FYI: proliferation of exchange-traded funds, now with $3 trillion in assets globally, has carved up much of the world by industry and/or geography.
One result is a whole bunch niche ETFs can trade a lot like single stocks, rather than diversified indexes. On one hand, a concentrated baskets stocks can be superior hit-or-miss stockpicking. That’s what one portfolio manager told this blogger earlier this year about the recently launched Pure Funds Cyber Security ETF (HACK).
On the other hand, investors can be burned by the single-stock-like qualities of top-heavy ETFs. Take the unusual case of Hanergy Thin Film Power Group (566.Hong Kong), which carried solar-themed Guggenheim Solar ETF (TAN) and the Market Vectors Solar ETF (KWT) to big gains this year before flaming out last week (TAN and KWT remain 29% and 24% higher on the year). It was a subject this blogger touched on in the holiday-weekend edition of Barron’s
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/05/26/is-your-etf-surprisingly-top-heavy/tab/print/
