Daily ETF Watch: MidCap Sectors On The Way

Elkhorn Investments, a relative newcomer to the ETF space that is led by an industry veteran, has filed for a set of nine midcap sector ETFs that echo the original large-cap Select Sector SPDRs offered by State Street Global Advisors and the small-cap sector ETFs issued by Invesco PowerShares. The nine ETFs represent sectors of the S&P MidCap 400 Index and include the following:

• Elkhorn S&P MidCap Consumer Discretionary Portfolio
• Elkhorn S&P MidCap Consumer Staples Portfolio
• Elkhorn S&P MidCap Energy Portfolio
• Elkhorn S&P MidCap Financials Portfolio
• Elkhorn S&P MidCap Health Care Portfolio
• Elkhorn S&P MidCap Industrials Portfolio
• Elkhorn S&P MidCap Information Technology Portfolio
• Elkhorn S&P MidCap Materials Portfolio
• Elkhorn S&P MidCap Utilities Portfolio

The Select Sector SPDRs are a $90 billion family of ETFs and the largest sector funds currently trading. They launched in late 1998. The group of funds was recently expanded to include a financial services ETF and a real estate ETF to reflect the Global Industry Classification System’s structural change, which broke the financial sector out into two more-focused sectors. However, investors have not yet taken to the new funds.

Invesco PowerShares, where Elkhorn’s founder Ben Fulton was a top executive, launched its small-cap family of U.S. sector ETFs in 2010. Although the nine funds have accumulated respectable assets, the largest has $205 million in assets.

While the telecommunications sector is folded into the information technology sector in the large-cap Select Sector SPDRs family, the small-cap PowerShares funds include telecommunications in the utilities sector. The recent filing from Elkhorn also classifies telecommunications firms as utilities.

Nonetheless, the launch of the Elkhorn funds would allow investors a variety of sector investing opportunities, such as constructing portfolios that reflect the sector breakdown of the broad S&P 1500 Index or to tweak those breakdowns as they wish.

The filing did not include expense ratios or tickers, but it did indicate that the funds will list on the Nasdaq stock market.

Contact Heather Bell at [email protected].