ProShares supply chain ETF
Leveraged and Inverse ETF specialist ProShares is launching yet another thematic ETF – its ninth in six months. The latest will invest in companies with supply chains that have been disrupted by covid.
The ProShares Supply Chain Logistics ETF (SUPL) tracks the FactSet Supply Chain Logistics Index, an index purpose built for this ETF.
The index is made of the 40 largest global companies that are responsible for moving raw materials, intermediate goods, and finished products around the globe.
To qualify, companies must make 75% of their revenue from one of 17 FactSet RBICS subindustries that are thought to capture supply chain logistics.
The index is market cap weighted with a 4.5% cap placed on the biggest stocks. The top 10 stocks are below.
The fund charges 0.58%.
|
Company |
Weight |
|
Canadian Pacific Railway Ltd |
5.40% |
|
Union Pacific Corp |
5.12% |
|
United Parcel Service Inc |
4.87% |
|
CSX Corp |
4.66% |
|
Evergreen Marine Corp Taiwan Ltd |
4.60% |
|
Amadeus IT Group SA |
4.43% |
|
DSV A/S |
4.26% |
|
FedEx Corp |
4.26% |
|
Old Dominion Freight Line Inc |
4.02% |
|
Kuehne + Nagel International AG |
3.97% |
Bernie’s commentary – weak ticker, and the sheer size of the ETF industry
There’s a couple of things to say about this launch, almost all of which is surface-level commentary.
First up, the ticker – I don’t like it. SUPL sounds like supple. Which has all kinds of connotations that aren’t really relevant to supply chain logistics. But maybe that’s what ProShares was going for, I don’t know.
Second, did you ever realise how massive the ETF industry is? As it turns out, in amongst the several thousand ETF listed in the US, there are already a bunch of them that cover supply chain logistics – even if differently marketed. For example, BlackRock runs the iShares US Transportation Average ETF (IYT), which is essentially just a US-centric version of this with no caps on the top stocks.
And First Trust offers the First Trust Nasdaq Transportation ETF (FTXR), about which a similar point can be made. Meanwhile, SonicShares provides the SonicShares Global Shipping ETF (BOAT). Almost a decade of looking at ETFs every day and I never noticed IYT, FTXR, BOAT were even there. And IYT has over $1.25 billion under management!
Finally, there feels like there’s something panicky about ProShares thematic launches. Nine of them in such a short space of time, with no clear overarching narrative. My reading is that they’re pivoting away from leverage and inverse under pressure from the SEC commissioners. However i do like the thematic ETFs generally, as I feel they are driving innovation, so i wish this one well.