Best And Worst ETF Tickers

February 16, 2012

The barrage of ETF launches in recent years has brought us many brilliant ETF tickers, but also a fair share that are just plain silly.

Picking catchy tickers isn’t only exclusive to ETFs. Companies have picked interesting tickers for their stocks for years. For example, DNA was Genentech’s ticker before the company was bought by Roche in 2009. TINY, the ticker for nanotech venture capital specialist Harris & Harris Group, is another great example.

In the ETF world, one of the first funds to really hit it out of the ballpark with a catchy ticker was “MOO,” Van Eck Global’s Market Vectors Agribusiness ETF (NYSEArca: MOO). I can still remember all the buzz that MOO created in the financial community when it launched back in 2007.

It appears, for better or for worse, that the pursuit of cleverness is heating up. According to a recent Wall Street Journal article, issuers are increasingly scrambling to come up with catchy tickers because so many have already been taken or reserved.

That makes sense. But the problem is many tickers are starting to sound like issuers trying to stretch their imaginations, and some sound too clever or plain silly—at least to my ears.

When I think of silly or ridiculous ETF tickers, one that immediately comes to mind is “KROO,” the symbol for the IndexIQ Australia Small Cap ETF (NYSEArca: KROO). Yes, that’s “KROO,” as in kangaroo. That’s like calling a China fund “Panda,” or PNDA.

I haven’t seen any studies done on the importance of tickers and how that relates to assets. Most of the focus has been on the importance of first-mover status, especially in niche sectors. My colleague Devin recently wrote a great piece about the advantages of first-mover status.

But I’ve always thought that having a catchy ticker can help a fund get noticed. Once noticed, assets and liquidity materialize, which begets more assets and liquidity as investors tend to pile into the most- popular and -traded ETF in a niche sector.

Dave Nadig, our director of research here at IndexUniverse, visited the same topic in a blog two years ago titled The Name Game. Dave argued good tickers do make a difference, and a big one at that.

I find myself agreeing with him when I look at funds like the Guggenheim Solar ETF (NYSEArca: TAN) and the Market Vectors Solar Fund (NYSEArca: KWT). TAN and KWT both target solar companies and have the same expense ratios and similar holdings and historical returns.

TAN launched only one week before KWT, but has over $101 million in assets, compared with KWT’s $17.5 million. That means TAN has roughly six times the assets and over 85 percent of the solar ETF market for launching only one week earlier.

 

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