iShares Files for Three Russell 200 ETFs

Yet another iShares fund has been proposed to the SEC, this time seeking megacap coverage of the Russell 3000. The company recently filed for a new ETF targeting the Russell Top 200 Index, which represents the top 200 companies within the broader Russell 3000 Index.

In addition to this core fund, iShares has also established plans for two other ETFs relating to the Russell 200; the first would track the Russell Top 200 Growth Index, while the second would monitor the Russell Top 200 Value Index.

The Russell 200 currently accounts for 65% of American equities market capitalization, while the growth and value indices cover 64% and 74% of holdings, respectively, within its corresponding index. Unfortunately for iShares, an ETF representing the Russell 200 is hardly revolutionary -- the index is a popular benchmark for large-cap funds, and as such, it may be a risky choice for iShares' new fund.

The mega-cap ETF space is swarming with similar funds (the Vanguard Mega Cap 300 Index ETF (MGK - commentary - Trade Now), the Vanguard Mega Cap 300 Value Index ETF (MGV - commentary - Trade Now) and the PowerShares Active Mega Cap (PMA - commentary - Trade Now) all offer nearly identical exposures), so excessive competition might inhibit the upcoming ETFs' success. Furthermore, these funds maintain an expense ratio of 0.14%, as opposed to the 0.20% offered by the iShares fund.

Overall, keep an eye on this upcoming ETF, but don't be too surprised if excessive competition prevents it from flourishing.

At the time of publication, Dion had no positions in securities mentioned.

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Know What You Own: Other index-based ETFs include the Nasdaq-100 Trust (QQQQ - commentary - Trade Now), the iShares Russell 100 Index (IWB - commentary - Trade Now), the Consumer Discretionary SPDR (XLY - commentary - Trade Now), the iShares Dow Jones Transportation Average (IYT - commentary - Trade Now) and the iShares Dow Jones Basic Materials (IYM - commentary - Trade Now).

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Don Dion is the publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

Dion is also president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.