New ETFs are popping up all the time. This is partially due to the ease of the process of opening a new product but largely because investors are looking for new ways to play different emerging trends and new technologies. Of course, it's unlikely all the new ETF options will last the test of time; just look at how many ETFs close each year, but that doesn’t stop fund managers from opening new ones like it's going out of style. I guess the thinking is, ‘throw as many things at the board and see what sticks.’
But from an investor's point of view, it's not costing you anything unless you invest in something that fails, and it gives us a lot more options to choose from. So with that in mind, let's take a look at a few of the newer ETFs to hit the market; perhaps you may find one interesting enough to invest in or at least follow.
The first one that I would like to highlight is the iShares Emergent Food and AgTech Multisector ETF (IVEG). The fund will invest in companies that focus on agriculture technology, alternative proteins, nutritional innovation and safety, and sustainable food production and packaging. For the fund to hold a company, it must derive revenues from one of those themes; they also must expect to see profits from one of the themes increase by at least 5% during the coming 5-year period. The fund will have an expense ratio of 0.47%.
From 2010 to 2050, food demand is expected to increase by 56% worldwide. Furthermore, it is believed that 34% of global emissions are caused by food production. These two figures point toward some big changes in the food and agricultural industries in the coming decades. We may be early today, especially since this is not an industry that is known to change quickly, but it is hard to deny the fact that it is ripe for change in the coming years.
Another interesting one is the Invesco Electric Vehicle Metals Commodity Strategy No K-1 ETF (EVMT). This ETF focuses on gaining exposure to iron, copper, aluminum, nickel, and cobalt through a combination of futures contracts and commodity-linked ETFs. It will avoid being labeled as a commodity pool, which will allow it to have different tax status from other commodity-focused ETFs. The fund will have an expense ratio of 0.59% for the first roughly year and a half.
The demand boom we are seeing for EVs around the world is likely only going to grow in the coming years, and this is sort of a back door way to play the EV trade without trying to cherry pick which companies are going to make it and which ones will fade out. These materials will be required by all the companies trying to make EVs, and thus, these commodities will likely only move higher in price with time. The only question is, can they move high enough, quickly enough, so that the futures contracts don’t deteriorate and erode profits.
And finally, let's take a look at the new AdvisorShares Drone Technology ETF (UAV). UAV focuses on companies that derive at least half their revenue or profits from the manufacturing of drones or the development of related technologies. It primarily focuses on US-based companies.
If you have been investing long enough, you remember when drones and this technology were all the hype a few years ago. This is the second drone-focused ETF; the first was launched in 2016 and failed. Part of this was fueled by Amazon.com Inc. (AMZN) announcing that they were trying to figure out 'last mile delivery' using drones. Other delivery services have also talked about trying to do this, but unfortunately, no one has figured it out enough to roll out a nationwide program. Unfortunately, it hasn’t happened yet for those working on it, but perhaps fortunate for those of us who may be interested in investing in this space prior to it really taking off, but after the initial pop and fade.
Drones are already being used for military applications, photography, e-sports, and just for enjoyment. Which is all good because the concept is sound, and the businesses in this industry are producing good products. But, the real money won't flow in until drones can and are being used on a more commercial basis. So, investing in this industry today is risky but could offer big upside.
Matt Thalman
INO.com Contributor - ETFs
Follow me on Twitter @mthalman5513
Disclosure: This contributor did not hold a position in 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.
