A varied assortment of ETFs for investor tastes.
We are living in a golden age of investment options. From accessible stock trading via low-cost brokers with mobile technologies to dirt cheap index funds, it’s great to be a trader in 2018. However, there are plenty of quirky and downright confusing investments out there that may not be any better than a plain vanilla play in a major index like the Dow Jones industrial average or Standard & Poor’s 500 index — or in some cases, could be significantly worse. Here are nine exchange-traded funds that stand out for their weird structures. Investors should look very closely before they consider an investment in these ETFs.
ClearShares OCIO ETF (ticker: OCIO)
This is a play on the concept of an “outsourced CIO,” or chief investment officer. That’s a fancy way of saying this fund has an asset allocation strategy that hopes to mimic the hands-on approach of a personal manager. It uses a plain breakdown of roughly 40 percent U.S. stocks, 30 percent international equity and 30 percent bonds. It achieves this by holding big name ETFs like the iShares Core S&P 500 ETF (IVV). But worst of all, OCIO charges 0.67 percent in annual fees, well above the expenses of its component ETFs. You’re better off building a more personalized portfolio or buying the funds directly and save on costs.
Columbia EM Core ex-China ETF (XCEM)
When investors think of emerging-market investing, the biggest appeal tends to be China. After all, it’s the world’s second-largest economy by GDP with years of growth above the global average. However, if for some reason you want to play emerging markets without China as a part of your strategy, the XCEM fund can let you do that. Instead, you’ll focus on regions like Korea, Taiwan and Brazil. Weirdly enough, this strategy has paid off with 22 percent gains in the last year. Most China-focused funds are up more, but that performance is still better than U.S. stocks in the last 12 months.
iShares MSCI Kokusai ETF (TOK)
Lest China feel singled out, there is another fund that has carved out a specific nation. This time, it’s Japan excluded from the TOK fund offered by iShares that is meant to be a global play on developed markets — save one, of course. There is reasonable interest, too, with some $150 million in assets to this ETF at present and a one-year return that has slightly outperformed the major U.S. stock indexes. Of course, a closer look shows that this is really just a play on megacaps with two-thirds of assets in U.S. stocks and familiar names like Exxon Mobil Corp. (XOM) and Apple (AAPL) topping the list.
iPath Bloomberg Livestock Subindex Total Return ETN (COW)
Extra points should be awarded for the clever ticker symbol of this investment — which, as you can guess, is a pure play on livestock prices. Technically, COW is an exchange-traded note because it doesn’t deal in equity investments like blue-chip stocks. Right now, it holds futures contracts in both live cattle and lean hogs. Anyone who has been to the grocery store lately knows beef and pork prices are up from a few years ago. And if for some reason you want to tap into this very specific trend, there’s apparently an ETF to let you do that.
The Obesity ETF (SLIM)
Managed by Janus Henderson Investors, this quirky fund includes stocks that have a relatively direct play on America’s much-publicized obesity epidemic and related health issues. These include Novo Nortdisk (NVO), which specializes in diabetes treatment, and Weight Watchers International (WTW). The SLIM ETF has put up more than 35 percent gains in the last year to handily outperform the roughly 14 percent gains for the Standard & Poor’s 500 index in the same period. And with annual expenses at just 0.5 percent, or $50 on every $10,000 invested, this unique twist on ETF investing is quite affordable.
Global X Millennials Thematic ETF (MILN)
The motto of ETF shop Global X is, “Beyond Ordinary ETFs.” And the investment firm delivers with a play on demographics and generational trends with a meant to target the habits of millennial consumers and their very different spending habits. Some holdings are predictable, like e-commerce giant Amazon.com (AMZN), but others are less intuitive like financial services technology company Fiserv (FISV) that helps power mobile and internet banking interfaces. These high-growth investments can result in volatility, but so far they have also resulted in outperformance as the fund is up more than 22 percent in the last 12 months.
Buzz US Sentiment Leaders ETF (BUZ)
ALPS funds has created a unique play on social media trends via this sentiment-driven fund, which targets the most frequently mentioned stocks across the social media landscape, such as Facebook (FB) or Twitter (TWTR). There’s a vague science behind it to separate bullish feelings from just passing mentions, but you’re pretty much chasing headlines. Top stocks are some of the most widely traded on Wall Street, including Apple and Nvidia (NVDA). The fund has modestly outperformed the S&P 500 over the last 12 months, so maybe there’s something here. On the other hand, it could simply be that this is an overcomplicated twist on momentum investing. You decide.
ETFMG Video Game Tech ETF (GAMR)
There are undeniably some interesting tech ETFs out there, focused on high-growth trends including industrial automation or cybersecurity. But if you’d prefer to simply worry about the companies making flashy games for the Xbox, then the GAMR lets you do that. Admittedly, gaming is big business. Estimates vary, but there is theoretically a $100 billion annual market in video game software and hardware sales. Even more impressive is the more than 40 percent gains for this fund in the last year. However, investors should tread lightly in this quirky subsector of tech — particularly if consumer sentiment rolls over, and game sales dry up in a hurry.
AI Powered Equity ETF (AIEQ)
Speaking of tech trends, instead of investing in AI by buying related stocks, why not simply deploy the latest artificial intelligence solutions to directly manage your portfolio? That’s what this fund does. According to its prospectus, “the underlying fund investments in AIEQ are based on the results of proprietary quantitative models developed by Equbot with IBM Watson artificial intelligence.” Top holdings are names that most human investors would be bullish on, including Amazon.com and Google parent Alphabet (GOOG, GOOGL). The fund has only been around since late 2017 so there’s not a lot of history, but thus far an investment in AIEQ has pretty much tracked the market.
More from U.S. News
7 Investment Fees You Might Not Realize You’re Paying
7 of the Best Emerging Markets Stocks to Buy
9 ETFs to Capture China’s Red-Hot Growth
9 ETFs That Are True Oddballs originally appeared on usnews.com
