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Misc Strategies ETFs
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About Misc Strategies ETFs |
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Miscellaneous Strategies ETFs Overview and forecasts
These are the individualists of the ETF class, with their own separate strategies. They're based on their own rules, and it's a pretty mixed bag. That said, they've been surviving in the hurricane of equity crashes. Some of them don't seem to have been hit as hard as other classes of ETFs, either, so their individuality appears to be paying off to some extent.
Individuality in this class of ETFs is well demonstrated by the Claymore ETFs.
This group includes:
An ETF that invests in the top patent holders on the market, in the form of Claymore/Ocean Tomo Patent (OTP)
An ETF which invests in spinoff companies from existing corporations, Claymore/Clear Spin-Off (CSD)
An ETF based on growth in the top patent holders in the market, Claymore/Ocean Tomo Growth
(NFO).
http://www.google.com/finance?q=INDEXAMEX:SBRIN.X
(This is an extremely interesting strategy, because a look at that index over a 1 year period looks very much like the classic ETF basic chart over that period.)
http://www.google.com/finance?q=INDEXAMEX:SBRIN.X
In contrast, the TDX Independence group of ETFs is based on holdings in things like Treasury bonds, and other returns- based ranges of investments.
The individuality, however, hasn't gone down too well with the markets in the recent past. Of the Claymores, only NFO is showing any sign of life in the second quarters. The others are low traders, obviously not attracting a lot of
trader interest. Some of the TDX group attract average levels of interest, but not spectacularly so.
In fairness, these ETFs haven't been around for long, and many came into being just as the meltdown started. They started at high prices, and paid for it in their unit values. They can also be considered somewhat exotic, at a time
when being exotic definitely isn't a plus for investor sentiment.
Short term (6 months)
Despite the above, some of these ETFs are making a recovery in price, clawing their way back up, even if on what seem to be relatively thin volumes. They're all trading below their inception price, like nearly all other ETFs, which may indicate that they're considered to be undervalued at this point. It'd be easier
to pick a motif if volumes were higher, but at this stage the moves look like a combination of trading and values in a relatively small asset base. Even so, NFO has made a respectable upward move from around $12 in January 2009 to near $20 in early May.
It would be fair to say that the Miscellaneous Strategies ETFs have followed the indices, but as short term recoveries go, not particularly impressive. They tend to be flat, and the movements are slow.
Medium term (2 years)
The fact that the Miscellaneous Strategies ETFs haven't been around for long is no great help in terms of trying to predict a medium term result. It may be that their popularity is going to define how they fare in the medium term. These ETFs include some of the smallest fish in the biggest pool of liquidity in the
world, and they could, literally, be ignored to death.
This is a pretty hard market to make an impression, and it has to be said that
the Miscellaneous Strategies ETFs as a whole aren't making a huge ripple.
They're working on a low average. That doesn't spell instant success. The medium term may see a few fall by the wayside.
Long term (5 years)
The long term will, definitely, be more brutal, if the Miscellaneous Strategies
ETFs don't find a working market for themselves. Investors have a world of
other options, and serial non- performers aren't generally welcomed into investment portfolios. The Miscellaneous Strategies ETFs are serving their probation in the markets at this point, but five years from now, investors'
books won't be any more keen on carrying non- paying passengers than they are now.
Some of the Miscellaneous Strategies ETFs will fold, because of non-performance. If a fund can't perform on a very low capital base, it's hardly likely to encourage more investment. ETFs are basically market creatures. They
either adapt or they vanish. This is the natural order of the markets, and they
may find their habitat overrun by more aggressive beasts.
Qualifier to predictions
The Miscellaneous Strategies ETFs are a natural development from the ideological basis of the ETFs. Their individuality is based on different ideas, stemming from the older concepts. It's quite natural that some ETFs would want to operate on quite different bases, as a distinguishing market characteristic, as well as different operational methods and strategies. The number of investment strategies being used in the markets can easily equal the number of investors, who will be attracted by some strategies and repelled by others.
It doesn't necessarily follow that the current lame performance of the existing Miscellaneous Strategies ETFs will be repeated by new ETFs with new ideas.
Any investment strategy has to be viewed on its results, not just on principle.
NFO, for example, is based on an index which not many mainstream investors would have heard of, let alone studied. That index, however, is an extremely interesting study, and it has some characteristics which should get shudders out of thoughtful investors.
There's no reason why, as new indices are created, new Miscellaneous Strategies ETFs wouldn't develop new strategies, and new investment mixes, which have never before been seen. Investors could consider the Miscellaneous Strategies ETFs group a work in progress.
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Last Updated on: 2010-01-14 02:03:40 |
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