Yahoo Finance ETF Names: The Long and Short Of Them
When it comes to individuals stocks, most investors are usually quite familiar with corporate names, from Apple to Coca-Cola to Ford to Walt Disney, because they are all familiar with the products they sell.
But start asking investors who are familiar with the names mentioned above what the trading tickers are for—say, those four companies—and I would bet dollars to donuts few could rattle off the four correct tickers: AAPL, KO, F and DIS.
In the world of exchange-traded products, it’s just the opposite. Tickers rule the ETF landscape. The names behind those tickers, not so much.
Anyone familiar with ETFs recognizes tickers such as SPY, GLD, QQQ, BOND, etc. But ask those same investors what the proper names of those funds are, and you would most likely get a description of the exposure they offer than the correct names: SPDR S&P 500 ETF Trust, SPDR Gold Trust, PowerShares QQQ Trust and PIMCO Total Return Active ETF.
The Long Of It
Because ETFs are selling investment exposure rather than consumer goods or services, you could argue the actual name of a fund isn’t that important.
Nonetheless, our friends at FactSet, which powers ETF.com’s analytics and fund reports, sent me an Excel sheet this week that listed the character count of 1,884 exchange-traded products listed in the U.S.
What struck me was the disparity between the lengths of names, from a low of 14 characters to the longest name, which employs 79 characters.
Deutsche Bank has the lion’s share of long names by virtue of its ETF brand, “Deutsche X-trackers.” That brand is already longer than many of the shortest-length ETF names by character count.
The issuer that has the longest ETF name in the market today is the Deutsche X-trackers MSCI Emerging Markets High Dividend Yield Hedged Equity ETF (HDEE | F-77), and the second-longest is the Deutsche X-trackers MSCI All World ex US High Dividend Yield Hedged Equity ETF (HDAW | F-76). The funds, which target dividend-paying companies outside the U.S. and include a hedge overlay, have only between $2 million and $3.3 million in assets under management (AUM). They are also less than one year old.
Running right behind these two is the Etracs 2xLeveraged Long Wells Fargo Business Development Company ETN Series B (LBDC), which has $23 million in AUM. This exchange-traded note, which is also less than one year old, is designed to provide 2x leveraged exposure to a market-cap-weighted index of business development companies listed on the NYSE or the Nasdaq.
It is unclear whether long names help or hurt branding and, ultimately, investor acceptance of a fund. But I doubt a financial advisor or broker has ever received a request from a client asking, “What do you think of the Deutsche X-trackers MSCI Emerging Markets High Dividend Yield Hedged Equity ETF?”
The Short Of It
On the flip side of the naming coin, there are three funds that come in with the shortest names, 14 characters each. They are the 18-month old Deep Value ETF (DVP | C-49), with $65 million in assets; the two-month-old Dhandho Junoon (JUNE), with $6 million in assets; and the six-month-old Restaurant ETF (BITE), with $2.6 million in assets.
Some of these names offer somewhat obvious clues as to what these funds do. Long or short, the point of the name of an ETF is to convey what exposure the fund is serving up. Some of these names do a much better job at describing what’s in the portfolio than others.
BITE, for example, tracks an equal-weighted index of U.S.-listed companies that operate restaurants. That’s pretty obvious.
In DVP’s case, it’s perhaps less obvious that the fund tracks an index of about 20 stocks selected from the S&P 500 that aims to find undervalued stocks by using fundamental screens, enterprise value to EBITDA and price/free cash flow. Still, there’s a clear clue that this is a value play on some part of the equity universe.
JUNE, meanwhile, offers 3-in-1 exposure to three distinct buckets of U.S. stocks: buybacks, spinoffs and hedge fund holdings. Did you get that from the fund’s name: Dhandho Junoon (JUNE)? I’m going to go out on a limb and say you didn’t.
How Important Is A Name?
“ETF providers appear to have prioritized getting a ticker that sounds like what the ETF offers and trying to make a complicated and niche investment product seem simple and memorable,” said Todd Rosenbluth, director of ETF and mutual fund research for S&P Global Market Intelligence. “But with the addition of an ETF provider’s name and often the index provider’s name plus its investment style can cause the name to bleed off the screen or the client statement.”
At the end of the day, having a catchy ticker despite whatever the name is doesn’t guarantee success. “Despite being simple, many of these catchy tickers have limited asset bases,” Rosenbluth added.
While this exercise doesn’t really prove anything in terms of success or failure depending on the length of a name, or even a ticker, all the above mentioned are fairly new product offerings. That may point to just how hard it is for a new ETF to gain traction no matter the name, the ticker or the exposure it offers.
Drew Voros is Editor-in-Chief at ETF.com and can be reached at dvoros@etf.com.
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