The First City-Specific ETF Targets Nashville Area

July 26th at 4:10pm by Tom Lydon

Exchange traded fund investors can gain exposure to the broad macroeconomy or track small economic ecosystems, even all the way down to the Nashville area.

According to a press release, LocalShares will launch the Nashville Area ETF (NYSEArca: NASH) on August 1. NASH will track a basket of Nashville area based companies in Tennessee. Specifically, companies have to be headquartered in Davidson County or its surrounding counties.

The underlying LocalShares Nashville Index utilizes an algorithm to identify and weight companies based on positive earnings, momentum and valuation metrics.

Top holdings based on the index include Acadia Health Care Companies (ACHC), Amsurg Corporation (AMSG), Brookdale Senior Living (BKD), Clarcor (CLC) and Community Health Systems (CYH).

LocalShares founders Elizabeth Seigenthaler Courtney, CEO of Seigenthaler Public Relations, Inc., William S. Decker, CEO of Decker Wealth Management, LLC and Michael D. Shmerling, chairman of XMi Holdings came together to provide financial services products based on geographic locations, such as American cities.

“We believe that communities like Nashville provide significant value-add to the companies that are headquartered here,” Shmerling, chairman of LocalShares, said in the press release. “In middle Tennessee, these attributes include low taxes, a strategic location and a state where people have the right to work.”

Courtney said that the city-based ETF was created on the idea that every city’s economy functions as its own ecosystem with unique resources, legislation and demographics. Nashville has been known as America’s healthcare hub, #1 market in the country for job growth in 2012 and ranks among the most business friendly cities.

“The Nashville area has realized significant growth with our GDP exceeding $87 billion in 2011, up 6.05% from the previous year,” Ralph Schulz, president and CEO of the Nashville Area Chamber of Commerce, said in the press release. “We feel we are ideally situated for continued growth when you consider our geographical location and that Nashville is one of only a dozen major U.S. cities connected to three major interstates. These attributes along with our competitive tax structure and strong workforce have allowed for a diverse base of publicly traded headquartered companies, and our competitive economic development and recruiting programs have us poised for further growth.”

Other ETFs that have tried to give targeted geographic exposure to the U.S. have not been so popular. In 2009, two state-specific ETFs, Texas Large Companies ETF (TXF) and Oklahoma ETF (OOK), both closed due to poor investment demand.

For more information on new fund products, visit our new ETFs category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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