Sometimes one isn't enough. Maybe that will prove to be the case with exchange traded funds dedicated to restaurant stocks as the USCF Restaurant Leaders Fund (NYSE: MENU) debuted Tuesday.
The USCF Restaurant Leaders Fund is the second ETF dedicated to restaurant stocks and will compete directly with the Restaurant ETF (NASDAQ:BITE). MENU follows the Restaurant Leaders INDXX Index (iMENU), which selects companies in the restaurant industry, especially in the Quick Serve category, and screens the universe for fundamental qualities expected to lead to outperformance, according to a statement.
MENU offers a smart beta spin on investing in restaurant names while BITE is an equal-weight ETF, a strategy that also falls under the jurisdiction of smart beta. Year-to-date, restaurant stocks have been a drag on the broad consumer discretionary sector and some trade at lofty valuations.
Valuations have come down a bit. But you have to take each restaurant chain in isolation. A lot of the quick-service guys and some of the fast-casual players have reached a point of being much more attractive. It still looks like a lofty multiple on strictly a P/E basis. You are still talking about a group that's trading at 24 times earnings, which is above what we've seen across the broader consumer space, notes Morningstar.
MENU can hold small-, mid-, and large-capitalization companies that trade on a U.S. Exchange and have both a minimum market capitalization of $300 million and an average daily trading volume of $1.5 million, according to U.S. Commodities Funds, the ETF's issuer.
MENU charges 0.65 percent per year, or $65 on a $10,000 investment.
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