London
Vanguard lists DAX 30 tracker in effort to undermine BlackRock
In what looks like an attempt to undermine BlackRock, Vanguard is listing a DAX 30 tracker in London that will charge a mere 10 basis points. The Vanguard DAX UCITS ETF (VDXX) will be the third cheapest DAX 30 tracker in the world, after Xtrackers’ XDAX and ComStage’s CBDAX, both of which are based in Germany with German parent companies. VDXX will physically track the DAX 30, in much the same way as other DAX ETFs.
Analysis – might need to be slightly cheaper
At first blush, there is no super clear-cut competitive advantage to VDXX. If an investor is price sensitive, there are cheaper alternatives from DWS and ComStage. If an investor is concerned about size and liquidity, there are big liquid funds provided by iShares. If an investor wants a hedged offering, they can go for WisdomTree’s line. Which begs the question: how might VDXX compete in this crowded market?
Part of the answer, we suspect, will surely be the Vanguard brand. Structured as a not-for-profit based out of Pennsylvania, Vanguard has always been popular with retail investors. Let’s see how this goes.
USA
Global X lists quality and dividend smart beta ETF
Thematic ETF specialist Global X is listing a new smart beta ETF that targets quality dividend paying companies. The Global X S&P 500 Quality Dividend ETF (QDIV) will pick companies from the S&P 500 that have “high quality and dividend yield characteristics, as determined by S&P”, the prospectus says. With only those companies that rank within the top 200 of the S&P 500 Index universe by both quality score and dividend yield being eligible for inclusion. The index is equal weighted and is reconstituted and rebalanced semi-annually. At each rebalance, a sector capping methodology is applied to reduce sector concentration and increase diversification. There exist several other quality dividend ETFs in the US, the largest of which is provided by WisdomTree.
Impact Shares lists minority empowerment ETF
ESG specialist Impact Shares is listing another ESG fund that tries to make the world a better place. The Impact Shares NAACP Minority Empowerment ETF (NACP) starts by taking the Morningstar US Large-Mid Cap Index and then choosing specific companies that have “strong minority empowerment practices,” the prospectus says.
Minority empowerment will be scored by the NAACP and Sustainalytics, a for-profit consultancy based in Amsterdam. In picking which companies are doing the right thing, Sustainalytics looks at the following 10 criteria:
- Board Diversity
- Discrimination Policy
- Scope of Supplier Social Programs
- Digital Divide Programs
- Freedom of Association Policy
- Diversity Programs
- Supply Chain Monitoring
- Community Development Programs
- Minority-Inclusive Health and Safety Management System
- Conflict Minerals Programs
With the top 200 scoring companies in view, Morningstar then builds the index using the following variables: Minority Empowerment Score, market capitalization, maximum and minimum weightings by security and sector. Companies are then subject to a maximum 5% weighting.
Taiwan
Taipei-based Cathay Securities is listing a new ETF China mid-large cap ETF. The Cathay FTSE China A150 ETF (00743) will track the performance of the FTSE China A 150 Index, which includes the largest 51th to 200th China A-share companies (i.e. the top 200 excluding the top 50).
