7 ETF Solo Acts You May Have Missed
The major sponsors of ETFs have billions of dollars in assets. Chances are you regularly hear about their latest fund offerings.
At the other end of the market are these ETFs, which (as of today) are the sole offerings of their sponsors. Many, if not all, of these sponsors are planning additional ETF products.
Should you consider a standalone ETF for your clients?
On the plus side, to launch a single ETF, a sponsor needs an idea that isnt a clone of something already in the market. That doesnt mean it will be the best investment strategy ever devised, but at least it wont be an idea that youve already seen a dozen times.
And, if you have questions about the product, theres a good chance the sponsor will get back to you rather quickly. Companies new to the ETF space need your business and usually are willing to work hard to get it.
Of course, there are negatives associated with smaller ETFs. A new product may have more limited liquidity. That means it will trade with wider spreads, so you may want to buy or sell with limit orders.
And there are no guarantees of success in the ETF world. If it does not attract enough assets, an ETF (even one from a big sponsor) may close its doors. If that happens, the underlying assets are liquidated and the cash distributed to holders of the defunct ETF. That can produce a gain or loss what our friends at the IRS call a taxable event.
Here are seven standalone ETFs to consider. Data is from the fund companies and Morningstar as of 08/03/2015. Joseph Lisanti
Click through to see the funds or click here to see a single-page version.