Loading...
Symbols:
Authors:

ETF Wish Lists

by: Roger Nusbaum April 13, 2006    

Roger Nusbaum

Roger's blog: Roger's wealth management firm:
Become a Contributor Submit an Article
  • Font Size:
  • Print

Roger Nusbaum submits: I stumbled across a couple of articles by Matt Haugen, who writes for Index Universe (and a couple of other publications too), about an ETF wish list. One article was his wish list and the other was a wish list taken from reader input. Both articles are worth reading. I think they are free but you will have to register.

I thought it might be worthwhile to add my two cents to this. (I am not the most creative fellow, and no doubt there are some great ideas for products that are needed but that I wouldn't come up with on my own.)

One of Matt's articles touches on a currency ETF that is leveraged. There are a bunch of currency ETFs (unleveraged) slated to come out soon. I would favor leveraged currency ETFs but I also think some interesting things could be done, strategically, by blending a leveraged ETF with an unleveraged in pursuit of some effect.

I would like to see an ETF made out of the Rogers International Commodity Index. Currently it is only tradable as a futures product. The Rogers index has 35 different commodities. Db Commodity Index Tracking Fund (DBC) is 55% in oil. There is a commodity ETF in the works from iShares that will be 80% energy. I have held off on buying DBC because of the energy (I am still undecided) but I would buy more broad-based product tomorrow if it existed.

I would like to see certain regions of the world isolated into ETFs. I would like to see central and Eastern Europe put into the ETF format. The regional closed end funds do the job, but it is tough to get good information on what is in the funds.

I think a lot of interesting things could potentially be done with subsectors of the market with both domestic and foreign stocks. There are too many to mention, but I will say that if the industry goes down this road there is likely to be a mix of useful and useless.

Matt's articles also touch on fixed income ETFs. This one is a little lost on me. Once you get too far beyond generic government bonds it gets complicated. Take convertible bonds as an example. An ETF would not necessarily be able buy the same bonds to fulfill the need for creation units. Buying different bonds takes away the index aspect of the product. If the ideas floating around for bond ETFs are more about offering active management in such a way that the premium/discount common to CEFs goes away, then that would be a great product -- but it wouldn't be a true ETF, in my opinion.

ProFunds has had inverse index funds in the hopper for a long time. I don't know if they will come this year as ProFunds earlier thought but I suppose eventually they will come. They would obviously be useful fro speculators and I think would use in diversified portfolios.

The idea of this discussion ties in with a long running theme of new investment products allowing access to parts of the market that were previously difficult to access.

Two years from now I think it will be possible to have much more control over volatility and returns, such that a do-it-yourselfer can have a lot of predictability which in turn may make being exposed to equities easier.

Related Articles

This article has 1 comment:

More by Roger Nusbaum
Investment Resources
Money Managment
Research
Seeking Alpha provides these ads as a service to its leading contributors
Articles on related themes
Asset Allocation with ETFs
Closed-End Funds
Commodity ETFs
Currency ETFs