Powershares Global Progressive Transportation ETF: Unnecessarily Cutesy

Invesco Powershares is one of the leading innovators in the exchange-traded fund world. In fact, they helped fuel the ETF revolution. And they absolutely belong in the same conversation as their chief rivals, the State Street SPDR ETFs and the iShares Barclays ETFs.

However, one has to question the narrow niche focus on some of the most recently listed vehicles. At this point, it's not investor demand that is driving the new investments; rather, fund sponsors are flooding the market with "ideas" that don't require ETF solutions.

For instance, the PowerShares Global Progressive Transportation Portfolio (PTRP) tracks an index of:

1. Global companies engaged in...
2. Efficient modes of transportation that stand to benefit from a worldwide transition to...
3. Cleaner, greener energy use.

As much as we would like to believe that the cleaner, greener component is providing something new to the transportation sector, the price movement barely deviates from the Dow Jones Transportation Fund (IYT). Yet IYT trades 1,000,000+ shares on a daily basis, while PTRP trades less than 500. That makes PTRP susceptible to terrible entry or exit prices, not to mention the possibility that PTRP's ultimate longevity is questionable.

Some may argue that IYT isn't global enough, that the Dow Jones Transports represents 100% U.S. companies whereas PTRP is only 40% exposed to the U.S. And others may argue that IYT isn't green enough... whereas PTRP is capturing energy efficiency.

To the naysayers, I'd say, "Get practical." If you like transports, stick with old reliable, the Dow Jones Transports (IYT). If you like energy efficiency, look at the PowerShares CleanTech Index (PZD) with plenty of global exposure.

ETF investors have to be concerned with the long-term viability of their investments. I'd rather see a tandem of a legitimate transportation component and a proven progressive energy component than a "cutesy" Global Green Transporter like PTRP.

Disclosure Statement: ETF Expert is a web log ("blog") that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Advisor with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site. 

Comments

[searcher]

These 'products' are similar to the solutions in search of problems or nostrums in search of diseases or software approaches that ignore the requirements of actual human interface developed by 'engineers'. In the financial world it is the 'rocket scientists' run amok with their 'modeling' resources made available by mathematical protocols. I guess 'marketing' figures they'll throw on the wall to see if it sticks.

2008 Nov 19 12:04 PM