Five Niche ETFs Your Broker Forgot to Mention
Last week, we highlighted five ETFs that help investors use hedge fund strategies without the expense and high net worth requirements of actually investing in a real hedge fund. This week, we're following up on that concept by looking at five ETFs that deserve the “niche” label.
While the expansion of the ETF business has been criticized by many, that expansion and evolution has brought dozens, if not hundreds, of funds with unique investing concepts to everyday investors. Some niche ETFs are a little too obscure while others are actually pretty good funds worth taking a look at.
Let's explore some that fit into each category and we can almost guarantee you your broker forgot to mention these ETFs.
PowerShares Buyback Achievers Portfolio (NYSE: PKW): The PowerShares Buyback Achievers Portfolio gives away its niche in its name. Obviously, this ETF focuses on companies that have been repurchasing shares. To be eligible for inclusion in underlying index, companies will have had to repurchased at least 5% of their shares in the past 12 months. The ETF has $43.5 million in assets under management and is home to 141 stocks. The top three holdings are Wal-Mart (NYSE: WMT), IBM (NYSE: IBM) and UnitedHealth (NYSE: UNH). Expense ratio: 0.7%.
Global X Canada Preferred ETF (NYSE: CNPF): It's not that ETFs tracking preferred stocks are unique, but CNPF makes the list because it is the first ETF to exclusively track preferred issues from our northern neighbors. The ETF made is debut in late May and has done a decent job of attracting assets with $8.4 million. Hey, a 30-day SEC yield of 3.8% is pretty good, too. Expense ratio: 0.58%.
Guggenheim Spin-Off ETF (NYSE: CSD): The Guggenheim Spin-Off is one to keep an eye on as spin-offs have become increasingly popular this year. Investors should note the index that CSD tracks is comprised not of companies that are engaging in spin-offs, but the newly spun-off business. Companies that have been spun-off in the past 30 months are eligible for inclusion in the index. This is one that could see some interesting rebalancing at the end of this year or early next year as spin-offs remain popular. CSD has an expense ratio of 0.6% and AUM of $16.7 million.
Guggenheim Ocean Tomo Patent ETF (NYSE: OTP): For the investor looking to bet on the value of patents held by a broad swath of companies, the Guggenheim Ocean Tomo Patent ETF is the fund for you. Not surprisingly, information technology accounts for 33% of the fund's sector weight, but four other sectors (health care, industrials, consumer discretionary and energy) get double-digit weights. OTP has $9.2 million in AUM and fees of 0.6%.
IndexIQ Real Return ETF (NYSE: CPI): The IndexIQ Real Return ETF is sort of a fund of funds ETFs as the ETF invests in other ETFs, both equity and fixed income, to accomplish its goal of being a low-beta inflation-fighter. An expense ratio of 0.48% is reasonable for a niche fund like this.
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