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business news5 ETFs That Deserve Better Asset Hauls
There are some good exchange traded funds out there that deserve more love when it comes to assets under management. Here, some candidates to consider.
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Given an increasingly high level of competition, what is it that motivates issuers to keep bringing new products to market? In part, it is the assumption that new offerings will attract a reasonable amount of assets under management to justify the new ETF's or ETN's existence.
While there is no hard and fast rule for what a new ETF's AUM total should be, the $50 million figure gets tossed around quite a bit for where a rookie fund should be in terms of AUM at the end of its first year of trading.
Plenty of funds arrive at the level and some are lucky enough to do so in far less than 12 months. Still, there are some good ETFs out there that may just deserve more love when it comes to AUM.
We went looking for some candidates for the “unloved ETF club” or ETFs that arguably should have better asset hauls than they currently do. As such, we tried to steer clear of funds that are just a few months old because new ETFs can struggle in their first few months of trading to attract investor inflows.
Here's our list:
1. Direxion Daily Gold Miners Bear 2X Shares (DUST): DUST is one exception to our new ETF stipulation as the fund made its debut in December. It makes the list because it has attracted less than $8 million in AUM despite a focus, albeit bearish, on a hot commodity: gold. While gold itself and the ETFs backed by physical holdings of the yellow metal have soared recently, gold miners have struggled by comparison. Put another way, pairing DUST with say the SPDR Gold Shares (GLD) could make for a profitable short-term hedge within a portfolio.
2. Market Vectors Latin America Small-Cap Index ETF (LATM): Considering that LATM is over a year old and that it is a play on two wildly popular themes (emerging markets and small-caps), AUM of $29.6 million is a tad disappointing. The good news is that total is probably enough to keep the fund viable for a while, and as investors continue to return to emerging markets, LATM should benefit.
3. IQ Australia Small Cap ETF (KROO): Just over a year old, KROO has attracted over $42 million in AUM, but given that this is a commodities-heavy play on a solid developed markets performer, it might have been fair to expect a bit more. As is the case with LATM, KROO is certainly viable and the issue here isn't the quality of the ETF (which is sound), it's more a matter of investors becoming informed about KROO's story.
4. ETFS Physical White Metals Basket Shares (WITE): Alright, so the ETF is still in its rookie year, but how an ETF that devotes 55% of its weight to physical silver has accumulated just over $70 million AUM while silver is all the rage is befuddling. This situation isn't likely to persist. Check back in six months and you may see WITE's AUM figure much higher than it is today.
5. Wisdom Tree International Energy ETF (DKA): Considering the sector DKA tracks and its constituents, the fact that the fund has less than $51 million AUM as it approaches its five-year anniversary is baffling. This is the epitome of an ETF that should have more AUM, but doesn't.
Editor's Note: This content was originally published on Benzinga.com by The ETF Professor.
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