Are We Running Out Of ETF Ideas?

Not really of course but there has been a flurry of new funds and interesting listings, several of which I've been talking about for ages. As funds come out some will have an obvious use and some will be headscratchers.

Something like the Global X Fertilizer ETF (SOIL) has an obvious purpose. It would not be shocking to do a little research and conclude that the long term prospects for agribusiness look pretty good and draw a narrower conclusion that fertilizer might be something to focus on. It would also seem reasonable to prefer a narrow fund over a stock because some of the names in the group are very volatile and while the fund should also prove out to be volatile it should usually be less volatile than the constituent holdings.

The above paragraph relates to any narrow based equity ETP; a top down decision is made about some theme and then time is spent figuring the best way in. An ETF simply broadens the choices available but as I have mentioned before it is not logical that an ETF can be the best choice for all themes.

From the headscratcher department comes the recently listed PowerShares DB Japanese Govt Bond Futures ETN (JGBL) and the 3X version that has symbol JGBT. There must be some purpose to these that the issuer has in mind but I don't know what it is. They've been trading for a little over two months and while that might be too short of a time frame for the following observation to stand up; they both appear to less volatile than the Rydex Yen Currency Shares (FXY). Does anyone need a less volatile way into what amounts to exposure to the yen? I might have this all wrong but again, I have no idea what use an end user in the ETP market would have for these.

Of the ideas I've talked about most over the years, a couple have listed and a couple more there has been no movement. As much as I would like to see a toll road ETF and a cement ETF I am surprised there has not been a publicly traded exchange ETF (the capital markets ETFs have asset managers and investment banks in them). There are many countries with a publicly traded exchange and they continue to come; recently the Warsaw Exchange went public. Additionally there is a lot of M & A activity in the space and people, I think, love to trade these names. Given how pathetic the banks might be there are probably plenty of investors looking for ways into the financial sector without US, European, Japanese for Chinese bank exposure.

I would like to see the specialized funds continue to proliferate. Jack Bogle and Morningstar will never be fans but there is value in having an ETF among the choices of individual stocks in narrow themes.