Jul 07, 2011
ETF asset growth continues to demonstrate the accelerating importance of exchange based products in modern portfolios. Below shows the growth in the number of $1 billion asset products:
We find the media focus on ‘new ETFs’ to be 95% waste of time. While some notable new ETFs occasionally come to market, these are not like IPOs --- these are indexes. They are not intentionally priced low to create a short-term pop --- they price in line with the value of the underlying index. The overwhelming focus by investors should be on the real meat & potatoes ETFs that represent the real portfolio drivers – the ones with assets and that have been around for many years.
On that note, rather than watch ‘new ETFs’ --- a ridiculously over-covered topic (driven by the ad budgets of ETF providers trying to market these products), we will instead begin to focus on ETF products gaining ‘asset traction.’ This is much more interesting. Before Silver had its monstrous, wealth-creating run in 2010 --- its assets grew large and signaled to at least ‘pay attention’.
Below is a list of ETFs that in the first 6 months of the year went above $1 billion in assets (and started the year below it).
Note that PIMCO now has its first two billion dollar products --- a very unexciting cash management ETF (MINT) -- as wells as a short-term Inflation Protected (TIPS) product (STPZ). AMLP is another oil & gas master limited partnership product (first one out and to get traction was AMJ). This MLP area is a group that should at least be on your radar as Oil & Gas MLPs are the ‘toll-roads’ of energy infrastructure in the United States – they own the pipes that transport energy and these assets are limited in supply --- who wants to approve new oil pipes through their countryside? Another item of note is the currency theme – PCY, WIP and of course UUP all have strong currency components to them. The investment landscape is going more global each and every year – this is a 20-year trend – embrace the investment implications of this secular move to globalization.
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