City-based exchange-traded funds — what will those financial slickers think of next? And the country-western capital got the first slice of the action when the Nashville Area ETF (ticker: NASH) launched on the New York Stock Exchange on Aug. 1 with an initial price of $25.
“Like most ETFs, the Nashville fund tracks an index, the LocalShares Nashville Index, which requires its component companies to have a market capitalization of at least $100 million and an average daily volume of at least 50,000 shares — in addition to being headquartered in the Nashville region,” Reuters reports.
LocalShares is a money-management firm based in Nashville.
The idea is that people like to invest in what they know, and what’s closer than your hometown? The Nashville index includes 24 firms, including Cracker Barrel and Dollar General, with a full complement of health care corporations.
Analysts questioned in the article wonder if the invest local concept may be risky business:
“I think it’s mostly a marketing tool,” said Dave Nadig, president of San Francisco-based IndexUniverse LLC’s ETF Analytics. “It’s not like the local Nashville economy is immune to what goes on in the rest of the country.”
But LocalShares Chief Executive Officer Beth Courtney told Reuters that she envisions as many as 25 similar funds in the future.
“Some other cities with robust economic themes include Houston, with a strong commodities market, Orlando, with tourism, and Silicon Valley and its technology companies,” the article says.
So, we have to wonder, is an ETF coming soon for another great music city, our hometown, Detroit? OK, no comments needed.
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