Tuesday, September 30, 2014

Bloomburg: Let's Go Back to Nashville and See If We Want to Buy It

This is not a financial advice blog and I am certainly not qualified to give financial advice but I did want to pass on some investment news that people who feel invested in Nashville might find interesting.

If you have read my blog with any regularity, you know that I am very bullish on Nashville.  I love this city and would not want to live anywhere else. I love our climate and the location and that we are the state capital and I love country music. I like our parks and festivals and outdoor music offerings and a lot of other things about our city. While I think Mayor Dean may have overextended our financial commitments, I am more concerned about the cumulative effect of all of the projects than thinking any one project was a terrible mistake. Many of my conservative friends think the Music City Center was a mistake.  I don't.  If I were in the Council when it was voted on, I would have supported it. I don't think I would support it for my city if I was a policy maker in Knoxville or Memphis or Louisville or most other cities, but I think Nashville has enough going for it, that it can be a success in our city.

I could not be more pleased that Nashville is either in the top ten or at the top of the list as a great place for corporate relocations, for most people employed in the arts, for a top place for a vacation, for a town with great food and all kinds of other list. I am concerned that as we grow we do not lose the character that makes Nashville unique.

I am not by any means a wealthy man and I have never earned more than a modest income, but I have regularly saved and invested and have an adequate retirement nest egg. I have never done anything risky, letting my financial adviser guide me and my investments have been in a broad based balanced portfolio, becoming more conservative as I have gotten closer to retirement age.

About a year ago or so, a Nashville ETF was established. An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks but it is a collection of stocks much like a mutual fund. The Nashville EFT invest in only Nashville-based companies, companies like Pinnacle, Old Cracker Barrel, Correction Corporation of America, HCA and others. Health care related companies make up about a third of the holdings.  I wanted to invest, not that I expected to get rich and I wasn't going to put much money at risk, but I just wanted to own a little piece of Nashville's diversified economy.  I already pay attention to what happens in Nashville and I wanted a reason to pay closer attention. I feel invested in our city, so I wanted to actually invest in our city.  I called my financial adviser and he said the fund looked adequately diversified with investments in solid companies and he thought it was Ok to put a little money in it and I did.

The Nashville ETF was the first of its kind to be based on a location.  When it launched, many dismissed it as a cute gimmick. Well the cute gimmick is doing OK. Here is what Bloomburg recently said about NASH ETF:

The Nashville Area ETF (NASH) was pretty much put into the gimmick category by many analysts and news media when it launched one year ago. Its attempt to turn local pride into profit by holding stocks of companies based in and around Nashville, Tennessee, sounded a bit too cute. The ETF has attracted just $9 million in assets.
So it was a surprise to see that it ran circles around the broader stock market this summer. It has returned 12 percent since Memorial Day, while the S&P 500 Index has returned 6 percent. One good run doesn’t make a gimmicky ETF any less gimmicky. But when you pull the thread to see where the outperformance came from, it reveals that this fund -- the first-ever city ETF -- has some unique things going for it. (read more)
I am very pleased, not that I have enough money invested to make a financial difference to me, but I am pleased to see that Nashville is being recognized as the unique place that it is.  I am pleased that Nashville can do what most cities could not do. 

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