Awaiting A Global Exchange ETF

Up until a few years ago, easy money could be made every time a stock index announced an upcoming change. For example, when the Russell 2000 announced the addition of new stock, "easy money" could be made by simply purchasing the new stock because the index funds would eventually purchase so many shares that it would drive the price up.

Unfortunately, the index funds "wised-up" to this situation and made procedural changes to keep it from happening again. However, similar "easy money" seems to still exists among Exchange Traded Funds (ETFs). For example, the Silver ETF that launched in 2006 pushed silver prices to multi-decade highs. It's unclear when the next new ETF will be announced, however a quick survey of the industry suggests we are long overdue for a Global Exchange ETF.

If Barclay's or State Street or some other ETF creator announced a new Global Exchange ETF, it would probably include some of the following stocks:

NYSE Euronext (NYX)
NYMEX Holdings (NMX)
Nasdaq (NDAQ)
International Securities Exchange (ISE)

and international exchanges like:

London Stock Exchange
Hong Kong Exchanges and Clearing
Australian Securities Exchange

It's uncertain whether a Global Exchange ETF will ever be launched, however it wouldn't surprise me to see one sooner than later based on the explosive growth in new ETF's. Regardless, I like the exchanges in general for their strong foothold within the ever growing capital markets.

Comments

[User 5045:]

It was launched quietly last week. It is the Claymore/Clear Global Exchanges, Brokers and Asset Managers (EXB).
Please note he construction and constituents at www.clearindexes.com/I...;sub=3.
Disclosure: my firm publishes the index and has the analytics.

2007 Jul 05 03:37 PM

[Mark Hines:]

Wow. Ask and ye shall receive. The power of Seeking Alpha. This is a broader based index than I had in mind, but a very useful one nonetheless. Thank you for bringing this to our attention. Too bad you can't put together an ETF consisting of smaller privately held exchanges. I would absolutely invest in an ETF like that because I envision explosive growth in this area as the smaller exchanges continue to be acquired by the bigger ones (seems like all the best investments are always privately held). Regardless, thank you very much for the information Andrew!

2007 Jul 05 06:48 PM

[garlicbulb:]

I was watching CNBC Fast Money yesterday and they discussed this with a guy from Ishares. The problem area is that "funds" cannot have more than 25% of its holdings in a single stock so it makes an "all exchange" fund difficult.

2007 Jul 05 07:09 PM

[mitsuo:]

You didn't check if there was a Global Exchange ETF out there before writing the article?

2007 Jul 05 09:03 PM

[Mark Hines:]

Hi Satoh,
As far as I know, there isn't one. The above example provided by Andrew includes brokers, asset managers, and exchanges (it's not a pure play gobal exchange ETF).

2007 Jul 05 10:04 PM

[mitsuo:]

Hi Mark,
Apologies!

2007 Jul 06 10:40 PM

[Roger Nusbaum:]

I think/wonder whether a product just consisting of global exchanges could be created that wasn't an ETF. I don;t know if the HOLDRs structure would be better or any other product structure.

I did not see the <em>Fast Money</em> bit mentioned above but based on the comment it sounds like it misses this point. If there is demand for a theme, find the right wrapper.

2007 Jul 05 11:23 PM