An ETF Wish-List

by: Where is the Yield?

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.

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