Over time, the exchange-traded products industry has
continually brought new products to market that have increasingly
narrow exposures. Call them niche funds, call them too narrow,
but whatever one's opinion is, there's no getting around the fact
niche funds are a last frontier of sorts for ETF issuers.
That's not surprising given that the market for ETFs tracking
the S&P 500 or another benign investment concept such as
large-cap value funds is essentially saturated at this point.
The technology sector is a case study in this trend. In 2011
alone, new ETFs focusing on smartphones, cloud computing and
social media came to market, indicating that gone are the days
that all tech ETFs must be dominated by the likes of Apple
), IBM (NYSE:
) and Microsoft (Nasdaq:
While the technology group may be particularly heavy on niche
ETFs, the trend has reached to all corners of the ETF arena,
providing investors with more narrowly-focused ETF options than
ever. Here are some of 2012's more compelling new introductions
on the niche product front.
Market Vectors Unconventional Oil & Gas ETF (NYSE:
FRAK isn't your run-of-the-mill energy ETF, so those looking for
another version of an old standby like the Energy Select Sector
) should look elsewhere. FRAK and XLE do share some holdings in
common, Occidental Petroleum (NYSE:
) being one prime example, but FRAK differentiates itself by
focusing on a specific niche of the energy exploration business:
Onshore activity at oil sands and shale plays.
is also a credible play on rebounding natural gas
given that the fund is also home to major gas producers such as
EOG Resources (NYSE:
) and Devon Energy (NYSE:
). Energy stocks have been beaten up lately, and that's putting
it mildly, but FRAK might be worth a nibble as long as support at
WisdomTree Emerging Markets Corporate Bond ETF (Nasdaq:
Investors have plenty of options when it comes to bond ETFs.
There also hasn't been a shortage of funds offering exposure to
corporate debt or emerging markets sovereigns, however, emerging
markets corporate bonds hadn't been deemed worthy of their own
ETF until March when EMCB debuted.
EMCB has a 30-day SEC yield of 4.85% and more than two-thirds
of its holdings are rated either BBB or A. The idea of an
emerging markets corporate bond ETF may have been overdue because
soon after EMCB debuted, the iShares Emerging Markets Corporate
Bond Fund (BATS: CEMB) came to market.
iShares Aaa - A Rated Corporate Bond Fund (NYSE:
Speaking of corporate bond funds with a niche flavor to them, we
present the iShares Aaa - A Rated Corporate Bond Fund. QLTA,
which debuted in mid-February, does exactly what its name
implies: Tracks corporate bonds rated AAA down to A. Conservative
investors will like that and they'll also like the monthly
dividend and the meager 0.15% expense ratio.
PowerShares S&P Emerging Markets Low Volatility
High and low beta and volatility ETFs have been a favorite outlet
for fund sponsors to create new narrowly-focused funds and it's
not surprising that theme has reached into the emerging markets
universe. EELV has a
natural rivalry going with the older, larger
iShares MSCI Emerging Markets Minimum Volatility Index Fund
), but there are important differences between these two funds
regarding country exposure. The PowerShares offering has also
outperformed its iShares rival since coming to market in
Market Vectors Morningstar Wide Moat Research ETF (NYSE:
Arguably, the Market Vectors Morningstar Wide Moat Research ETF
really stretches the bounds of a niche product by focusing on
stocks that deemed to be both undervalued and possessing distinct
competitive advantages. MOAT isn't even a month old, so perhaps
it's wise to reserve judgment and/or praise until the fund has
had time to mature. Investors appear to like MOAT though as the
ETF has attracted almost $20 million in AUM since its debut.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.