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Seven ETFs I Wish Existed, But Don't

|Includes:BPT, BTE, McDonald's Corporation (MCD), YUM
If several years of following the exchange traded products industry has taught me one thing it is that there are almost no limits to the ideas issuers will come up and bring to market for investor consumption. Some of the ideas are relevant and turn into solid-performing ETFs that investors embrace. Other "new" ETFs are simply carbon copies of existing products (many of us that write about ETFs call these "me too" ETFs) and the investor's decision boils down to expense ratio. And of course we have the ETFs based on ideas that are just a little bit off the wall.

Consider this week's piece my personal ETF "wish list" for ETFs that don't exist, but I think the ideas could make for worthwhile funds. If I had written this piece a year ago, I would have included ETFs backed by physical palladium and platinum, but ETF Securities took care of that and the occasional bear in me wishes Greece- and Portugal-specific ETFs were around for shorting purposes, but alas, those funds don't exist.

Here's my list in no particular order of desire or how successful I think the idea would be.

  1. An Argentina-specific ETF

    Investors love ETFs that track Latin America, so I've been puzzled why there isn't an ETF tracking Argentina. The country has a larger economy than Chile, Colombia and Peru, all of which have specific ETFs. My guess is that Argentina's less-than-favorable regulatory environment has kept ETF issuers from bringing a fund for this country to market, but that's just a guess.

  2. A Sin Stock ETF

    I'll start by saying I think an ETF that tracked vice stocks once existed and if I am wrong in saying it no longer trades, please write to me and let me know, but assuming it is in fact gone, I still think the idea works. The dividend yields in the tobacco sector are too good to ignore, fast-food chains like McDonald's (NYSE: MCD) and Yum! (NYSE: YUM) offer good dividends and are plays on changing culinary tastes in the emerging markets. Throw in some casino stocks with Macau exposure and you've got an interesting ETF.

  3. A Royalty Trust ETF

    There have been several new additions in terms of ETFs and ETNs that track master limited partnerships this year and I say why not carry that over to an ETF that tracks royalty trusts like Baytex Energy Trust (NYSE: BTE) and BP Prudhoe Bay Royalty Trust (NYSE: BPT)? These stocks offer incredible dividends and yields, so the corresponding ETF should be an income generator as well.
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  1. A Lean Hogs ETF or ETN

    Think about all the commodities, mainstream and obscure, that ETFs and ETNs have given investors exposure to. Lean hogs are almost conspicuous by their absence from the ETF/ETN universe. ETF Securities does offer such an ETF in London, so the idea could be viable here in the U.S.

  2. Sector-Specific ETFs For India

    Global X has introduced several sector-specific ETFs for China and a couple for Brazil and it is clear the Indian economy is large enough and dynamic enough to warrant ETFs for its energy, financial, industrial and technology sectors.

  3. Specific Inverse ETFs for Australia, Canada and Russia

    These countries all have specific bullish ETFs and those offerings have proven popular enough to warrant bearish equivalents, in my opinion. Think about it: The performance of Australia's economy is tied to demand for mineral resources and the same can be said for Canada and Russia when it comes to oil. That would make inverse ETFs on these countries excellent ways to profit in a bear market for commodities.

  4. More Frontier Markets ETFs

    No pun intended, but frontier markets are the next frontier after emerging markets. The Philippines would be an example of a frontier market and both iShares and Global X have said they'll roll out an ETF for what may be the next Asian tiger. I would add countries like Pakistan and Ukraine to the list of legitimate candidates for country specific ETFs. Pakistan may get an ETF as Global X said earlier this year it may introduce such a product.

I don't think any of these ideas are too far flung and I do think we'll eventually see the India sector ETFs come to life as well as more frontier market offerings.


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Disclosure: No positions
Stocks: MCD, YUM, BTE, BPT