Three ETFs Doing Things Others Can’t

Three ETFs Doing Things Others Can’t

Their niches are narrow, which some investors may find attractive.

Reviewed by: Staff
Edited by: Ron Day

The first half of 2024 may look like a winner for the stock market, with the S&P 500, as measured by the SPDR S&P 500 ETF Trust (SPY), up 16%. 

Yet the average U.S. stock, among the 1,000 largest as measured by the Invesco Russell 1000 Equal Weight Portfolio ETF (EQAL), was up only 2%. And for the three years ended June 28, 2024, EQAL has produced only a 1% annualized gain, including dividends.

With so much money having flooded into S&P 500 index funds, much of that via ETFs, many investors are understandably oblivious to the fact that other than a relatively small number of stocks that are “working” this year, there is a lot of malaise. For proactive investment advisors and research-driven and curious self-directed investors, the second half of 2024 may be an ideal time to look for alternatives. And, while the ETF industry offers hundreds of products that tend to mimic each other performance-wise, there are unique, hyper-niche routes that can be considered.  

More Than 3,000 US ETFs to Explore

As with so much of consumer behavior in the social media/mobile phone world we now inhabit, an 80/20 rule applies. That is, most of the attention, and in this case, assets, gravitates to what is popular, making it even more popular. As a result, 80/20 becomes more like 95/5, which leaves a lot of investment “meat on the bone” in terms of other opportunities that could be tomorrow’s winners.  

Or, more appropriately, there are ETFs that may not appeal to many investors and at the same time may be interesting to those seeking an ETF wrapper around a part of the global investment world that may be tough to reach in single-security form.  

This article highlights three of them. In each case, they are either the only ETF that that do what they do or exist among few peers. And I specifically focused on ETFs that have not been written about substantively at, and likely anywhere else, for the past several years, if ever.  

Three Unique ETFs

The $104 million 3D Printing ETF (PRNT), which is now run by Cathie Wood’s ARK Investment Management LP, has been around for eight years. No one has tried to copy this equal-weighted ETF, even after it doubled in price during its first four and a half years. 

PRNT has come back to its inception price. Its $6 billion average market capitalization means it tends to patrol the small to midcap company range, which is where these innovative stocks tend to reside. A 45% turnover ratio implies that nearly half the portfolio is turned over in a typical year, well above an S&P 500 index ETF. PRNT covers five different 3D printing areas: printing hardware, printing software, 3D printing centers, scanners and measurement, and 3D printing materials.  

India’s stock market is flying, but most of money on board for that ride is market cap weighted. That’s what makes the $240 million First Trust India Nifty 50 Equal Weight ETF (NFTY) different. It owns the popular India stock index, but with each stock positioned the same at each quarterly rebalance event. A modest 12% tech weighting and much higher allocations to energy and basic materials make NFTY a potential S&P 500 diversifier.  

The $139 million Invesco Currency Shares Swiss Franc Trust (FXF) is one of those “flight to quality” ETFs that has its time in the sun when the U.S. dollar is weak, and when more prominent world currencies are experiencing financial stress. In other words, perhaps soon. Japan, Europe and the United Kingdom are all in different states of disrepair, and the dollar, while holding up well, is doing so despite mounting debt and higher interest rates. 

The Swiss have a reputation for being “neutral” but there was nothing neutral about FXF’s 50% rally following the Global Financial Crisis in 2009-2010. So, there is a potential diversification benefit here.

The market's overflowing with adoration for the S&P 500. But as investors know, there’s much more to long-term investing, as markets are inherently cyclical. These three ETFs and many others that target very specific market areas, or offer structural differences from their peers, are one way to respond when things don’t go as well for the “headline” stock market indicators. 

Rob Isbitts' Wall Street career spans 5 decades and multiple roles, all dedicated to providing clarity to investors by busting classic myths and providing uncommon perspective. He did so as a fiduciary investment advisor, Chief Investment Officer and fund manager for 27 years before selling his practice in 2020. His efforts now focus exclusively on investment research, education and multimedia. He started ETFYourself and SungardenInvestment to provide straightforward commentary and access to his investment intellectual property for portfolio construction, stocks and ETFs. Originally from New Jersey, Rob and his wife Dana have 3 adult children and have lived in Weston, Florida for more than 25 years.