Exchange-traded funds or ETF's have rocketed into the mainstream consciousness since the first one, the S&P 500 SPDR, was launched more than 25 years ago. Now there are almost 1800 ETF's being traded in the U.S., a remarkable number considering that there are less than 4000 companies listed on exchanges here. And investors around the world have already poured about $410 billion dollars into exchange-traded products in 2019 alone.
As you might guess, this explosive growth has attracted all kinds of new ETF issuers into this market. To distinguish themselves from the competition and to attract investment assets, these fund sponsors have stopped at nothing to slice and dice the financial markets in innovative, and in many cases just plain silly, ways. (I'll let you decide which of the following is which.)
Would you like your portfolio to reflect your opinion on the recent Trump vs. the NFL uproar? Perhaps an investment in the Point Bridge GOP Stock Tracker Index ETF, designed to track companies with employees and political action committees highly supportive of Republican candidates, would make sense. Or until recently you could have taken the other side of the debate with the ProSports Sponsors ETF, designed to invest in companies that sponsor professional sports teams. Alas, the ProSports Sponsors ETF closed earlier this year, so I guess you could say that the GOP prevailed, at least in the ETF arena.
Is all of this political bickering winding you up? Put some relaxation in your portfolio with the Quincy Jones Streaming Music, Media & Entertainment ETF. Or mellow out with the Horizons Marijuana Life Sciences Index ETF.
Need help deciding from among all these newfangled ETF's? How about the Equbot with Watson AI Total US ETF, which invests in firms using IBM's Watson artificial intelligence. And there was a time when you could have celebrated your portfolio's spirited performance with WSKY, the Spirited Funds ETF that tracked companies that sell liquor, but that was before this fund closed in June, 2018 - a "last call for alcohol" if you will.
Do all of these ETF's sound attractive to you? Then I might have suggested the Industry Exposure & Financial Services ETF, an exchange-traded fund designed to invest in companies that make money from exchange-traded funds, but ironically it too has closed due to lack of interest. And that's a pity because when all is said and done, I have a feeling that as usual it will be Wall St. rather than individual investors that will benefit from many of these over-engineered products.
About the Author
Paul Winter, MBA, CFA, CFP® is a Fee-Only financial advisor and fiduciary in Salt Lake City, UT. His independent wealth management firm, Five Seasons Financial Planning, provides professional portfolio management and objective financial planning services to individuals and families, and to their related entities including trusts, estates, charitable organizations, and small businesses.