A TARP ETF? Investors Look to Cash In on The Bailout

The Nasdaq launched a Government Relief Index on Jan. 5 to measure the performance of companies receiving TARP money, and now investors want a piece of the action.

“We’re getting a lot of attention from investors and traders who want to see ways that they can participate in the movement of that index,” said John Jacobs, executive vice president and chief marketing officer of the Nasdaq.

Options trading on the Nasdaq OMX Government Relief Index begins Jan. 26, and TARP ETFs are on the horizon, according to Jacobs.

“There are a couple of different ETF families that have been looking at this index for ETFs, structure products and mutual funds,” he said.

Scott Burns, director of ETF analysis at Morningstar, has some reservations about a TARP ETF, saying it’s essentially a financial ETF with General Electric and General Motors . (GE is the parent of CNBC and CNBC.com.)

“There are other ETFs out there that track equal-weighted financial indexes, and a very niche index like this is going to have to keep its fees comparable to those,” Burns said.

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