ETF Watch: Fund To Track The ETF Industry

November 22, 2016

You’ve heard of ETFs of ETFs, but an ETF ETF? Exchange Traded Concepts has filed for an ETF that will track companies involved in the ETF industry. The ETF Market ETF (TETF) will list on the Bats exchange, which owns ETF.com.

TETF’s index was developed by Toroso Investments and covers companies that directly or indirectly provide services and support to the ETF industry, the prospectus said. Component companies must be listed in the U.S. and have free-float-adjusted market capitalizations of at least $200 million, with three-month average daily trading volume of at least $1 million.

Components fall into four buckets, according to the prospectus. Tier A is weighted at 50% of the index during rebalancings and covers companies that are the most deeply involved in the ETF industry, with shareholders benefiting directly from that involvement. Tier B receives a 25% weighting and involves companies that still have “substantial” involvement in the ETF industry, though their shareholders see mainly indirect benefits from that involvement.

Tier C is weighted at 15% of the index upon rebalancing, and the companies in that group are only moderately involved in the ETF industry, with shareholders still seeing indirect financial benefits. Finally, Tier D covers newcomers to the industry and minor participants, with shareholders’ financial benefits described as “tangential”; it receives a 10% weighting.

Companies within each tier are equally weighted, with individual company weights capped at 9%, the prospectus said.

Penserra Capital Management is listed as the fund’s subadvisor.

The filing did not include an expense ratio.

No other fund has sought to track the exchange-traded fund industry, so TETF is likely to be the first-to-market in this particular niche.

Contact Heather Bell at [email protected].

Find your next ETF

CLEAR FILTER