An exchange-traded fund that will focus on stocks of companies based in Middle Tennessee will hit the public market next Thursday, its backers announced Friday.
The Nashville Area ETF (Ticker: NASH) will begin trading on the NYSE Arca next Thursday morning at a price of $25. The fund, which is being launched by three-year-old LocalShares, will be the first ETF focused solely on a specific city and put its money in a weighted index covering two dozen area companies. That has drawn skepticism from some market watchers — previous ETFs focused on specific parts of the United States have flopped — but the LocalShares team says it has done its homework and is confident in the fund's prospects and its ability to capitalize on the national buzz around Music City.
“LocalShares has spent several years creating this concept, as well as developing our selection formula to carefully pave the way to launch the Nashville Area ETF,” said Mike Shmerling, chairman of LocalShares and of XMi Holdings. “This is a solid group of diverse companies and we look forward to bringing them together in Nashville Area ETF.”
Key to the Nashville Area ETF's success will be its ability to attract dollars. Earlier this year, an industry consultant told Pensions & Investments that an ETF needs between $50 million and $100 million to become profitable. LocalShares has a decent time window in which to amass the assets it needs to sustain the ETF: A fee waiver that lowers the fund's annual operating expenses to 0.49 percent from 0.65 percent won't expire until the end of 2016.