Just when it appeared the ETF industry was undergoing a much needed shake out comes news that both Schwab and Pimco are hopping on the ETF bandwagon just a few years too late, each registering a single ETF with the SEC. What the ETF industry doesn’t need are more broad tracking ETFs such as those planned by both Schwab and Pimco. Schwab is apparently filing to list an ETF that will track the Dow Jones US Total Stock Market Index while Pimco’s ETF will track an index of US Treasury securities. Insert yawn here. I’d imagine they are rolling out one ETF to gauge demand and may follow with more depending on the response. Note to both: take the route of Claymore, ProShares, PowerShares or Direxion and get creative or you will fail.
Barclays owns about half of the ETF market with its iShares lineup while State Street Global advisors (STT) accounts for about 30% of the market with its SPDR family of ETFs. Vanguard rounds it out with 10% market share while Rydex, Direxion, ProShares Claymore and PowerShares splitting the scraps
The new Claymore Airline ETF (FAA) launched last week that seeks to track the performance of the NYSE Arca Global Airline Index and consists of 25 airline stocks with a cap of at least $100 million. It’s got an easy to remember and clever ticker in FAA. Continental (CAL) is the largest holding at roughly 15%, then Southwest Airlines (LUV) at 11% and AMR at 9.5%
The fund really isn’t liquid enough to begin trading at only about 7K shares a day but I’d expect within a month or two, liquidity would improve significantly since there isn’t another way to play the airline sector. When the time comes I can’t imagine why anyone would want to go long the FAA.. the debt laden airlines will not only continue to have problems with a slowing global economy but oil prices won’t stay down for long.
Here’s a chart of the Claymore Airline ETF (FAA).. it’s been a downward spiral since it began trading last Monday
