Copy Cats
Issuers are increasingly looking for new ways to put out trendy products, even if the funds are derivatives of something that already exists, said Mike Cronan, president of marketing services at Exchange Traded Concepts, an ETF advisory firm that helps companies launch custom funds.
“A lot of thematic ETFs tend to be copy-cat a little bit,” he said. “Who’s doing well? What’s come out? Maybe a little derivative of it. So we hear a lot about different tech themes, AI, quantum computing, cloud computing.”
These trends are likely to continue in 2019, Balchunas said, with even some smaller issuers debuting out-of-the ordinary funds. Defiance ETFs, for example, filed a prospectus for robotics and cloud computing funds, among others.
Staying Relevant
A fund that tracks the lowest-paid chief executive officers is getting some buzz, Balchunas said. It’s loosely based on the Global X Founder-Run Companies ETF, ticker BOSS, which tracks the performance of founder-run companies. Or, if Congress manages to pass an infrastructure spending bill, an issuer might put together a product based on that.
“It’s a theme and it crosses a few sectors -- industrials, energy,” Balchunas said. “That could do well.”
Dunn agreed that fund firms will keep bringing out thematic ETFs in the search for the next big hit. The challenge will be keeping them relevant and exciting.
“You’ll also see a lot more of them launched and a lot more of them closed because of timing or for whatever reasons that theme didn’t resonate,” he said.
This article was provided by Bloomberg News.