4 Intriguing New ETFs

The rash of new exchange-traded funds (ETFs) hitting the market each week has been picking up as both established firms and newcomers roll out new and inventive products. Some of the new ETFs are clones of products already available to investors, while others offer a new opportunity for investors to gain even more diversity with niche sector ETFs. For more, see How To Pick The Best ETF. Either way you look at the expanding world of ETFs, either good or bad for the industry, the key is to remember to do your homework and analyze each new product in a similar manner.

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New, Interesting ETFs
Pimco Australia Bond ETF (ARCA:AUD) was launched last November, and since that time the ETF is up 1% and has been trading within a 10% trading range. The ETF is composed of 40 debt securities that are denominated in the Australian Dollar. With a 30-day SEC yield of 4%, it is nearly double what the 10-year U.S. Treasury bond is offering investors. Exposure to Australia, which has close ties to China and the Far East, offers investors instant diversification within the fixed income asset class for an annual cost of 0.45%.

iShares MSCI All Country Asia Information Technology ETF (Nasdaq:AAIT) is a niche product that invests in companies involved in the IT field and are based in Asia. The ETF is heavily invested in semiconductors (34%) and electronic components (13%). Japan, Taiwan and South Korea make up 89% of the entire allocation of the ETF. The ETF began trading in February, and has yet to garner the attention of investors with assets under management at less than $6 million. Top holdings include Samsung Electronics and Taiwan Semiconductor (NYSE:TSM) and the expense ratio is 0.69%.

Pimco Total Return ETF (ARCA:TRXT) is the ETF version of the widely popular mutual fund run by Pimco legend Bill Gross. The ETF invests in bonds (government, municipal and corporate), currencies and mortgage-backed securities. The mutual fund version has been a top performer over the last five and 15-year periods. However, over the last 12 months it underperformed 80% of its peers. The ETF is actively managed, which is still a very small portion of the ETF universe and has not caught on like many experts had anticipated. The annual expense ratio is 0.55%, less than the 0.90% charged by the similar mutual fund.

iShares Financial Sector Bond ETF (ARCA:MONY) is composed of 68 investment-grade corporate bonds issued by companies in the finance sector. The majority of the bonds are linked to banking or insurance stocks. The ETF that launched in February has struggled to bring in money with approximately $10 in assets and an expense ratio of 0.30%. The 30-day SEC yield of 3.04% is fairly attractive, but it appears investors are still concerned with the future of the finance sector even though the bonds in the ETF are investment-grade. (For related reading, see An Introduction To Corporate Bond ETFs.)

The Bottom Line
The four ETFs highlighted are just a few of the new ETFs that hit the market recently and there are many more slated to begin trading in the coming months. Investors need to be open to the new offerings, but at the same time they should not run out and invest in every exciting niche ETF now available. Due diligence is a must for any new investment possibility.

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At the time of writing, Matthew McCall did not own shares in any of the companies mentioned in this article.