Trademark lawsuit could make it harder to pick meaningful abbreviations; 'rush for good ticker symbols' coming?
A trademark lawsuit filed last week could raise the bar for exchange-traded-fund providers when choosing ticker symbols for their funds.
Select Sector SPDR Trust filed a suit against Invesco PowerShares Capital Management LLC for merely adding an S to the same XL ticker symbols that its SPDR series has been using.
Invesco launched nine ETFs in April with the symbol Ticker:(XL). All of the ETFs are based on the Standard & Poor's 500. SPDR has been using the XL symbol for 12 years with its ETFs, which divide the S&P 500 into nine sectors, said Dan Dolan, director of wealth management strategies at Select Sector SPDR Trust.
“Did they just randomly choose nine ETFs with symbols just like ours? I don't think so,” Mr. Dolan said in an interview. “We are known more by our trading symbol than by our name.”
Unlike mutual funds, ETFs largely are referred to by their ticker symbols, experts said. “It's the ticker that resonates in this industry,” said Paul Justice, an ETF analyst at Morningstar Inc.
And today, many ETF providers coming out with new products try to get tickers that reflect what the fund is invested in. For example, the ticker for BlackRock Inc.'s iShares MSCI Emerging Markets Index Fund is Ticker:(EEM)
If Select Sector SPDR Trust wins its lawsuit, it could put more pressure on ETF providers to find good tickers that mean something to investors, experts said.
“There is already a very high bar on coming up with good ticker symbols in the ETF world,” said Dave Nadig, director of research at IndexUniverse.com. “This could cause a rush for good ticker symbols.”
Bill Conboy, a spokesman for Invesco, declined to comment, citing company policy not to comment on litigation.
