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Checking In: Fishing For Opportunities With The Fishing ETF

August 2, 2011 2:55 pm
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There are ETFs that can be considered obscure and ones that have what can be deemed a niche focus. Global X is perhaps the ETF sponsor most proficient at taking these types of ETFs from the obscure to the relevant, helping to add to the firm’s assets under management total.

Certainly fitting the bill of a niche-based sector, there is the recently introduced Global X Fishing Industry ETF (NYSE: FISN), which is part of the firm’s 4Fs of the food supply chain. Fertilizer, farming and food producers are the other ETFs in the quartet.

FISN, which is home to 20 stocks and an expense ratio of 0.69%, made its debut in early May to a little bit of fanfare. While the idea of an ETF that tracks fishing companies may seem like it flirts too closely with a far-flung concept, it’s actually not.

To overlook the role of the fishing industry on the global economic stage is a mistake and one that could mean investors miss an opportunity with FISN. No, the fishing business will never be confused with financial services, energy or technology, but CNN reported the industry employed 200 million across the globe and generated $80 billion in revenue in 2008.

As FISN holds no U.S.-based companies, the ETF represents an interesting way to get some international exposure mainly through developed markets while tapping into the emerging markets theme.

Norway and Japan account for over 58% of the new ETF’s weight while Chile, South Korea and China combine for over 27%. Spain, Malaysia and Peru account for the rest of FISN’s weight.

In that vein, China, for instance, has seen dramatic growth in its per-capita fish consumption, with an average growth rate of 5.7% per year since 1961 Taking into account the global population forecast, an additional 27 million tons of production will be needed to maintain the present level of per-capita consumption in 2030 according to the Food and Agriculture Organization, Global X said in a statement when FISN debuted.

Today, FISN has just under $2 million in assets under management and trades about 4,350 shares per day. Those aren’t statistics that will blow anyone away, but several Global X ETFs have shown a tendency to start slow out of the gate when it comes to AUM and volume only to see those numbers swell the longer they’re on the market. The Global X FTSE ASEAN 40 ETF (NYSE: ASEA) is a prime example.

Due to a weak market environment, FISN is flirting with its all-time low, but this isn’t a knock on the fishing concept. The pullback in FISN presents an opportunity for patient investors to get involved with the ETF (above $13.15 would be best). Open your time horizon to six months or longer and as volume and assets start to flow into FISN, you’ll have a winner on your line as the global economic recovery gains speed.

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