These investments offer focus and potential.
Thanks to the proliferation of exchange-traded funds, there are thousands for investors to shop. But do a little digging and you’ll discover that while there’s a crowd chasing the more popular investing vehicles, such as tracking the S&P 500, there are also a bunch of niche ETFs that offer very specific ways to play a certain investing strategy or economic trend. For investors watching the news or looking for a targeted way to add growth to their portfolio, these niche ETFs are powerful tools. Here are nine funds with interesting approaches that are worth a look right now.
Global X Millennials Thematic ETF (ticker: MILN)
There’s a lot of talk about how millennials are reshaping the U.S. economy. And this fund is the best way to pull together some of the quirky characteristics of this group’s consumer habits. Holdings include social media giant Twitter (TWTR), streaming video king Netflix (NFLX) and e-commerce mainstay Amazon.com (AMZN). The idea, according to Global X, is to “invest in companies that have a high likelihood of benefiting from the rising spending power and unique preferences of the U.S. millennial generation.” And given that this tech-heavy fund is up about 11 percent year to date, that philosophy seems to be worthwhile.
Amplify Online Retail (IBUY)
It isn’t just millennials using high-tech consumer platforms. Rather than get too hung up on specific trends of younger Americans, you can bank on the wide appeal and consistent growth of e-commerce with IBUY. Of course Amazon is a top holding, but others include car-sales platform Carvana Co. (CVNA), travel side TripAdvisor (TRIP) and home goods site Wayfair (W) for a diversified look at the biggest internet-based consumer businesses. With broad e-commerce sales up 16 percent last year to tally more than $390 billion, it may pay to cast a wide net to tap into this trend.
The Obesity ETF (SLIM)
Without moralizing too much about the causes, let’s just admit that Americans have a bit of a weight problem with almost two out of every five Americans suffering from obesity, according to the Centers for Disease Control, and seven in 10 of American adults meeting the clinical definition of being overweight. For investors, SLIM grants investors access to companies that focus on obesity and obesity-related disease such as diabetes. This means companies like insulin management device maker Insulet Corp. (PODD) make the list as well as more conventional consumer names like Weight Watchers International (WTW).
First Trust Capital Strength ETF (FTCS)
What if you’re less interested in a big-picture story about consumers and the economy, and simply want to tap into the broader trend of big corporations sitting on gigantic piles of cash? Then the FTCS has you covered, with an index of 50 companies with a bulletproof balance sheet, including $1 billion or more in cash on hand, long-term debt that’s less than 30 percent of the company’s market value, and a return on equity rating of 15 percent or higher. You’ll find old cash-rich favorites like Apple (AAPL) but may be surprised to find others including big-box giant Costco Corp. (COST).
iShares Global Timber & Forestry ETF (WOOD)
While some of these niche ETFs may impress with their growth potential or creative structure, don’t expect too much from WOOD. It’s exactly what it sounds like — a group of companies that produce forest products, mostly for paper and building materials. But wood has high baseline demand despite its unglamorous applications. And, lumber prices have been on a tear recently to set record highs thanks to tight supplies. The WOOD ETF has roughly 36 percent of its assets in U.S. companies and the rest worldwide, giving a truly global play. And with more than 13 percent gains in 2018, investors may want to consider this timber ETF.
VanEck Vectors Gaming ETF (BJK)
Another hyperfocused consumer fund worth noting is this gambling focused fund that holds 45 of the most connected casino operators on the planet. These include well-known brands like Las Vegas Sands Corp. (LVS) and Caesars Entertainment Corp. (CZR). In an age of strong global consumer spending, gambling is riding a tailwind. And particularly after a recent Supreme Court ruling paved the way for the potential of access to sports gambling across the U.S., these niche gaming investments could be worth a look in 2018.
ETFMG Video Game Tech ETF (GAMR)
Another kind of gaming that is just as lucrative for investors is video games. The GAMR fund helps traders tap into the best names in the space worldwide, including U.S. names like Activision Blizzard (ATVI) and emerging market firms like Korea’s Netmarble Games. This combination of both established Western companies and emerging growth plays, and a mix of console video games and mobile-focused software companies, offers a diverse look at the industry. And with video game-related sales generating more than $100 billion in revenue last year, it’s a lucrative segment of the tech sector.
Ark Innovation ETF (ARKK)
Many investors love tech stocks because they want to buy into the innovators who will lead the global economy. But picking individual winners can be risky and plenty of small tech companies fail despite their grand visions, as the dot-com crash showed. ARKK gives investors a diversified approach to this strategy, with an array of companies that range from 3D printing to self-driving cars to drones. You’ll find familiar names like Tesla (TSLA) but also lesser-known innovators like gene editing biotech Editas Medicine (EDIT). The fund can be volatile because of its fast-moving holdings, but is up an impressive 17 percent so far this year.
Fidelity MSCI Industrials Index ETF (FIDU)
While technology has appeal, there’s also something to be said for investing in the tried and true industrial names that provide stability and income. That’s what FIDU does with an established niche fund that tracks more than 300 industrial companies with a market value ranging from over $100 billion to under $300 million. Top components right now include aerospace giant Boeing Co. (BA), construction machinery icon Caterpillar (CAT) and railroad Union Pacific Corp. (UNP). There’s admittedly risk here amid talk of a global trade war, but it’s worth noting that FIDU may be a great play when those tensions settle down.
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9 Niche ETFs You’ve Never Heard Of originally appeared on usnews.com
