Lots Of New ETFs, But S&P Finds Just 2 Standouts

While the pace of new ETF and ETN introductions slowed considerably in July and August, nearly 200 new funds have been introduced this year. In fact, through early August, 191 new funds had come to market and more new funds were introduced in the first seven months of this year than in all of 2008 and 2009, according to S&P Equity Research. That's a lot of new funds, but that doesn't mean all new ETFs are worth warming up to. Actually, S&P Equity Research has put its “overweight” ranking on just two new ETFs, the PowerShares S&P 500 Low Volatility Portfolio SPLV and the Vanguard International Total Stock Market ETF VXUS. As S&P notes, VXUS made its debut in January and is the ETF version of a previously existing Vanguard mutual fund. The Vanguard International Total Stock Market ETF holds 6,635 stocks with an expense ratio of just 0.2%, according to Vanguard data, and those factors are cited by S&P as reasons for the “overweight” rating on the new ETF. In addition, the Vanguard International Total Stock Market ETF has already attracted more than $300 million in assets under management since its debut, a stellar total for an ETF that isn't even a year old. Emerging markets and the Pacific Rim account for about 24% each of the ETF's country weight's while Europe accounts for over 43%. Familiar holdings in the Vanguard International Total Stock Market ETF include Royal Dutch Shell RDS and BP BP, Europe's two largest oil companies. The PowerShares S&P 500 Low Volatility Portfolio has also flourished since its May debut, garnering $253.5 million in AUM, according to the PowerShares Web site. SPLV has an expense ratio of 0.25%, but the real allure with this new ETF may be its focus on less-risky stocks such as Dow component Coca-Cola KO and defensive sectors such as consumer staples (26%) and health care (10%). Those attributes were highlighted in the S&P research report. Other new ETFs rated by S&P included the following: Morningstar Basic Materials Index ETF FBM at “marketweight,” the Global X Oil Equities ETF XOIL at “underweight,” the Schwab U.S. REIT ETF SCHH and the Schwab U.S. Mid-Cap ETF SCHM both at “marketweight” and the iShares High Dividend Equity Fund HDV also at “marketweight.”