Company creates Nashville exchange-traded fund

Local company creates Nashville-based exchange-traded fund, first of its kind

Associated Press

NASHVILLE, Tenn. (AP) -- Want to buy a piece of Nashville? Now you can.

A Nashville company has developed the nation's first city-based exchange-traded fund (ETF) that follows an index of companies based in Nashville and the surrounding counties.

LocalShares, Inc., on Friday announced plans to begin trading on the New York Stock Exchange on Aug. 1. It will use the ticker symbol NASH. Shares will initially be priced at $25 and will be available through any securities broker.

Bob Goldsborough, a fund analyst with Morningstar, said there have been state-based ETFs before in Oklahoma and Texas, but both of those failed.

"That doesn't mean this can't succeed, but it's a very, very narrow mandate," he said, noting that this ETF is expected to include 24 companies at its list date.

"Most ETFs have more than 24 companies. They have multiple, multiple times that number," he said.

On the positive side, the companies in the index are very diverse, he said.

"Some geographical regions have a cluster of companies in the same industry. It's interesting to look at the companies in this ETF. There's Ryman Hospitality Properties, Louisiana-Pacific, Corrections Corporation of America, Tractor Supply Company. It's a pretty broad batch of companies."

The Nashville Area ETF tracks an index that uses an algorithm to identify and weight the companies to be included. Companies that are part of the index must have market capitalizations of more than $100 million and an average of at least 50,000 shares traded daily, among other qualifications.

Beth Courtney founded LocalShares along with William Decker and Michael Shmerling. She said the group spent more than three years in research and development to make sure the fund would be viable and welcomed by both institutional and individual investors.

"We feel that there's a lot of confidence in this market and we believe there will be lots of interest in this product," she said. ..."We believe there will be a lot of interest locally, and it allows people around the country to buy a little piece of Nashville."

Courtney said it's true that most ETFs are much larger, but "that doesn't mean you can't have a successful ETF with fewer companies. The question is, 'Are they the right companies? Have they historically done well?'"

She said it is no mere coincidence that many successful companies are located in and around Nashville.

"The reason companies are relocating to this community is because they see an advantage to this market."

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