ETF IPOs (New ETFs)

Second Automotive Fund Now Available

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First Trust Advisors last week (5/10/11) introduced the First Trust NASDAQ Global Auto Index Fund (CARZ).  CARZ becomes the second fund to focus on the global automotive industry and the first in an ETF format.  The underlying index is a modified market capitalization weighted index of companies classified as automobile manufacturers.  The index caps the five largest stocks at 8% and all others at 4% during each quarterly rebalancing.

CARZ presently has 32 holdings, and the annual index reconstitution is scheduled for next month.  The ten largest stocks are Daimler AG (DDAIF) 7.9%, Ford Motor Company (F) 7.8%, General Motors Company (GM) 7.2%, Toyota Motor Corporation (TM) 7.1%, Honda Motor Co., Ltd. (HMC) 7.0%, Hyundai Motor Co. 5.2%, Kia Motors Corporation 5.0%, Volkswagen AG (VLKAY) 4.3%, Bayerische Motoren Werke AG (BAMXY) 4.2%, and Nissan Motor Co., Ltd. (NSANY) 3.9%.

Nine countries are represented in the fund with Japan at 32.7%, Germany 20.2%, U.S. 17.7%, South Korea 9.9%, France 7.0%, China 5.2%, Italy 5.0%, Taiwan 1.4%, and Malaysia 1.0%.

Fidelity Select Automotive (FSAVX), the first automotive industry fund, was launched nearly 25 years ago in June 1986.  It limped along with assets under $40

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Barclays Offers New Variation of 19 Existing Commodity ETNs

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Barclays rolled out 19 new commodity-based exchange-traded notes (ETNs) last Thursday (4/21/11).  The 18 new Pure Beta products attempt to track the same commodities as 18 existing iPath ETNs, the primary difference being the process used by each underlying index to roll future contracts.  The iPath Seasonal Natural Gas ETN (DCNG) was also introduced, although it is not part of the new Pure Beta methodology.

Barclays new Pure Beta indexes intend to provide a more representative measure of commodity market returns by reducing the negative impacts of contango.  Instead of rolling futures contracts on a monthly basis, they may roll into one of a number of futures contracts with varying expiration dates.

Each index will attempt to provide the best proxy for the average price return of the front-year futures contracts for each commodity in the index, while avoiding parts of the futures curve that are subject to persistent market distortions.  A new Barclays’ special report, The Basics of iPath Pure Beta Commodity ETNs (pdf), provides additional information and background on the methodology.

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