When it comes to itsy-bitsy ETPs, fewer assets don’t indicate a bad investment.
Assets are a good thing. For exchange-traded products, more is certainly better. But is less necessarily worse?
The short answer is no. The long answer is, well, a longer answer.
In the ETP universe, there live 10 tiny funds. The chart below shows just how “tiny” tiny can be.
These funds’ assets under management pale in comparison to giants like the SPDR S&P 500 fund (NYSEArca: SPY), which has nearly $140 billion in assets, or even the fallen-from-grace SPDR Gold ETF (NYSEArca: GLD), with close to $50 billion in assets in spite of the past few months’ massive outflows from the physical gold fund.
The puniest of these exchange-traded products holds just $660,000 in assets. It’s the VelocityShares Daily 2X VIX Mid Term ETN (NYSEArca: TVIZ), and it might surprise you to find out that it’s been around for almost three years.
SPY, on the other hand, is the oldest ETF you can buy. Its $140 billion in AUM also makes it the biggest ETF around. The fund celebrated its 20th birthday in January of this year, and a fund doesn’t become the first to 20 years without doing something very right.
A fund like TVIZ, on the other hand, with just more than $500,000 in assets—a mere sneeze in terms of assets for an exchange-traded product to hold—and the other nine funds on this list of ETP dwarves might cause some folks to ask, What hope do these funds have of staying open?
Plenty. And here’s why.