Observers of the exchange-traded products industry know that 2012 has been long on closures, 99 to be a precise — a record. They also know that new fund listings have reached “just” over 160 according to Lipper data; the slowest pace in several years.
However, an argument can be made that, broadly speaking, the lack of new ETF quantity has been made up for in terms of quality. Said another way, while a fair amount of 2012’s new ETFs have niche focuses, many have investment objectives that are easy to understand and are not as opaque as some critics would like to believe.
The good news for investors is that the straight forward investment objectives combined with quick success in terms of asset-gathering and performance bodes well for some of these ETFs on two levels. First, they could be equally if not more successful next year. Second, many of 2012’s new ETFs look destined to be around for a while and not head to the ETF graveyard.
With that here is a review of some of the best new ETFs of 2012. Here, “best” means a combination of understandable investment objectives, asset-gathering proficiency and performance. Please not all of the successful new product launches of 2012 are included here.
PIMCO ETF Trust (NYSEARCA:BOND) There is not much more praise that can be heaped upon the Bill Gross ETF. Following its February 29 inception date, BOND is on track to haul in $4 billion in assets. BOND is already the largest actively managed ETF and the ETF has delivered the goods in terms of performance since its debut. In fact, it has been better than the Total Return Mutual Fund, the world’s largest bond fund. By returns, AUM and ease of understanding what this ETF tries to do, BOND has impressed. There is no arguing that.
iShares Inc. (NYSEARCA:PICK) On the basis of performance, PICK has been lousy as it has tumbled about 18 percent since its early February debut. That is not because this ETF is a bad idea. PICK’s woes are attributable to not enough of 2012 being a risk on year. Investors have been worried about the Chinese economy, the fiscal cliff and a myriad of other issues that have hamstrung materials stocks.