A Thematic Startup Sports Its First ETF Launch
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Wednesday, August 02, 2017

A Thematic Startup Sports Its First ETF Launch

A new ETF shop in California has a decidedly sporty theme. They just launched their first ETF and plan to create more.

On July 11, San Ramon/San Francisco-based SportsETFs, LLC launched its first exchange-traded fund, ProSports Sponsors ETF (BATS: FANZ). The fund tracks the ProSports Sponsors Index, which tracks the performance of corporate sponsors of major professional American football, basketball, baseball, and hockey leagues.

Nick Fullerton, president and co-founder of SportsETFs, tells MFWire that SportsETFs has other ideas and plans for different indices over the coming years, with "other leagues around the world and domestically that demonstrate the same relations." Fullerton declined to share specifics about those possibilities.

"There are a lot of sports-related products we'd like to have in the market" he says.

Fullerton is the founder and principal at Fullerton Advisors, LLC. He previously worked in sales of ASI Investments from 2005 to 2010, and earned his CFP at the Boston Institute of Finance. He and his partner, Jim Kozimor, announcer with the NBC Sports Group and co-founder and chief strategy officer of SportsETFs, created the business in order to give investors and sports fans access to professional sports-related investment opportunities.

The fund is available directly through online brokerage firms and in the independent broker-dealer channel. The ETF charges 69 basis points, which is in line with more thematic ETFs, explains Fullerton, because of the "manual process" it took to come up with the fund's partners.

The fund is distributed by Foreside Fund Services, LLC and is administrated by UMB Fund Services, Inc. Its legal advisor is Morgan, Lewis & Bockius. Its investment advisor is Exchange Traded Concepts, LLC, and its subadvisor is Vident Investment Advisory, LLC. Its PM is Denise M. Krisko, president of Vident.

The ProSports Sponsors Index aims to gain from the growth of companies that partner with professional sports leagues, offering broad market exposure with holdings in areas including consumer discretionary, information technology, financials, energy, and healthcare.

"There's an industry that has its own diehard audience, and it grows a lot faster than the general economy," says Fullerton. "We wanted to crack the code to see how an investor can potentially participate in sports investing."

The ProSports Sponsors Index includes all official partners and broadcast partners of each league and are equally weighted. SportsETFs originally had 105 different partners available, but limited it to 66 partners within the U.S. and Canada, excluding some private companies, Fullerton tells MFWire. Companies in the index are official partners of the teams, not just advertisers.

The index rebalances four times a year at the beginning of each league's season: in April, August, September, and in December for broadcasters. If a new partner joins, it is not included in the index until the next rebalance, Fullerton explains.

Not all of the index's components are domestic companies. 85 percent of them are, while 15 percent are international companies, Fullerton tells MFWire.

SportsETFs expects the percentage of foreign partnerships to rise with a projected upward trend in league sports. "Foreign companies will see the benefit in participating," Fullerton says.

"This is a product that can resonate with investors from the millennial generation to the greatest generation," says Fullerton. "These are companies you see on a daily basis, and we think it'll resonate with both the advisor and investor communities."

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