BGI Launches International Bond Funds; RevenueShares Tries Navellier Strategy

Three new ETFs launched on Friday, two international bond ETFs from Barclays Global Investors (BGI) and an RevenueShares fund based on a strategy from mutual fund maven Louis Navellier.

RevenueShares Investor Services launched the RevenueShares Navellier Overall A-100 Fund (RWV) on the New York Stock Exchange ARCA. Less than a year old, RevenueShares is the most recent entrant in the ETF space for Fundamental Indexing. Proponents of the concept of fundamental indexing believe indexes based on fundamental metrics produce better returns than indexes based on market capitalization, such as the S&P 500. In a dig at WisdomTree, the fundamental house that builds indexes based on dividends, Sean O’Hara, president of RevenueShares, tells ETF Trends, while dividends can be adjusted, revenues are the one variable that can’t be fudged. Well, they can’t be fudged unless the company decides to do a little technique called stuffing the channel. In channel stuffing a company books sales from the future in the current quarter. But, that’s highly frowned upon, so it doesn’t happen much, so I won’t dwell on it.

Anyway, they take that revenues-based index and mix it with a quantitative methodology from Navellier’s firm Navellier & Associates. The strategy seeks to beat the benchmark indexes with what they call alpha generating growth strategies. Alpha is that bit of return that a manager’s skill adds to the fund’s returns. ETF Trends says “The fund is constructed using an 8-factor model to give stocks a letter grade. From there, the top 100 A-rated stocks are included and ranked by revenue annually on Sept. 1, and rebalanced on the first day of each calendar quarter.”

Also on Friday, BGI launched two new ETFs on the Nasdaq Stock Market.

iShares S&P/Citigroup International Treasury Fund (IGOV)
iShares S&P/Citigroup 1-3 Year International Treasury Bond Fund (ISHG)

They both charge and expense ratio of 0.35%. These are the first two iShares ETFs to list on NASDAQ in 2009, compared to eight listings in 2008 and five in 2007. Nasdaq says it’s the most liquid U.S. market for ETFs, capturing 34.8% of all U.S. ETF volume in December.

ETFguide says with only four broadly diversified international bond ETFs (including these two) and one emerging markets bond ETF these are the least populated areas in the U.S. ETF market. With 8.22 years as the average weighted maturity for the bonds, IGOV is the long-term option. ETFguide breaks down IGOV three largest country allocations: Japan (24.95%), Germany (9.28%), and Italy (8.74%). The bonds in the short-term ISHG have an average weighted maturity of 1.87 years and with the largest country allocations in Japan (24.95%), Germany (10.95%), and Italy (7.99%).

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