However, Ho points out that there are a few hurdles the NASH ETF will have to overcome, including city bias, Nashville’s business environment, diversification and failed niche strategies.
Investors in today’s globalized economy don’t put much stock in where a company is company is headquartered and many don’t specifically single out companies in a specific city. Some even argue that more large companies should have also headquartered in Nashville if the business environment was a factor to success.
While not unheard of, the ETF has a smaller basket of 24 holdings, compared to larger funds. Consequently, this type of investment may be better suited as a small tactical holding, rather than a core investment portfolio component.
Historically, regional investments have not taken off either. Two state-specific ETFs, Texas Large Companies ETF (TXF) and Oklahoma ETF (OOK), launched in 2009 both closed due to poor investment demand after one year.
For more information on new fund products, visit our new ETFs category.
Max Chen contributed to this article.