Alternative ETF List

A Broader Class of Exchange Traded Funds

Alternative ETF ListAlternative ETFs are a broader class of exchange traded funds that have a specific investment strategy that is different from traditional (long-only) investments such as mutual funds. They are sometimes referred to as Hedged ETFs or Smart Beta ETFs. The different strategies can reduce the market risk in an investment portfolio and tend to hold up better during market sell-offs. Here is an alternative ETF list including products designed to hedge downside market moves, fiat currencies or exhibit low volatility characteristics..

Quality Factor ETFs

Name: PowerShares S&P 500 High Quality

Benchmark: S&P 500 Quality Index

Issuer: PowerShares

Focus: Invests in companies that focus on highest quality stocks based on three fundamental variables, return on equity, accruals ratio and financial leverage ratio.

Holdings: Top weighted holdings as of May 1, 2016 included JNJ, GILD, HD, PG and IBM.

Name: PowerShares S&P International Developed Quality Portfolio

Issuer: PowerShares

Benchmark: S&P Quality Developed ex US Index

Focus: Selects holdings based on highest quality score derived from three fundamental factors- return on equity (ROE), the accruals ratio and the Financial Leverage ratio.

Holdings: Top holdings as of May 1, 2016 included Nestle SA, Roche Holding AG, Novo Nordisk A/S, Novartis AG and British American Tobacco PLC.

Name: iShares MCSI USA Quality Factor ETF

Issuer: iShares

Benchmark: MSCI USA Sector Neutral Quality Index

Focus: Invests in high quality stocks based on three fundamental factors- return on equity, earnings variability and debt-to-equity.

Holdings: Recent top holdings included Johnson & Johnson, Microsoft, PepsiCo, Apple, and Exxon Mobil.

Name: iShares MSCI International Developed Quality Factor ETF

Issuer: iShares

Benchmark: MSCI World ex USA Sector Neutral Quality Index

Focus: Invests in higher-quality international, developed stocks based on three fundamental factors-return on equity, earnings variability and debt-to-equity.

Holdings: Recent top holdings included Roche Holdings, Novo Nordisk, Nestle, Royal Dutch Shell and AIA Group.

Low Volatility ETFs

Name: S&P 500 Low Volatility

Issuer: Invesco PowerShares

Symbol: SPLV

Benchmark: S&P 500 Low Volatility Index

Focus: Invests in the 100 stocks in the S&P 500 with the lowest realized volatility over the past 12 months.

Holdings: Recent top holdings included Coca-Cola, DaVita HealthCare Partners, PepsiCo, Aflac and Berkshire Hathaway ‘B’ shares.

Name: S&P MidCap Low Volatility

Issuer: Invesco Powershares

Benchmark: S&P MidCap 400 Low Volatility Index

Focus: Invests in the 80 stocks in the MidCap 400 with the lowest realized volatility over the past 12 months.

Holdings: Recent top holdings included RPM Intl, Arthur J Gallagher & Co., RenaissanceRe Holdings, The Valspar Corp and Aspen Insurance Holdings.

Name: PowerShares S&P SmallCap Low Volatility Portfolio

Issuer: Invesco PowerShares

Benchmark: S&P SmallCap 600 Low Volatility Index

Focus: Invests in the 120 stocks of the SmallCap 600 with the lowest realized volatility over the last 12 months.

Holdings:  Recent top holdings included ProAssurance Corp., Northfield Bancorp Inc., Kaiser Aluminum, Northwest Bancshares and Getty Realty Corp.

Name: PowerShares S&P International Developed Low Volatility Portfolio

Issuer: Invesco PoweShares

Benchmark: S&P BMI International Developed Low Volatility Index

Focus: Invests in the 200 least volatile stocks in the index (ex-U.S. and South Korea) over the last twelve months.

Holdings: Recent top holdings included MAN SE, HK Electric Investments, Sofina SA, CLP Holdings and Singapore Press Holdings.

Name: S&P Emerging Markets Low Volatility

Issuer: Invesco PowerShares

Benchmark: S&P BMI Emerging Markets Low Volatility Index

Focus: Invests in the 200 least volatile stocks in the index.

Holdings: Recent top holdings included Chunghwa Telecom, Public Bank Bhd, First Financial Holding Co., Banco de Chile and Telekom Malaysia.

Name: iShares MSCI EAFE Minimum Volatility ETF

Issuer: iShares

Benchmark: MSCI EAFE Minimum Volatility (USD) Index

Focus: Invests in developed, international stocks that exhibit lower volatility characteristics.

Holdings: Recent top holdings included Reckitt Benckiser Group, Nestle, Swiss Re, Nippon Telegraph and Telephone and National Grid PLC.

Name: iShares MSCI Emerging Markets Minimum Volatility ETF

Issuer: iShares

Benchmark: MSCI Emerging Markets Minimum Volatility Index

Focus: Invests in emerging market stocks that exhibited lower volatility characteristics.

Holdings: Recent top holdings included Taiwan Semiconductor, Chunghwa Telecom, IHH Healthcare, Public Bank (Malaysia) and Taiwan Mobile.

Hedged Equity ETFs

Name: PowerShares S&P 500 Downside Hedged

Issuer: PowerShares

Symbol: PHDG

Benchmark: S&P 500 Dynamic VEQTOR Index

Focus: Actively-managed fund that rotates asset allocation between equity, cash and volatility. May help manage risk since not directly correlated to markets and can take advantage of downside market moves.

Holdings: Recently held S&P 500 index futures, CBOE Volatility Index Futures as well as Apple, Microsoft and Exxon Mobil.

Name: Wisdom Tree Managed Futures Strategy Fund

Issuer: Wisdom Tree

Benchmark: Wisdom Tree Diversified Trend Indicator

Focus: Attempts to achieve positive total return in rising and falling markets utilizing various asset classes in one fund. This non-correlation to traditional equity portfolio may reduce risk to a portfolio.

Holdings: Recent large holdings from their website included U.S. Treasury Bills, Japanese yen forward contracts, soybean futures, U.S. 10-Year Treasury note futures and a short natural gas futures contract.

Name: RAFI Long/Short Fund

Issuer: ProShares

Benchmark: FTSE RAFI US 1000 Long/Short Total Return Index

Focus: Equal dollar amounts to long and short positions. Goes long the RAFI 1000 US Index (fundamentally weighted) and shorts the Russell 1000 (market cap weighted).

Holdings: Recent large holdings included Exxon Mobil, Chevron, JP Morgan, AT&T and General Electric.

Name: Janus Velocity Tail Risk Hedged Large Cap ETF

Issuer: Janus/Velocity Shares

Benchmark: Velocity Shares Tail Risk Hedged Large Cap Index

Focus: Uses VIX futures to help hedge an equity portfolio. Comprised of 85% S&P 500 index ETFs and 15% exposure to volatility components to hedge against market declines. Rebalances monthly. Uses both long and short volatility futures.

Holdings: Recent top holdings included SPY, IVV, VOO and VIX futures.

Name: QAM Equity Hedge ETF

Issuer: Advisor Shares (managed by Commerce Asset Management)

Benchmark: HFRI Equity Hedge Total Index

Focus: Actively managed long/short equity strategy which seeks investment results that beat the risk adjusted returns of at least 50% of the long/short equity hedge funds.

Holdings: Recent substantial holdings included cash and equivalents, short positions on Japanese yen, short position in Russell 1000 Value ETF, short position in Pound Sterling.

Symbol: QEH

Name: Wisdom Tree Dynamic Long-Short U.S. Equity Fund

Issuer: Wisdom Tree

Focus: A dynamic long-short fund, DYLS seeks to go long roughly 100, fundamentally attractive large and mid cap stocks while going short the 500 largest U.S. companies by market capitalization as a hedge.

Top Holdings: Recent long holdings included CH Robinson Worldwide, Spectra Energy, Clorox and Kimco Realty.

Expense Ratio: 0.53%

Name: IQ Hedge Long/Short tracker ETF

Issuer: IQ Hedge

Benchmark: IQ Hedge Long/Short Index

Focus: Seeks low correlation to equity markets by implementing a long/short strategy.

Holdings: As of Q1 2016, QLS had a large position (40% weighting) in PowerShares Senior Loan Portfolio, BKLN. Also included 20% of LQD (investment grade corporate bond ETF) and 13% of IWO. Short positions were various small cap ETFs.

Total Operating Expenses: 1.1%

Name: REX Gold Hedged S&P 500 ETF

Issuer: REX Shares

Benchmark: S&P 500 Dynamic Gold Hedged Index

Focus: Invests in the S&P 500 though the Vanguard S&P 500 ETF (VOO) and E-mini futures. Then goes long near-dated gold futures contracts in an attempt to hedge against a decline in the home currency (US dollar).

Expense Ratio: 0.48%

Name: REX Gold Hedged FTSE Emerging Markets ETF

Issuer: REX Shares

Benchmark: FTSE Emerging Gold Overlay Index

Focus: Invests in emerging market equities through VWO and also goes long near dated gold futures contracts to hedge the different emerging market currencies represented in the VWO (South African rand, Mexican peso, Brazilian real, etc).

Expense Ratio: 0.65%

Hedged Fixed Income ETFs

Name: Barclays U.S. Aggregate Bond Negative Duration Fund

Issuer: Wisdom Tree

Benchmark: Barclays Rate Hedged U.S. Aggregate Bond Index, Negative Five Year Duration

Focus: Uses a combination of both long bond positions and short bond futures positions to create a bond portfolio with reduced interest rate risk.

Holdings: Recent large holdings included Fannie Mae mortgage securities, U.S. Treasury notes, investment grade corporate bonds and short CME Ultra 10-year Note futures.

Name: Wisdom Tree Barclays U.S. Aggregate Bond Zero Duration Fund

Issuer: Wisdom Tree

Benchmark: Barclays Rate Hedged U.S. Aggregate Bond Index, Zero Duration

Expense Ratio: 0.23%

Info: Helps immunize a bond portfolio against rising interest rates, by owning fixed income securities while simultaneously shorting Treasury bond futures. Had an effective duration of 0.35 and an average yield to maturity of 1.93% as of May 3, 2016.*

Bear ETFs

Name: AdvisorShares Ranger Equity Bear ETF

Issuer: Advisor Shares

Focus: Short sells domestic equities it perceives as having low earnings quality or aggressive accounting techniques.

Holdings: Recent large short positions included Cerner, GrubHub, CarMax, Lending Club and Alibaba.

Benchmark: Barclays Rate Hedged U.S. Aggregate Bond Index, Negative Five Year Duration

Focus: Uses a combination of both long bond positions and short bond futures positions to create a bond portfolio with reduced interest rate risk.

Holdings: Recent large holdings included Fannie Mae mortgage securities, U.S. Treasury notes, investment grade corporate bonds and short CME Ultra 10-year Note futures.

Name: Dynamic Bearish U.S. Equity Fund

Issuer: Wisdom Tree

Benchmark: Wisdom Tree Dynamic Long U.S. Equity Index and Wisdom Tree Dynamic Short U.S. Equity Index.

Focus: Invests in roughly 100 companies with high quality fundamental factors while selling short the 500 companies with the largest market capitalizations. Hedge ratio is 75%.

Holdings: Recent top holdings included Cirrus Logic, Mednax, CH Robinson Worldwide, Kimco Realty and Spectra Energy.

Floating Rate Bond ETFs

Name: WisdomTree Bloomberg Floating Rate Treasury Fund

Issuer: Wisdom Tree

Benchmark: Bloomberg U.S. Treasury Floating Rate Bond Index

Expense Ratio: 0.15%

Focus: Invests in floating rate U.S. Treasury notes. Yield could increase in a rising interest rate environment.

Name: Vectors Investment Grade Floating Rate ETF

Issuer: Van Eck

Custodian: Bank of New York Mellon

Expense Ratio: 0.14%

Effective Duration: 0.12 years (as of May 3, 2016)

Yield to Maturity: 1.42% (as of May 3, 2016)

Benchmark: VanEck Vectors U.S. Investment Grade Floating Rate Index

Top Holdings: Recent top holdings included corporate bonds from financial companies, including JP Morgan Chase, Wells Fargo, Royal Bank of Canada, Goldman Sachs and Citigroup maturing between 2 and 4 years from now. (May 2016)

Name: iShares Floating Rate Note ETF

Issuer: Barclays iShares

Benchmark: Barclays U.S. Floating Rate Note< 5 Years Index

Expense Ratio: 0.20%

Info: Tracks floating rate investment grade corporate debt maturing in under 5 years. Top holdings are financial company bonds mostly rated between A (44.49% of fund) and AA (27.29%) of fund.

Name: SPDR Barclays Investment Grade Floating Rate ETF

Issuer: State Street

Expense Ratio: 0.15%

Benchmark: Barclays U.S. Dollar Floating Rate Note < 5 Years Index

Summary
Article Name
Alternative ETF List
Description
An alternative ETF list to help hedge against downside market moves. They could be included with inverse ETFs and other protective strategies.
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www.inverse-etfs.com
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