Nashville Area ETF sells another block of shares

Backers hopeful one-year anniversary will lead to more investor commitments

The managers of the Nashville Area ETF are crossing their fingers that the fund's recent first birthday will put it on the radar of more investors and bring in the assets they had aimed to attract in 2013.

Numerous market watchers and media sources scoffed a year ago when LocalShares Chairman and President Beth Courtney and Portfolio Manager Bill Decker launched the ETF, the first ever to focus all of its investments on companies based in a single metro area. Early results were promising — the fund started life with assets of more than $6 million — but the team's hopes of growing its asset base to more than $20 million before 2014 proved to be very optimistic. In the 10 months that followed, the fund sold just one other so-called creation unit of 50,000 shares.

The sale last week of another creation unit has Decker upbeat about gaining traction with investors, many of whom likely were holding out until the fund survived its first year, he said. The ETF, which owns parts of 23 Middle Tennessee companies, now has 300,000 shares outstanding and a market capitalization (Ticker: NASH) of almost $9 million. Its year-to-date gain of almost 7 percent trails the benchmark Standard & Poor's 500 Index by about a point, mostly because of a spring swoon. It has risen almost 20 percent since its launch.

Still banking on the idea that investors are naturally inclined to like the idea of investing in close-to-home companies, the ETF's marketing team has been in regular talks with numerous investment houses about adding the Nashville Area ETF to their offerings.

"Hopefully, that sale a sign [...] that there's some momentum," Decker said. "We were thinking we would be faster out of the gate but it takes time to get on the shelf at bigger firms."

As to the operations of LocalShares itself, Decker said he hasn't needed to think about making changes to cut costs.

"The expensive part was getting up and running," Decker said. "Running the fund on an ongoing basis is not the expensive part. It will just take us a longer time to recoup our initial money."