Exchange traded funds try to follow a specific sector, style or asset class, but some ETFs may exclude specific segments of the market they are targeting.
The exclusionary approach allows investors to stay away from what may be poor performers within a specific market, but the “ex” has not been popularly received, writes Jonathan Burton for MarketWatch.
“They really haven’t resonated with investors,” said Paul Justice, director of ETF research at investment researcher Morningstar Inc, said in the report. “Inclusionary strategies have gained the money, not exclusionary ones.”
For example, the iShares MSCI ACWI ex U.S. Materials Sector Index (NYSEArca: AXMT), which follows global materials-related stocks sans the U.S., has only attracted $3 million in assets and trades less than 2,000 shares per day on average. Additionally, other similar sector offerings have not attracted a strong following either.
Nevertheless, providers believe some investors will find the strategies valuable.
“We provide products targeting broad and specific exposures in order to meet the needs of a diverse client base,” iShares director Rene Casis said in the article.