This has been another brisk year in terms of launches of new exchange-traded funds. As of Dec. 20, nearly 200 new ETFs have come to the market this year with 15 coming to market in just the first half of December.
It seems like every year brings a steady stream of new ETFs and every year, new ETFs face the same set of hurdles. The obstacles faced by new ETFs include, but by no means are limited to, fighting with entrenched competition for investors’ assets, convincing investors that the nuanced, sometimes complex concepts offered by new ETFs are worth learning about and more.
Actually, the biggest hurdle faced by many new ETFs is the fact they are new. In what epitomizes herd mentality, many investors, including professionals, avoid new ETFs simply because of these funds’ rookie status. More often than not, they are waiting for other investors to contribute assets to a new ETF to validate the fund, but if that does not happen, new ETFs can languish with paltry assets under management totals and scare investors away for extended periods of time.
On the other hand, not all new ETFs are to be avoided. In fact, some of this year’s best new ETFs still merit consideration by investors. In searching for 2016’s best new ETFs, the focus was not entirely on assets gained, but admittedly, it is not coincidental that investors have rapidly validated the concepts behind these new ETFs.
The following are three new ETFs that are worth your money.