Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Why You Should Ignore New ETF Filings

Companies / Exchange Traded Funds Jan 28, 2010 - 03:35 AM GMT

By: Ron_Rowland


Best Financial Markets Analysis ArticleThe old saying says, “Don’t believe everything you read.” While this is good advice, investors today have a bigger problem: News that is accurate but irrelevant.

I see this all the time as I track the ETF industry. Just about every week — and sometimes several times a week — I receive breathless news like “So-and-so has filed for an ETF to track the price of kangaroo milk in New Guinea!”

Will this be the next ETF?
Will this be the next ETF?

OK, that wasn’t a real story, but I hope you get the point. Sometimes the excitement about unique new ETFs gets out of hand. I’m as happy as anyone to have so many different ways to get involved in different market niches. On the other hand, the news about “filings” is not always very useful. Today I’ll explain why.

How An ETF Is Born

In the U.S., ETFs are regulated by the Securities and Exchange Commission. Every new ETF must be registered with the SEC before it is offered to the public. The process is not automatic, nor is it necessarily quick.

Here’s what happens: Lawyers for the firm that wishes to launch a new ETF prepare a draft prospectus and assorted other materials for the SEC staff to review. This is filed electronically on a computer system called EDGAR.

EDGAR is open to the public. This means that when someone files an application for a new ETF, anybody who wishes can read all about it. Keep in mind, no one can actually buy the new ETF yet, but as soon as the filing hits EDGAR the cat is out of the bag. Specialized research firms will usually pick up the news within minutes and broadcast it to the world.

The financial press likes to report new filings, especially if they are unique and interesting — and sometimes just to fill up space on slow news days. I don’t get too excited when I see these stories. Why not? Here are a few of my reasons …

The SEC is in charge of regulating ETFs.
The SEC is in charge of regulating ETFs.

Reason #1: The mere fact that an application for a new ETF has been filed does not mean it will ever come to market. Why get all excited about something you may never be able to buy?

The fact is, at least recently, most new ETF filings never go anywhere. Just look at last year. As 2009 opened there were 525 “active” filings at the SEC. By the end of the year only 49 had left the launch pad — less than 10%!

By the way, it’s important to remember that the SEC does not “approve” any ETFs or mutual funds. They just “grant registration,” which simply means they don’t see anything illegal in the prospectus. It does not mean they think the ETF will be a good investment. Making that call is your job, not theirs.

Reason #2: You can wait a long, long time before that new ETF you read about is available. The original filing for ProShares ETFs was made in June 2002, but it was another four years before the funds reached the market in 2006!

You can wait a long time before the curtain goes up on a new ETF.
You can wait a long time before the curtain goes up on a new ETF.

Why should you care? Because these delays can tempt you into procrastination. People sit on the sidelines because “something better” is right around the corner. Then when the new ETF finally shows up — if it ever does — they may have missed out on good opportunities in the meantime.

Reason #3: There’s no added benefit to being one of the first to buy a new ETF. It’s not like a stock IPO where early investors can enjoy a first-day surge. ETF price movement is based more on the underlying market than on the number of people who want to buy the particular ETF.

In fact, you can actually hurt yourself by jumping in too soon. How? New funds often take time to attract interest, and in the interim can be highly illiquid. That means extra transaction costs for you. If the new ETF flops, you could have a hard time getting out at a decent price.

Reason #4: An ETF idea that sounds great on paper may turn out to be not so wonderful in real life. A good example is the MacroShares Major Metro Housing bullish (UMM) and bearish (DMM) instruments that came to market with great fanfare last year — only to quietly flop and be delisted in December.

In retrospect, UMM and DMM had fatal flaws from the very beginning. I saw this and avoided them. Unfortunately, some investors didn’t see it coming and found themselves holding the bag.

These are four good reasons I’ve found to ignore ETF filings. Way too many of them turn out to be “vaporware,” to use a term I learned back in my IBM engineer days. They can be fun to anticipate but may never turn into anything you can actually use.

I keep track of all the new ETFs that are actually available. When something new and interesting comes along, I tell my readers. So don’t worry about new ETF filings. I’ll let you know when it’s time to pay attention.

Best wishes,


This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in