4 New ETFs – BRZS, KORZ, FTSL, SYLD
The race among ETF providers to launch new ETFs is fast and furious. Right now there are nearly 1,000 new ETF prospectuses filed with the SEC.
Not all of these will actually be launched. But many will be.
In fact, there have been about 50 ETFs launched already this year. And four of them launched this month. Let’s take a closer look at the latest offerings…
Direxion Daily Brazil Bear 3X Shares (BRZS)
BRZS is designed to profit from the value of stocks in the Latin American country of Brazil falling.
In other words, it’s an inverse ETF. The value of BRZS goes up when the MSCI Brazil 25/50 Index goes down. And the ETF goes down when the index goes up.
And like many of Direxion’s ETFs, BRZS is leveraged. It’s designed to move three times as much as the index itself. That means on a single day BRZS will go up 3% for every 1% the index falls.
BRZS is a great tool for active traders if you’re bearish on Brazil. But for most investors, leveraged ETFs aren’t a good tool.
Direxion Daily South Korea Bear 3X Shares (KORZ)
KORZ is designed to profit from the value of stocks in the Asia Pacific country of Korea falling.
It’s an inverse ETF as well. So the value of KORZ goes up when the MSCI Korea 25/50 Index goes down. And the ETF goes down when the index goes up.
And like many of Direxion’s ETFs, KORZ is leveraged. It’s designed to move three times as much as the index itself. That means on a single day KORZ will go 3% for every 1% the index falls.
KORZ is a great tool for active traders if you’re bearish on Korea. But for most investors, leveraged ETFs aren’t a good tool.
First Trust Senior Loan ETF (FTSL)
FTSL is an actively managed exchange-traded fund.
The fund’s primary investment objective seeks to provide high current income by investing primarily in a diversified portfolio of first lien senior floating rate bank loans.
And the secondary investment objective is to provide capital appreciation.
FTSL will invest in at least 80% of its net assets in Senior Loans that are made predominantly to businesses operating in North America and may also invest up to 20% of its net assets in non-Senior Loan debt securities including high-yield bonds, warrants, and equity securities.
Senior loans are generally made to below-investment grade companies. So they carry a higher risk of default than investment grade bonds. But in order to compensate for the increase in risk, they come with a higher interest rate.
The higher interest rates companies are forced to pay on senior liens are what allow ETFs that invest in them to deliver higher rates of return that are so attractive to investors today.
Cambria Shareholder Yield ETF (SYLD)
California Based Cambria Funds entered the ETF world with the launch of their first ETF SYLD earlier this month.
The company’s mission is to preserve and grow capital by producing above-average absolute returns with low correlation to traditional assets and manageable risk.
To that end, SYLD is an actively managed fund. It uses a quantitative algorithm to select US stocks based on characteristics in returning free cash flow to shareholders.
In other words, SYLD invests in 100 stocks with market caps greater than $200 million that rank among the highest in paying cash dividends, engaging in net share repurchases, and paying down debt on their balance sheets.
Good Investing,
Corey Williams
