An ETF Wish-List

There has been such a truckload of new ETF offerings recently, that a reaction, equal in force but opposite in direction, should hardly come as a surprise to anyone. And so, many market observers and commentators have come out and said: "This is too much", and "Who needs so many ETFs anyway".

My take on the subject is this: We don't need many of the funds being offered, but that doesn't mean that all the usable ETFs have already been introduced. The ETF industry has a long way to go still. It just needs to go in the right direction.

The following is a list - by no means comprehensive or conclusive - of index ETFs that I feel would be useful to investors, and to the best of my knowledge have yet to materialize:

• Junk (or below investment-grade) bonds
• Preferred shares (possibly split by credit ratings, conversions and/or floating/fixed/cpi linked rates)
• MLPs
• International government dollar bonds
• International government foreign currency bonds (possibly split to developed and emerging markets)
• Mortgage backed securities
• Floating rate notes
• CBOE $BXM buy&write index
• Dogs of the Dow
• Hedge funds
• Private equity
• Art
• Collectible items

To reiterate: This list is neither comprehensive nor conclusive. You may have also noticed that I've let myself digress out of the mundane and into the creative towards the end of it. But the point is that instead of piling up semi-active, nuance and downright redundant funds, maybe some of the providers would do better by providing passive, low-cost cover for these and other asset classes of real interest.

Comment on this article

Comments

[Asif Suria:]

It looks like at least one of the ETFs on your wish list is already in the works. Check out the following two posts about a private equity ETF.

etf.seekingalpha.com/a...
quantinvestor.blogspot...

Last month, I suggested a Dogs of the Dow ETF that goes a little beyond the simple Dogs of the Dow theory.

www.sinletter.com/blog...

The last thing I would want in my portfolio at this point are mortgage backed securities.

What are MLPs?

2006 Sep 27 02:34 PM

[Mike Welna:]

Powershares is coming out with several new ETFs including Preferreds and Private Equity. How about adding Timber to the creative end of your list too.

2006 Sep 27 03:26 PM

[Ernesto Gar...:]

International Bonds in Foreign Currency will no doubt be in demand as the USD is forecast to devalue. Besides, some of those bonds offer good yields and no great risk.

2006 Sep 27 06:25 PM

[Panskeptic:]

I'd like to echo the remark about "timber." For those of us already sufficiently exposed to oil and the metals, I'd like to add some of those agricultural commodities now trading as ETFs in London, like grains and cattle.

2006 Sep 27 10:52 PM

[Daniel Winter:]

I love _IDEA_ of the new DBV "Currency Yield" ETF. I wish they could/would come up with market neutral ETFs, e.g. Sector Rotation long/short, or a SP500 long/short ETF that uses some index that tries to capture market neutral returns. Why do Mutual Funds exist (e.g. www.google.com/pfetch/...;s=SWHEX&h=1) that are able to replicate a strategy, but no ETFs so far?

2006 Sep 29 06:18 AM