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Avalanche Staking | Municipal Maturities | Sector Momentum | Active Japan Small Caps | Preferred Equity Income
In September, Ultumus has again identified some unusual ETFs illustrating the growing diversity and sophistication of the vehicle. ETFs let investors access Altcoins with enhanced income from staking; US municipal bonds with specific maturities; follow the best performing industrial sectors; tap into active stockpicking on the ground in Tokyo – and earn higher dividends from preferred stock.
Though Bitcoin and Ethereum have made all-time highs in 2025, some altcoins are well below their peaks: AVAX trading around 30 is nearly 80% below the peak of 147 reached in late 2021. Some contrarian investors are encouraged by more activity on the Avalanche C-Chain and growing decentralised exchange (DEX) volumes in recent months as well as a tripling of the number of deployed contracts. Bitwise has launched Bitwise Avalanche Staking ETP listed on XETRA (ticker: AVNB) that includes staking rewards, which for AVAX are based on maintaining network security. The net staking reward is 4.83% and the TER of 0.85% is well below the 2.5% that 21 Shares charges on another Avalanche staking ETF.
Invesco’s Bullet Shares range let investors do their own liability matching for costs such as pensions, university fees or other anticipating outgoings. The maturities range from 2025 to 2035, which enables investors to build a staggered ladder of maturities at various dates. The latest addition, Invesco BulletShares 2035 Municipal Bond ETF (Ticker: BSMZ), has a competitive expense ratio of only 0.18%.
Trend following models are most often applied to macro level markets and a range of managed futures ETFs are available. The same philosophy can be applied to picking winners and losers amongst industrial sectors. Symmetry Panoramic Sector MomentumTM ETF (ticker: SMOM) trades eleven industrial sectors in the S&P 500 index based on the Global Industry Classification Standard (GICS), using a 3- or 6-month lookback of their momentum. It uses other ETFs to implement the strategy, which contributes to its 0.63% TER since this includes both Symmetry’s fees and those on the underlying ETFs. As of October 3, it was exposed to six SPDR ETFs focused on utilities (XLU), technology (XLK), communication services (XLC), industrials (XLI), financials (XLF) and consumer discretionary (XLY), based on their 3- or 6-month performance. It had no exposure to the other five sectors: Consumer Staples, Energy, Health Care, Materials, and Real Estate since they have not performed as well over the past 3 or 6 months – for instance the XLV healthcare ETF is up about 5% compared to 23% for technology.
Though Japanese equities are making new highs, they are still at a discount to the US and Europe, and value can be found in small caps. MUFG Japan Small Cap Active ETF (MJSC) focuses on less well-known Japanese companies that many investors may have never heard of. MUFG’s Tokyo-based small and micro caps team do over 1,000 company meetings a year. The expense ratio of 0.85% is a little above average but Japanese small caps are a specialist area.
Rising equity prices have reduced dividend yields, which leads some investors to switch into corporate bonds. Others may prefer preferred stock, which can offer high yields. HANetf’s Infrastructure Capital Partners Preferred Income ETF (Ticker: PFFI) pays out monthly income and is currently 75% exposed to instruments issued by banks, with its top ten holdings including Banc of California Perpetual paying 7.75% and Merchants Bancorp Perpetual paying 7.625% yields. The expense ratio of 0.80% would be high for a corporate bond ETF and is also above average for preferred stocks where iShares Preferred & Income Securities ETF (one of PFFI’s top ten holdings) charges 0.45%.
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