Actively Managed ETF’s were a bit of a hot topic last year and many are saying they will catch on because of the advantages over mutual funds such as better liquidity and lower fees, but for now the actively managed ETF segment has failed to catch on and there are currently just a handful of ETF that are liquid enough for consideration. In addition, there are zero actively managed ETF’s available for equities that are liquid enough for consideration. Part of the reason is due to SEC red tape and it takes many months to be approved. I’d expect we’ll see more of these begin trading this year, but until we get more actively managed ETF’s focused on equities with a history of solid performance, they will fail to catch the attention of the average investor.
Here are the only four actively managed ETF’s liquid enough to consider at this time (at least from what I’ve been able to find).
WisdomTree China Yuan ETN (CYB) which seeks performance similar to money market rates in China (averages 242K shares traded per day)
WisdomTree Emerging Markets Currencies (CEW) seeks performance similar to money market rates in emerging market countries (170K shares/day)
Pimco Enhanced Short Maturity ETN (MINT) invests in short duration debt securities (141K shares/day)
WisdomTree Brazil Real ETN (BZF) seeks performance similar to money market rates in Brazil (68K shares/day)
The rare earth metal stocks such as Molycorp (MCP) and Rare Element Resources (REE) have received much attention of late due to the parabolic runs on concerns that China is hoarding these rare earth metals. While these miners have to yet produce rare earth metals, they are running on pure speculation. Now comes word that Van Eck is launching a Rare Earth Metals ETF (REMX) tomorrow on the NYSE. Will this mark a top to the rare metal momentum? Time will tell, but it seems to be a good contrary indicator to the bull run.
The Rare Earth Metals ETF seeks to track the Market Vectors Rare Earth/Strategic Metals Index which is currently comprised of 24 companies with a market capitalization of at least $150 million. To the right is a list straight from the Van Eck website as of Oct 27th. As you can see, there are a few that are from rare earth metal pure plays such as US based Titanium Metals (TIE) and RTI International (RTI) and many have yet produce an ounce of rare earth metals including top holding Lynas Corp which isn’t expected to begin production until late next year.
Despite the speculative nature of just about every rare earth mining company outside of China (yes you could argue that the China miners are even more speculative!) this is a highly unique niche focused ETF which the market needs more of. With the need for rare earth metals expected to continue to explode in the coming years, it should garner lots of attention now and in the years to come. If nothing else, it’s a great way to diversify, spreading your risk around within a very volatile and speculative sector.
