Who Dat?
But some name changes risk obfuscating rather than illuminating strategies, according to David Perlman, an ETF strategist at UBS Global Wealth Management. “There could be more confusion with names if certain words cannot be used in the title.”
A fund from Defiance ETFs focused on communication networks started life as the 5G Next Gen Connectivity ETF, but dropped the nod to 5G before listing earlier this year. Pacer ETFs originally planned to describe its Military Times Best Employers ETF as the Best for Vets Equity ETF before shelving that plan following pushback from the SEC, letters show.
And last year, two funds were encouraged to remove “blockchain” from their names at the 11th hour, people familiar with the matter said at the time. The Amplify- and Reality Shares-branded ETFs both referenced the digital ledger in early filings, but eventually adopted different names, as did other funds with a similar theme.
Protecting Buyers
While some investors could find this confusing, “people who are seeking out those exposures know full well what they’re going into and can read between the lines,” said Ben Johnson, who heads passive strategy research at Morningstar Inc. “If anything, it could potentially prevent someone from ever locating a particular fund that could ultimately prove harmful.”
Media representatives for Amplify declined to comment. The final name of the Reality Shares fund was a compromise with regulators, according to CEO Eric Ervin. Defiance dropped ‘5G’ when it looked like sticking with the term would delay its start, according to Paul Dellaquila, global head of ETFs at the company. Pacer tweaked its fund name because the SEC told it to be clearer, said Sean O’Hara, the issuer’s president; the firm still uses the original moniker to describe the strategy on its website.
Instead, issuers are using trading tickers to guide investors to their funds. They can reserve the tags, which are approved by the stock exchange, months in advance of a fund coming to market -- encouraging horse-trading between products that want the same ticker.
Despite losing blockchain from its name, Amplify’s fund trades as BLOK while Reality Shares chose BLCN. Defiance’s connectivity ETF is known as FIVG, while Pacer picked the VETS symbol for its ETF.
“We spend a lot of time talking about tickers and making sure we like the ticker and that it’s catchy,” said O’Hara. “The name’s important from a transparency perspective for the client; the ticker is important from a marketing perspective.”
This article was provided by Bloomberg News.