Bet On ETF Industry Growth With This Unique New Fund

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May 1, 2017 8:32am NYSE:TETF


From Zacks: The ETF industry has been taking giant strides lately, growing with product introductions and undergoing a radical change when it comes to themes.

Immense popularity within just over 20 years testifies to this growth (read: 6 Successful ETF Launches of 2016).

Though the pace of rollout slackened a bit year over year in 2016 as we saw close to 240 U.S. listed ETF launches compared with approximately 300 seen in 2015, it was way higher than about 180 ETF initiations in 2014, 150 in 2013 and 170 rollouts in 2012. So far this year, we have already seen 59 new ETFs (read: Too Many ETFs Flying in the Market?).

All these have taken the U.S. listed ETF tally to 2,011, as per Not only this, a considerable number of ETFs are in the pipeline, pointing to growing investor interest for exchange-traded products in this market. The credit goes mainly to a wide range of innovative and fresh-themed products in the space, which hold investors’ attention despite the ups and downs the market (read: 6 ETF Ideas Most Favored by Issuers in 2016).

The variety of themes and the popularity of the space have reached such a height that an ETF itself has been launched to play this growth story. The name of the product is ETF Industry Exposure & Financial Services ETF (TETFFree Report) .

As per TETF issuer, “ETFs have grown at a 19%+ annual rate over the last decade and the space now boasts more than $3.5 trillion in assets worldwide.” According to ETFGI – one of the key independent research and consultancy firms on the movement of the global ETF/ETPs – “there was a record level of US$3.548 trillion invested in the 6,630 ETFs/ETPs listed globally at the end of 2016.”

Inside TETF

The fund looks to track the Toroso ETF Industry Index and offer exposure to publicly traded companies that generate revenues from the Exchange Traded Funds. Components of the fund “ranges from fund sponsors, to index & data companies, trading & custody platforms, liquidity providers, and exchanges.”

There are 38 securities in the fund. Blackrock Inc, CBOE Holdings Inc, MSCI Inc and S&P GLOBAL Inc are some of the constituents. The fund charges 64 bps in fees.

Bottom Line

The product is too unique in its approach and is unlikely to face any competition. However, some components of TETF have exposure to other financial ETFs too, which may offer the newbie some competition.

For example, BlackRock has exposure to WBI Tactical LCG Shares ETF (WBIEFree Report) , Invesco has exposure to WBI Power Factor High Dividend ETF (WBIYFree Report) , CBOE Holdings is exposed to iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAIFree Report) and MSCI Inc. takes the fourth position in Elkhorn S&P MidCap Financials Portfolio (XFFree Report) . Having said this, we would like to note that these funds are nowhere near TETF which intends to give pure-play exposure to the ETF industry.

The ETF Industry Exposure & Financial Services ETF (NYSE:TETF) was unchanged in premarket trading Monday. Year-to-date, TETF is unchanged, versus a 6.51% rise in the benchmark S&P 500 index during the same period.

TETF currently has an ETF Daily News SMART Grade of NR (Not Rated), and is unranked among 39 ETFs in the Financial Equities ETFs category.

This article is brought to you courtesy of Zacks Research.

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