New ETFs are continually being brought to market as new niche ideas of capitalizing on an industry are being developed daily. But, not only are new ETFs the only ones that are worth looking at, older, more established ETFs which you may have forgotten about are also good to follow up on and even add to your watchlist. With that in mind, from time to time, I like to point out new and old ETFs that I come across which interest me and may intrigue others.
Today, let us look at one new ETF, one old ETF, and one ETF that is not yet trading but will soon be available for purchase.
The new Exchange Traded Fund is the AdvisorShares Pure US Cannabis ETF (MSOS). I know what you are thinking, just another marijuana ETF. Well, yes and no. This is a marijuana ETF; however, unlike all the other marijuana ETFs available before this one, all U.S. ETFs is the first. The others had, in large part, Canadian cannabis companies. This ETF only holds U.S. based firms. This ETF debuted on September 1st, 2020. It has an expense ratio of 0.74%, which is not cheap, but also not terribly outrageous. It currently has just $11 million in assets, but that should grow with time. We have no performance history on the ETF since it is so new, but the marijuana industry has struggled over the last few years. With that being said, this is a new ETF, so it comes with a clean slate, but we shouldn't expect it to boom in the short term unless we have major progress in the industry, as in more states passing marijuana as a legal substance. With that said, now would be a good time to get involved with this type of investment, as we are expected to have more states legalizing the drug in the next few years.
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The old ETF is one I have spoken about before, but not for some time, and since it has been performing relatively well year-to-date, it's up 66%, I figured I would throw it back out onto some investors radar. The Renaissance Capital IPO ETF (IPO) is just like the name, an ETF investing in recently IPO'd stocks. IPO, for those who don't know, stands for Initial Public Offering, which is when a stock comes to the public markets for the first time and can be traded by the general public on the stock exchanges. IPO currently holds 48 stocks, so it doesn't own every newly listed company. Furthermore, IPO has 90 days to buy the new IPO and will hold it for up to two years. The ETF has a weighted market cap of $24 billion and currently has $214 million in assets.
IPO's top ten holdings represent 54% of the fund, with Zoom Video (ZM) controlling more than 10% and being the fund's largest holding. IPO has an expense ratio of 0.60% and a yield of 0.25%.
And finally, we have the Fidelity Magellan Fund ETF (FMAGX). We don't yet have a ticker for the fund since Fidelity just, the last week of September, filed the paperwork to launch an ETF version of the historic Fidelity Magellan Fund. In 2000, the Magellan fund was the largest globally, with more than $100 billion in assets. Today, the Magellan Fund holds just $22 billion in assets.
Since 1963 and lead for many years by the famous Peter Lynch, 1977-1990, the fund which has been in existence was also the best performing fund in the world at one time. When Lynch ran the fund, it grew in popularity and value as he showed investors massive returns. Since then, the fund has fallen out of favor as returns have been less than stellar than when Lynch was running the show.
With that all said, ETF will have a legendary name backing it with legendary investors and impressive returns over the years. It is an actively managed fund, so stocks can and potentially will be regularly traded. However, investors will know what the fund holds regularly.
Perhaps marijuana is not your industry. Or owning a piece of investing history doesn't excite you. And IPO's seem too risky for you. That is perfectly fine because now you know these ETFs exist at the end of the day, and perhaps you may change your mind in the future. And for those who may want to own one of the three ETFs mentioned above, as always remember, each ETF has its limits, and a fully diversified portfolio should own more than just one ETF or Fund.
Matt Thalman
INO.com Contributor - ETFs
Follow me on Twitter @mthalman5513
Disclosure: This contributor did not own shares of any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
