An ETF for Domains

[rkbdomain]

Does anyone know if any serious consideration has been given to issuing an ETF for domain names? I know there have been some initial attempts at establishing a price index for domains (i.e., the INDX), but I was thinking more about an ETF that held actual domain names.

It could hold generic one-word names, short domains, numerics, and a variety of quality other names. With all the interest in alternative investment vehicles and commodity ETFs, one would think someone has at least thought of issuing a domain ETF along the lines of GLD, SLV, or the diamond ETF that's in the works.

What do people think about the concept?

 

[garptrader]

I made an extensive post about this topic a few months ago. PM for details.

 

[johname]

ETF along the lines of GLD, SLV

What do people think about the concept?

You can buy and sell gold and sliver close to spot price. There no equivalent in domaining.

The gold ETF GLD holds the physical gold according to the amount that's in the fund. If fund gets a net increase in investor funds, the fund managers buy spot gold. If there a net decrease the fund managers sell gold.

They are buying gold of a particular purity. If they bought gold of questionable purity the fund would have great problems.

Obviously your ETF would need to have a domaing portfolio that would have stellar names(high purity). The fund manager would end up having to pay enduser prices for stellar names which would be an instant fail for the ETF. You cant pay that rate then have people pull their money out of the fund, which is the whole purpose of an ETF, selling and buying when the investor wants.

Can you imagine the prospectus? We will only buy one word dot coms like zygomycetes

 

[ecalc]

Domain trading compared to GLD & SLV is a tiny fragmented dry black market. The population of undeveloped good names is finite and shrinking. Domain appraisals are a crap shoot compared to physical assay of metals. DNS lifespan is a wildcard. Blackrock, State Street and peers would rather join OWS than sponsor a domain ETF. That's not bad news for domain owner/operators - let the good times roll.

 

[hopkism]

I don't necessarily see a large enough market for it. ETF's rely in large part on trading volume. There would have to be enough interest from those outside of domaining to meet that trading volume.

You could simply buy stock in a company that specifically holds a lot of really nice domain names. I know there are several that trade for a modest P/E.

I also agree with the previous comments.

 

[rkbdomain]

I made an extensive post about this topic a few months ago. PM for details.

Found your original post, nice work! I agree with some of the other posters that the size may be an issue, the fund would have to be large and that may be hard to accomplish. Ideally, the fund would buy domains at reseller rates (lets say LLL.com's, NNN.com's, and other short, easily liquid domains) and hold them or offer them for sale at end-user rates.

Amassing a large collection would be difficult though and ultimately it would be better if some domainers with huge portfolios kicked it off. Obviously it wouldn't have to be on the level of GLD or SLV to start off, just as there are smaller market cap companies, there can be smaller market cap ETFs

A potential problem seems to be that the domain market is not as liquid and quick as the stock market. What if there is a significant net inflow/outflow into the ETF on a given day, could the fund quickly absorb/unload domain supply without significant disruption in price? A lot of thought would have to go in to these issues. All the commodity ETFs involve commodities with a very liquid spot market. Domains are liquid, but not as much as other commodities, and domain transactions usually take much longer.

 

[johname]

the fund would buy domains at reseller rates (lets say LLL.com's, NNN.com's, and other short, easily liquid domains) and hold them or offer them for sale at end-user rates.

The fund buying reseller means purchasing drop names like the rest of us dummies. There just not those types of names dropping. (You have to deal with best of breed in an ETF) Reseller on LLL.coms might as well be enduser pricing at the drop actions. And you really dont see the prime ones. "easly liquid" really just means somebody will buy them from you if your lower your price enough(and since you just bought it you already paid top reseller). ETF and domains not mix.

 

[rkbdomain]

The fund buying reseller means purchasing drop names like the rest of us dummies. There just not those types of names dropping. (You have to deal with best of breed in an ETF) Reseller on LLL.coms might as well be enduser pricing at the drop actions. And you really dont see the prime ones. "easly liquid" really just means somebody will buy them from you if your lower your price enough(and since you just bought it you already paid top reseller). ETF and domains not mix.

They could go on the forums also and say "will buy NNNN.com for $1,000, will buy all LLLL.com for $25" and buy whatever comes their way. May pay a little over baseline prices for some domains but for the ETF's purposes probably wouldn't matter so much. Admittedly, it would take a while to get a portfolio like that but it's a start. Realistically, though, it would have to be an existing portfolio (like Marchex or some other company, or some other big holder) that had to contribute its portfolio for the ETF at the beginning.