Horizons’ New Korean ETF is First Based on Kospi Index

Horizons ETFs Group, one of the largest ETF families in the world, earlier this month launched its third fund in the U.S. market and its first country-specific one: Horizons Korea Kospi 200 ETF (HKOR).

While other ETFs track the South Korean stock market, including iShares MSCI South Korea Capped ETF (EWY), First Trust South Korea AlphaDEX Fund (FKO) and WisdomTree Korea Hedged Equity Fund (DXKW), Horizons’ new fund is the first to track the Korean blue chip benchmark.

“What makes this significant is that it’s the first U.S. ETF to track an index whose point of origin is South Korea, as opposed to MSCI,” said Arlene C. Reyes, chief operating officer of exchangetradedfunds.com, a site that follows the global ETF market. “The Kospi 200 is to Korea what the DAX is to Germany. It’s important because it’s the index of choice for the South Korean stock exchange.”

Samsung Electronics makes up 21% of the index, with Hyundai Motor at 5.5% and Kia Motors at 2.3%. The information technology sector comprises 32% of the index, followed by consumer discretionary at 17%, industrials and financials at 13% each.

With more than $4 billion in assets, the iShares ETF, which tracks the MSCI Korea 25/50 Index, is the 800-pound gorilla tracking Korea. Its top-10 holdings and sector allocations are similar to the Horizons Fund. EWY has 20% in Samsung Electronics, for example. But the Kospi 200 ETF tracks a more diversified swatch of the stock exchange and 93% of its market capitalization, holding 200 companies vs. iShares’ 105.

Furthermore, HKOR is the cheapest of the bunch, with an expense ratio of 0.38%.

Officially listed in the emerging markets category, South Korea has fallen along with the other emerging-market economies over the past year. EWY is down 7% this year. Topping the reasons for the broad decline are worries about the U.S. Federal Reserve tapering its quantitative easing program and the falling yen, which will make Japan’s pricing more competitive to South Korea.

“Korea is more of an emerged market, as opposed to an emerging market,” said Joe Cunningham, executive vice president at Horizons ETFs Management, Horizons’ U.S. unit. “Compared to the other emerging markets, Korea has greater growth in per capita income, a larger consumer market, a very diversified economy, lower debt levels and the companies are household names.”

Cunningham says another advantage to HKOR is that while options are traded on the iShares ETF, no futures are traded on its index. But options and futures are traded on the Kospi 200, making it the most liquid index in Asia. This gives investors in HKOR 24-hour exposure, which the other ETFs don’t have.

Read more at Investor’s Business Daily.

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Currency Hedge ETFs Win Big at Global ETF Awards

Deutsche Bank’s family of Currency Hedge ETFs won the award for the Most Innovative ETF in the Americas for 2011 at the 8th Annual Global ETF Awards. The awards are given to industry participants for outstanding achievements in the marketplace. In Europe Deutsche Bank tied with the Nomura Voltage Mid-Term Source ETF for the top prize, while the Motilal Oswal Most Shares NASDAQ-100 ETF was named most innovative in the Asia-Pacific region.

The five ETFs under the Currency Hedge banner:
db-X MSCI Brazil Currency-Hedged Equity Fund (DBBR)
db-X MSCI Canada Currency-Hedged Equity Fund (DBCN)
db-X MSCI EAFE Currency-Hedged Equity Fund (DBEF)
db-X MSCI Emerging Markets Currency-Hedged Equity Fund (DBEM)
db-X MSCI Japan Currency-Hedged Equity Fund (DBJP)

The Most Innovative Exchange Traded Product (ETP) in the Americas went to the iPath S&P 500 Dynamic VIX ETN (XVZ), while the db Physical Gold SGD Hedged ETC won in Europe.

Held at the Grand Hyatt Hotel in New York last Thursday, the Global ETF Awards provide a window on how the global ETF industry views itself. Unlike the Capital Link awards, where a small committee of analysts and industry insiders choose the winners, the Global Awards is voted on by the entire ETF industry. Here 520 organizations from around the world voted on who they think are the industry’s leaders and innovators. The awards and ceremony were created and run by the operators of exchangetradedfunds.com.

The evening began with a new prize, the Nate Most Award. Named after the man who invented the SPDR, the first ETF, it’s awarded to the individual who has made the greatest contribution to the ETF Market.

“We honored to be able to celebrate Nate’s place as the father of the ETF and to honor achievements in the ETF industry,” said Arlene C. Reyes, chief operating officer of exchangetradedfunds.com.

The first winner of this new prize was James Rose, senior managing director of State Street Global Advisors, for his commitment to the industry and for setting a standard of excellence. In addition to running State Street’s ETF business he serves as the first chairman of the Investment Company Institute’s Exchange-Traded Funds Committee.

“Nate Most created a product that created an industry and a great product for investors,” said Ross upon receiving the award.

Here is the list of other winners:

Most Innovative ETF Index Provider
The Americas – Dow Jones Indexes
Europe – STOXX
Asia-Pacific – MSCI

Most Widely Utilized ETF Research (Statistical)
Deutsche Bank won in all three regions.

Most Widely Utilized ETF Research (Analytical)
The Americas – Bloomberg
Europe – Deutsche Bank
Asia-Pacific – Deutsche Bank

Best ETF Market Maker
The Americas – Knight
Europe – Flow Traders
Asia-Pacific – Flow Traders

Most Recognized ETF Brand
The Americas – SPDRs
Europe – (Tie) db x-trackers and iShares
Asia-Pacific – China 50 ETF

Best Service Provider
The Americas – BNY Mellon
Europe – (Tie) Northern Trust and State Street Fund Services (Ireland)
Asia-Pacific – SSgA

Most Informative Website
The Americas – SPDRS.com
Europe – etf.db.com
Asia-Pacific – hkex.com.hk

Most Informative Website – Media
The Americas – IndexUniverse.com

Palladium Shares Wins Most Innovative ETF Award

The ETFS Physical Palladium Shares (PALL) and ETF provider Global X Funds tied to win the award for the Americas’ Most Innovative ETF of 2010 at the 7th Annual Global ETF Awards banquet at New York’s Grand Hyatt Hotel recently.

Launched by ETF Securities in January 2010 with the ETFS Physical Platinum Shares (PPLT), the palladium and platinum funds were the first ETFs in the U.S. to provide investors with a cheap and convenient way to invest in these precious metals. The Palladium Shares track the price of palladium and are backed by palladium bullion plates and ingots and stored in vaults approved by the London Platinum Palladium Market. Because the Palladium ETF holds physical bullion it has minimal counterparty or credit risks and charges an expense ratio of 0.6%. Voters did not specify which Global X ETF deseved the award.

The Benchmark Hang Seng BeES was named the most innovative ETF in Asia. Europe’s most innovative ETFs came from db x-trackers and Source. The actual funds weren’t named.

Hosted and organized by exchangetradedfunds.com, the Global ETF Awards are like the Academy Awards for the ETF industry because only industry insiders are allowed to vote. Essentially, these industry insiders are asked grade their competitors to pick which denizens of ETF Land have done the best job over the past year.

The Most Innovative Exchange-Traded Product, not an ETF, in the Americas went to Barclays ETN + S&P Veqtor ETN (VQT). This exchange-traded note tracks the S&P 500 Dynamic Veqtor Total Return Index. It offers a strategy of “broad equity market exposure with an implied volatility hedge by dynamically allocating its notional investments among three components: equity, volatility and cash. The equity component is represented by the S&P 500 Total Return Index and the volatility component is represented by the S&P 500 VIX Short-Term Futures Index.” ETF Securities won in Europe for an unnamed product.

Once again, SPDRs was named the Most Recognized ETF Brand in the Americas beating out iShares, Vanguard and PowerShares. IShares shared the title with db x-trackers in Europe, while Asia’s best known brand is China 50 ETF.

“Every year this becomes more meaningful because the industry becomes more competitive every year,” said the SPDR representative.

S&P Indices won Most Innovative ETF Index Provider in the Americas, with STOXX the European winner and China Securities Index taking Asia’s prize.

IndexUniverse.com, where I am a contributing writer, was named the Americas Most Informative ETF Website, with etf.db.com and hkex.com.hk the winners in Europe and Asia, respectively.

Deborah Fuhr of BlackRock held onto her crown as the leading ETF analyst winning both Most Widely Utilized ETF Statistical Research and Most Widely Utilized Analytical Research in Europe. The latter award she was tied with Deutsche Bank, which also took both prizes in the Americas and Asia’s analytical award. Daiwa Asset Management won Asia’s statistical research award.

Other prize winners:

Best ETF Market Maker: Knight (Americas), FlowTraders (Europe), UBS Securities (Asia)

Most Proactive Exchange: NYSE Euronext (Americas), Deutsche Borse (Europe), Shanghai Stock Exchange (Asia).

Most Proactive Exchange for ETF Derivatives: International Securities Exchange (Americas), Eurex (Europe), Hong Kong Stock Exchange (Asia).

Best Service Provider: BNY Mellon (Americas), Bank of Ireland (Europe), SSgA (Asia).

J.P. Morgan Plans to Jump Into ETF Biz

J.P. Morgan Chase is jumping into the ETF business.

In two SEC filings dated March 10, J.P. Morgan filed for exemptive relief for its first ETFs ever. The filings ask for relief for both index-based and actively managed ETFs.

The passive funds appear to be two bond-index ETFs. One will track an index of investment grade municipal bonds with 1 to 12 years to maturity and the other will track investment grade corporate bonds with an issuance of at least $300 million.

For actively managed funds, the filing asked for exemptive relief for funds that could hold stocks, bonds, open-end funds, closed-end funds and unit investment trusts. The strategy for J.P. Morgan’s first actively managed ETF would be to invest in about 300 large-cap stocks across many sectors. The actively managed fund would have a fundamental weighting. The fund would “overweight inexpensive stocks with improving fundamental characteristics and underweight expensive stocks with deteriorating fundamental characteristics.”

Currently, the bank runs the J.P. Morgan Alerian MLP Index ETN (AMJ). This exchange-traded note isn’t a true ETF, but rather an unsecured debt sold to investors. However, J.P. Morgan wasn’t the fund’s sponsor, Bear Stearns was. J.P. Morgan acquired the ETN when it bought Bear Stearns in 2008. The AMJ tracks the market of master limited partnerships. MLP are partnerships that sell shares like a public company. Typically they’re involved in the business of transporting oil and natural gas.

The filings were first reported on the news feed at ExchangeTradedFunds.com.

You’re Invited to the Global ETF Awards

The Global ETF Awards Conference will be held next Thursday, April 30, in New York City at the Grand Hyatt Hotel. It’s sponsored by ExchangeTradedFunds.com.

I encourage all of you to attend this event. It’s the only conference that deals with U.S. and international issues in the ETF industry. This year it will concentrate on how regulatory changes will affect the industry. Because this conference receives the most attendees from Europe and Asia, it’s a great place to meet all the big players and firms in the industry.

It’s also easy to fit into your schedule. It runs only one day. The conference consists of a half day of workshops then the Awards dinner afterwards.

Some of this year’s workshops include:
· How and when to use leveraged ETFs and ETF Options
· Global ETF, ETN and ETC Product Developments-new ideas and trends
· Markets in crises-the impact on indices

Finally, the awards ceremony is unique on Wall Street in that the awards are not given by an outside body, but much like the film industry’s Academy Awards, the ETF industry votes on itself. So, this is a chance to see what the guys who run the ETF industry think are the most innovative products in the space right now.

I have attended the last two years. It’s very informative and a lot of fun, I encourage you all to go.