But the index provider to those funds says the problem was more about poor promotion than investor disinterest. "They [Geary] never had the marketing people to push the product," says Scott Sacknoff, index manager at SPADE Indexes, which created and still maintains the SPADE Oklahoma and SPADE Texas indexes that underpinned the two failed ETFs. "I still get calls from individual brokers asking how they can put money into this."
Sacknoff notes that certain states or regions make more sense than others to have their own ETF. "There aren't enough companies in Kansas to have its own fund," he says. He adds that people will invest in a state-centric or regional fund for two reasons--either from a sense of local pride or because it has a basket of companies that do something that others don't.
He says Oklahoma has a strong sense of local pride and an energy-focused corporate landscape. "Oklahoma provided higher beta than the average energy fund," Sacknoff says. "When energy is up, Oklahoma goes up real fast, and vice versa."
And Texas has a ton of local pride, plus an economic base that, while heavy on energy, is also more diversified than Oklahoma.
As for the Nashville ETF, if it ever comes to market the question will be whether it can generate any interest either locally or beyond.
--Jeff Schlegel