Exchange-Traded Fun!

March 30th, 2014
in contributors

Article of the Week from Sungarden Investment Research

by Rob Isbitts, Sungard Investment Research

This week, we take a lighthearted look at Exchange-Traded Funds. ETFs are mutual funds that trade on a stock exchange. ETFs are rapidly taking a bite out of the business long dominated by traditional “open end” mutual funds – the investment in a basket of securities with a common characteristic, such as industry, company size, geographic region, etc.

Follow up:

So, what’s so amusing about ETFs? In some cases, its their ticker symbols. Here are some whose trading symbols make us laugh, and may help you better understand how much the market can be sliced and diced these days. Note that in no way are we recommending any of these securities for purchase. This is info-tainment only.

SPDR Barclays High Yield Bond (JNK) – these types of bonds are also known as “Junk Bonds” so if the name fits…

Market Vectors Agribusiness ETF (MOO) – as parents of young children often utter (pun intended), “what does the cow say?” This combination of agricultural businesses has a cute symbol for sure.

iPath Pure Beta Coffee ETN (CAFE) – where else would you drink coffee? This ETF is technically an “Exchange Traded Note” which means it is backed by the credit of the issuer. This security tracks the price of coffee as a commodity. As for how much they mark up your daily price of it from there? That’s another story.

Direxion All Cap Insider Sentiment Shares (KNOW) – “insiders” are officers, directors or holders of at least 10% of the outstanding shares of a public company’s stock. This ETF is apparently based on the belief that such insiders know more about the company’s future stock price direction than the rest of us. Question: if this ultimately proved to a be a poor strategy, would they change the symbol to DUMB?

iPath Pure Beta Aluminum ETN (FOIL) – no explanation needed. The people at iPath in charge of choosing ticker symbols might have been fired if they had missed one as obvious as this.

First Trust NASDAQ Global Auto Index (CARZ) – the global trend toward using the letter Z as a hip surrogate for the letter S is not lost on the ETF world.

iShares MSCI Global Gold Miners (RING) – we’re guessing this one was chosen by an iShares employee who was engaged or a newlywed…and because TOOTH would be too long (like stocks, ETFs have three or four letters in their trading symbols).

PowerShares Dynamic Food & Beverage (PBJ) – we’re guessing the chicken, beef, soda and beer companies are just a tad jealous of this one. After all, a huge industry is represented by this ETF.

Market Vectors Unconventional Oil & Gas ETF (FRAK) – this one invests in companies involved in the business of natural gas, which is often extracted from the ground via a politically debated technique called Hydraulic Fracturing, or “Fraccing.” Yes, they substituted a K for the double-C in fraccing. No, we don’t know why they didn’t just use FRAC instead (its appears to be available).

Alps International Sector Dividend Dogs (IDOG) – this last one on our list combines international stock investing with a search for high dividends. And despite the the last name “Isbitts,” this is thankfully not one of my nicknames!

So that’s our list. There are plenty more out there, showing that ETF providers are not lacking for humor in the midst of a most competitive and innovative era for these types of investments.


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