Barron's has an article up (sub required) that wonders whether or not there are too many ETFs. Regardless of your opinion this is a good question to ask every so often.
A recurring theme to my commentary here has been that ETF offerings will allow access to more parts of the market, there will be both useless and useful products that come along and that we should all continue to keep tabs on new products as they come out.
WisdomTree just came out with 20 new ETFs. I have mentioned them a couple of time but have not really delved into them yet. I am convinced that their products are innovative, relative what is already out there. But I cannot imagine that all 20 ETFs will measure up to WisdomTree's own criteria for success. I'm not sure that even ten will be a hit but I think this goes with the territory. A few weeks ago a reader sent along a link to a news item from four or five years ago that Barclays closed a few sub-sector ETFs due to lack of interest. Now the ETF providers are falling over themselves to get new sub-sector ETFs to the market.
I think the notion of too many is the wrong way to look at the issue. The product is evolving, it is becoming more sophisticated and more investors are learning more about them. There is no genius in expecting some of the new ETFs will be popular and useful and some will offer no value at all. The divergence is unavoidable.
While I still prefer individual stocks in most instances, we are moving closer and closer to a point where thorough equity market diversification can be achieved with products only. Before you jump on me, I try to seek out some fairly narrow themes or countries or do some very specific things with volatility or market cap that are hard to recreate with ETFs. For example Ireland has been an investment destination personally and for clients for a long time. I capture Ireland through one of the bank stock ADRs listed on the NYSE. For folks that don't want single stock risk, there is no ETF but there is a CEF, the Irish Investment Fund (IRL). Price-wise it has held its own but the yield is much less than the ADRs.
That was just an example. Not every possible theme out there is is captured in a product. There is still no way to capture Norway, I which I have been fond of for a long time, other than owning a common stock.
New products are coming fast enough that I would think a lot of the gaps will get filled at some point soon but pondering too many just seems like a waste of time.
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5 comments:
Re: capturing Norway - Fidelity Nordic fund captures Norway / Netherlands countries. I have been very happy with the fund's performance over the last two years.
I am aware of the fund but other than Norway the countries it buys are not oil related, further a holder of the fund obviously has no control over how much Norway is in the fund. I looked one time a couple of years it was low double digits.
Perhaps this one will help you.
A Norwegian ETF that follows
OBX.The OBX Index consists of the 25 most traded securities in the OSEBX Index.
The ETF can be bougt at Handelsbanken and DnBNor.
Sending you a link to Handelsbanken.
Sorry, only in norwegian.
Here is the link:http://www.handelsbanken.no/shb/inet/istartno.nsf/FrameSet?OpenView&iddef=&navid=HandelsbankenNO&sa=/Shb/inet/ICentNo.nsf/Default/q30D2B98DA618D5B2C1256AD500520489.
Best regards
Halseth
Norway
most countries have ETFs that trade locally (this is my exposure to Iceland). I have been aware of ETFs in Norway but they are difficult to trade in the US for US investors.
It's a real shame not to have a Norway-specific ETF or other reasonable-expense fund available. Are there even American brokerage companies approved for trading on the Oslo bourse? I guess it shouldn't be too surprising that those in nations who love debt and war should have little interest in the enormous advantages and reserves of those who avoid both and discriminate accordingly in their investments. Perhaps some of the lessons of ill-gotten gains in the Viking era have been lost further south and across the Atlantic.
Time for a Norwegian fund! Maybe get an ethical private investment company to be the vehicle to create one (like Appleseed Value / www.appleseedvalue.com)?
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