First Trust, the exchange-traded fund company known for its successful natural gas drillers fund, filed papers with the U.S. Securities and Exchange Commission to offer an ETF focused on technology companies that specialize in smart phone devices like iPhones or BlackBerries.
The First Trust NASDAQ CEA Smartphone Index Fund will trade on the Nasdaq under the symbol “FONE.” The company didn’t say what the annual expense ratio of the fund might be, or when the ETF might be rolled out.
The fund’s benchmark, the NASDAQ OMX CEA Smartphone Index, includes companies primarily involved in the building, design and distribution of handsets, hardware, software and mobile networks associated with the development, sale and usage of smart phones, the filing said.
While ETFs are often extolled for the laser-beam investment exposure they can offer, the industry has also become notorious for taking a virtue to a fanciful extreme. A smart phone ETF, should it actually launch, may well ending up crossing that line of viability for a technology-related fund. Only time will tell.
By way of example, XShares, a company infamous for its HealthShares family of funds that sliced and diced healthcare into funds focused on cardiology, cancer, dermatology and orthopedic repair, was unable to attract significant assets, and ended up being sold to a unit of Deutsche Bank, as we wrote last month in an article titled XShares, Dreams Dashed, Sold to Deutsche.
The First Trust filing defined a smart phone as a wireless mobile communication device offering advanced capabilities and functionalities, including Web access, through the use of an identifiable operating system.
The fund will normally invest at least 90 percent of its net assets in common stocks and in American depositary receipts, global depositary receipts or other depositary receipts included in the index, the filing said.
The company’s most successful fund, the First Trust ISE-Revere Natural Gas Index Fund (NYSEArca: FCG), had about $372 million in assets at the end of July, according to data compiled by IndexUniverse.com.
Smart beta isn’t smarter than cap weighting, but it is different, and that’s great for investors.
Trial by fire is one way to discover why ETF transparency matters.
Most people now realize leveraged ETFs can hurt you, but how, then, to use them?
What would a shift out of a mutual fund and into an ETF look like up close?