Survival of the Fittest ETF
January 8th at 1:00am by Tom Lydon
The exchange traded fund (ETF) industry is buzzing with talk about "second-generation ETFs." These are funds that are actively managed by a money manager instead of the original passive ETFs.
Diya Gullapalli for The Wall Street Journal explains that 2007 had plenty of bumps in the road for the young industry, making it tough for smaller companies to start up and take off with their ETF families. Factor in the oil craziness, the zig-zagging market and talk of a recession and it’s not difficult to see why.
The first actively managed ETFs could launch as early as the first quarter this year, and providers are awaiting approval from the Securities and Exchange Commission (SEC). Although the environment is touch and go for some of the smaller fund providers, of the ETFs available at the moment, 40% were last year alone. The added competition could also be making the environment tougher to survive, which is great for investors. It ups the ante for providers to supply a good product with lower fees.
