For years there have been ETFs that invest in niche industries, single countries and innovative cross sections of the economy.
A groundbreaking fund provider has taken that targeted focus one step further by creating the first city-based ETF in the country -- and this month they are celebrating a big milestone.
The Nashville Area ETF (NYSE:NASH) enables investors to benefit from the diversified base of publicly-traded companies in Nashville, Tennessee. NASH is celebrating its one-year anniversary after the fund debuted in August 2013 and has declared a shareholder meeting to highlight local companies.
Currently the Nashville Area ETF has just $7 million dedicated to 23 holdings, which include businesses such as Dollar General Corp (NYSE:DG) and Healthcare Realty (NYSE:HR). To be included in the index, companies must have market capitalizations more than $100 million and an average daily volume of at least 50,000 shares traded.
Certain U.S. regions provide strong economic opportunity for the companies based there, which is why corporate relocation to these markets continues to climb, said William S. Decker, chief investment officer of LocalShares.
Nashville is one such economy benefitting from the markedly low taxes of the state of Tennessee and other attributes," he added. "We are pleased with the performance of the fund, which we believe reflects both the vitality of this specific economy and the fact that geographic ecosystems like Nashville add competitive value to companies based there.
Companies are weighted within the portfolio based on a proprietary formula that takes into account positive earnings and valuation metrics. NASH charges a net expense ratio of 0.49 percent as well.
At the one-year mark, this ETF gained 14.60 percent in total return. That gain closely mirrors the 15.01 percent increase in the SPDR S&P 500 ETF (NYSE:SPY) over the same time period.
The big question for NASH and other city-focused ETFs moving forward is whether investors will welcome these local markets or find them too narrow for investable assets.
To date NASH has proven that it can keep up with the broad market, and future ETFs may be able to crack the code of appeal to a wider audience.
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