You want MORE ETFs?

August 31, 2007

Hougan just can't get enough with 500 ETFs. He's asking for more of them. We do seem to be heading where there are more funds than equities, as with mutual funds. Here are my gaps:

OK, so if we're heading toward more ETFs than funds, why don't we just keep it simple and very thinly sliced. We could just have one ETF for every stock on the market. And slap it in an ETN structure for extra tax efficiency. That thinly sliced and in the exotic structure, surely at least a 70 bps expense ratio is justified.  Then we could wrap those up into "ETF model portfolios" to really add some extra alpha bang into the mix.  A load of 3% and then maybe another 150 bips sounds reasonable for that.  220 and 3 up front and you've got yourself a ROCKET SHIP my friend...and a tax efficient one at that.

OK, seriously, though, there ARE some more gaps right?  There ARE yes.

  1. I think the target date balanced funds, if they were well done could be good ones.
  2. I LIKE the total TOTAL market idea. I mean at least give me the total global with the total US in one fund.
  3. I definitely think there could be more size and style globally.
  4. I'm not sure if I buy into the East Timor ETF, but it seems like there could be more regional ones around various stories. I'd like to deepen out EM a bit as well and see more Africa and South America.  There's almost no representation there. Hey I was a Peace Corps guy...
  5. Leverage...not a leverage trader myself, but it seems like they're filling in these gaps. Matt mentioned currency. How about commodities? More international?
  6. Strategy focused with institutional flavor.  130/30, VIX, hedge fund replication at less than insane cost, true enhanced indexing, heck lets throw in the "portable alpha" ETF while we're at it.  This is the part of the ETF/ETN market that will continue to expand as the ETF market becomes more active.

I really can't think of anything else.  Of course you can forget all the rest, and everyone's problems will come to an end when the "BoboDex 10" comes to market...because our little monkey is a GENIUS.

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