Price war in plain vanilla ETFs leads to influx of niche funds
As money moves from high- to low-cost products, the explosion of ETFs has lead to an array of increasingly more niche funds, such as those focusing on video gaming tech, drone tech and services, millennial-focused firms, and gender diversity in corporate governance. The move comes as smaller players look to carve out spaces away from the plain vanilla area of the market dominated by a handful of players. In 2016, Vanguard and Schwab accounted for 70% of inflows and have pushed fees to sub 10bps. Many of these thematic or smart-beta funds fail to gather sufficient assets to thrive, however, with $10tn in actively-managed mutual funds there is plenty to play for and the circa 5% that do succeed are able to charge around 30bp for providing investors with alternatives to plain vanilla index trackers. 

Exchange traded funds (ETFs) are a collection of stocks or bonds, much like a mutual fund. Their popularity continues to grow as investors look to invest in a wide array of markets, whether broad like the S&P 500, in niche sectors, or targeted to a specific goal.

As the number of active ETFs continue to grow, so has the number of themed ETFs.

Here’s a look at four very different and unique ETF investment ideas:

PureFunds Video Game Tech ETF (NYSEArca: GAMR)

GAMR tracks companies actively involved in the electronic gaming industry including the entertainment, education and simulation segments [Read more: A Look at the First ETF Dedicated to Video Game Industry].

PureFunds Drone Economy Strategy ETF (IFLY)

IFLY provides a benchmark for investors interested in tracking companies actively involved in drone technology and services. The Index uses Modified Equal Weight capitalization-weighted methodology [Read more: PureFunds Launches Drone ETF on NYSE].

Global X Millennials Thematic ETF (Nasdaq: MILN)

MILN is the ninth ETF in Global X’s suite of thematic funds, and the first in its ‘People’ category, which focuses on emerging trends pertaining to changing demographics and consumer behaviors. MILN includes those companies that are among the best positioned to benefit as Millennials, those aged 16-36, gradually enter peak earning years, and become a major force within the U.S. economy [Read more: Global X Launches Millennials ETF on Nasdaq].

SPDR Gender Diversity Index ETF (NYSEArca: SHE)

SHE measures the performance of U.S. large capitalization companies that are gender diverse, and are defined as companies that exhibit gender diversity in their senior leadership positions [Read more: State Street Global Advisors Launches ‘SHE’ ETF to Address Gender Inequality].

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