video games and e-sports.

Global X has 12 other China-focused ETFs. With the exception of a fund that targets the 50 largest securities from the MSCI China Index, the rest focus on a particular economic sector. And they all track an index.

The Global X China Disruption ETF is actively managed, which explains why its expense ratio of 0.75% is higher than the other China funds. But if it delivers results in a similar manner to that of the Ark Invest funds, only in this case with a focus on Chinese companies, then that fee would become incidental.

Active REIT
The ALPS Active REIT ETF (REIT) that launched today is an actively managed, semi-transparent product that invests in real estate investment trusts.

The fund is a partnership between fund sponsor SS&C ALPS Advisors; GSI Capital Advisors, which will manage the fund; and Blue Tractor Group, whose Shielded Alpha ETF structure provides a semi-transparent structure than lets actively managed ETFs protect their strategies from front running by so-called sophisticated traders. In short, this structure lets funds report their holdings in a way that enables them to trade while shielding the individual weights of the holdings within the portfolio. The individual weightings are reported on a lagged basis. That differs from the full daily trading transparency required of traditional ETFs. The aforementioned Global X China Disruption ETF, for example, is fully transparent.

According to the prospectus, the REIT fund will mainly invest in U.S. REITs. The portfolio might also include U.S. real estate operating companies not structured as REITs, along with the preferred equity of U.S. REITs and real estate operating companies.

REITs are required to pay out at least 90% of their taxable income to shareholders. In return, they can deduct the dividends paid from their corporate tax bill. The combination of steady dividend income and potential stock price appreciation are big selling points for REITs.

The ALPS Active REIT ETF charges an expense ratio of 0.68%

Two ESG Funds
DWS has launched the Xtrackers S&P MidCap 400 ESG ETF (MIDE) and Xtrackers S&P SmallCap 600 ESG ETF (SMLE), a pair of index-tracking products with expense ratios of 0.15%.

The mid-cap fund tracks the S&P MidCap 400 ESG Index that excludes companies that exceed either revenue caps or ownership stakes in the areas of thermal coal, tobacco and controversial weapons such as cluster weapons and nuclear weapons, among others.

It also excludes companies that fall within the bottom 5% of the United Nations Global Compact score ranking that incorporates human rights, labor rights, the environment and anti-corruption. Those scores are provided by Arabesque, a global asset management firm that analyzes news reports and other publicly available information to rate a company based on the UNGC principles.

The small-cap ETF tracks the S&P SmallCap 600 ESG Index, which applies the same methodology as the mid-cap ESG index.