Core Insights - Texas is increasingly recognized for its economic advantages, with a GDP of $2.77 trillion in 2024 and leading the nation by adding 132,500 jobs in 2025, making it the eighth largest economy globally, surpassing countries like Canada and South Korea [1][2] Economic Overview - Texas has a pro-business environment characterized by no personal or corporate income tax, a low-cost operating environment, and a significant presence of major employers, including 54 Fortune 500 companies and over 3.5 million small businesses [1] - The Texas Stock Exchange is set to launch trading in 2026, indicating the state's ambitions in capital markets [1] Texas ETF Landscape - Four ETFs currently target the Texas economy, including two diversified funds and two focused on energy [1] - The Texas Capital Texas Equity Index ETF (TXS) is the oldest Texas ETF, launched in July 2023, with $34 million in assets, and has a diversified portfolio with a 22% weight in energy [1] - The Texas Capital Texas Oil Index ETF (OILT) tracks companies involved in oil and gas extraction in Texas, with a unique weighting methodology based on production rather than market cap, and has seen a 29% increase this year [1] - The iShares Texas Equity ETF (TEXN), launched in June 2025, has a more energy-tilted portfolio with 38% in energy and the lowest expense ratio among the group at 20 basis points [1] - The Horizon Kinetics Texas ETF (TEXX), launched in 2026, is actively managed and focuses on companies benefiting from Texas's economic expansion, with over 50% of its holdings in the energy sector [1] Investment Implications - Texas ETFs provide a focused investment opportunity in one of the fastest-growing state economies in the U.S., appealing to investors looking for both broad equity exposure and specialized industry investments [2] - The size of the Texas economy positions it as a viable alternative to single-country ETFs, making Texas ETFs a complementary addition to a broader U.S. equity portfolio [2]

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].