Specialty ETFs let you invest like Buffett, Icahn

By Craig Sebastiano | May 28, 2015 | Last updated on May 28, 2015
2 min read

Originally published on BenefitsCanada.com

Want to invest like a billionaire? Or in a booming city? Highly specialized thematic ETFs let you do just that.

But there are pros and cons to these investments, said Eric Balchunas, a senior ETF analyst and fund product specialist with Bloomberg, at the Exchange Traded Forum in Toronto earlier this week.

Many of these thematic ETFs are equal weighted. For example, the Direxion iBillionaire Index ETF holds just 30 equities and each stock makes up 3.33% of the fund. That equal weighting should help these ETFs beat the market when equities rise, he noted.

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Balchunas also said there are other ETFs that have performed well, such as the Nashville Area ETF, which invests in publicly traded companies based in and around the city.

The ETF’s up nearly 26% in the past 12 months, partially due to a number of healthcare companies based in the area. It’s trounced the S&P 500, which has risen just 11.4% in the same timeframe.

But some thematic ETFs may have a lot of overlap with stocks investors may own anyway, Balchunas added. Some of the top holdings of the Workplace Equality Portfolio ETF include Royal Bank of Canada, Microsoft and General Electric.

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Here’s a look at four thematic ETFs:

Direxion iBillionaire Index ETF (IBLN) – Launched in 2014, it invests in large-cap equities in which a select group of American investment billionaires (Warren Buffett, Carl Icahn and George Soros, just to name a few) have allocated the most assets. It’s based on data from Securities and Exchange Commission 13F filings.

Global Robotics & Automation Index ETF (ROBO) – Invests in companies focused on robotics, automation, and enabling technologies. Its holdings include iRobot, Northrop Grumman, ATS Automation Tooling, and MacDonald, Dettwiler and Associates. It was launched in 2013.

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Nashville Area ETF (NASH) – Launched in 2013, it invests in publicly traded companies based in and around the Nashville area. Some of its holdings include Dollar General, Cracker Barrel Old Country Store and Community Health Systems.

Workplace Equality Portfolio ETF (EQLT) – Tracks performance of the Workplace Equality Index, an index that includes U.S.-based companies who support lesbian, gay, bisexual and transgender equality in the workplace. It was launched in 2014.

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Craig Sebastiano