New ETFs Are Betting Big on Texas

Core Viewpoint - Texas is becoming a hub for ETFs focused on companies based in the state, driven by favorable business conditions and tax incentives [2][4]. Group 1: ETF Developments - Three issuers have launched or filed for Texas-focused ETFs, including Horizon Kinetics and iShares, with funds designed to invest primarily in Texas-based securities [2]. - The iShares Texas Equity ETF (TEXN) launched in June and is currently down 1.8%, while the Texas Capital Texas Equity Index ETF (TXS) is up 9% year to date [7]. - The Texas Capital's small cap equity index fund (TXSS) is down 3% year to date [7]. Group 2: Business Environment - Texas has no state income taxes for individuals or corporations, and its business laws are generally favorable, contributing to a conducive environment for companies [4]. - The state boasts more Tier 1 research universities than any other state, providing a strong talent pipeline for businesses [4]. - The cost of living in Texas is significantly lower compared to states like New York and California, attracting both companies and individuals [4]. Group 3: Economic Trends - The Texas economy is heavily reliant on oil production, which is currently experiencing slowing growth, posing potential risks for Texas-focused funds [4]. - The New York Stock Exchange launched the NYSE Texas, aimed at companies in the southwestern US, and the Texas Stock Exchange (TXSE) is set to launch next year, indicating a growing interest in Texas-based investments [5].