New Summer ETF Launches – Leveraged, Commodities, Emerging Markets and More

by ETF Base on July 19, 2010

It’s been a busy couple weeks for new ETF launches so I thought I’d highlight some of the newest to the crowd:

Leveraged ETFs

Direxion has launched 4 new leveraged ETFs focusing on natural gas and retail.

  • Direxion Daily Retail Bull 2X Shares (RETL)
  • Direxion Daily Retail Bear 2X Shares (RETS)
  • Direxion Daily Natural Gas Related Bull 2X Shares (FCGL)
  • Direxion Daily Natural Gas Related Bear 2X Shares (FCGS)

Each of these ETFs carries a 0.95% expense ratio and will act similarly to the myriad other daily reset leveraged ETFs out there.  As far as retail, the sector could really swing dramatically one way or the other in the coming months given what’s going on with home prices, unemployment, the upcoming election cycle and US Austerity which is ultimately heading our way, all of which will have an impact on consumer sentiment to be sure.

I love to hear about new ETF launches, not because they’re good investments, but because they’re bad investments long term.  What?  Due to the mathematical certainty of value decay over the long term stemming from daily resets, I short 2x and 3x ETFs as an alternative investment asset class in my own portfolio.  The returns are generally non-correlated with the broader market because I short them in pairs.  The performance on the long side is so abysmal that they routinely require reverse splits to boost their share price out of the single digits.  See more about reverse splits and why they all go to zero.


Taking a page out of the fund of funds approach, the Mars Hill Global Relative Value ETF (GRV) actually takes a long-short approach to various areas around the world.  The fund seeks to exceed the average annual return of the MSCI World Index by overweighting areas they view as attractive, while underweighting areas that are unattractive.  Based on the long-short approach, the fund will seek to capitalize on the spreads between the long and short positions.  As this is an active approach and requires insight into which way particular markets are going to head, I’m a bit skeptical as to whether the fund can deliver above-market returns.  I’ll have to wait and see.


Emerging Global Shares Indxx India Small Cap ETF  This small cap India ETF (SCIN) seeks to replicate the returns of the Indxx India Small Cap Index which has 75 publicly traded small caps all in India. IT and banking are the predominant sectors in the fund which carries and expense ratio of 0.85%.

For London Exchange Investors

RBS will be launching a series of new ETFs on the London exchange covering a both countries/regions and commodity indices:

Dax Russia
Dax Bric and Dax
Asia indices
Jim Rogers Commodity Index
Jim Rogers Metal Index
NYSE Arca Gold Bugs Index

That’s just a few of the ETFs coming our way this summer.  Make sure to check out the New ETF Review thread for more as they come.

Disclosure: No position in any ETFs covered in this article.

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