It’s easy to believe that all the good ideas have already been taken, but when it comes to the exchange traded fund (ETF) industry, that just isn’t true.
According to a morning report from ConvergEx, the relatively slow growth of ETFs launched in 2010 illustrates the difficulty of innovation in the ETF space, writes Matt Hougan for IndexUniverse. The report points out that funds need to reach a critical mass of $100 million in assets before it becomes profitable.
The ETF industry has definitely gotten a lot more competitive than it was even just five years ago, but that doesn’t mean there aren’t holes left to fill. Just look at IU’s ETF Watch, which contains a list of all 770 ETFs currently in registrtion. You’ll find no shortage of unique and innovative products waiting to hit the market:
- ALPS Precious Metals Producers
- Deutsche Bank DBX MSCI Brazil Currency-Hedged Equity Fund
- Direxion Auto Shares
- ETFS Copper
- Global X Fishing
Those hardly seem like old, tired ideas.
It’s a challenge for many new providers to come with market with truly unique products, but from our vantage point, many of them are rising to it. That, in turn, is continuing to stoke interest with advisors, investors and hedge funds.
The majority of ETFs aren’t generally blockbusters when they first hit the market. Investors tend to wait and see how the ETF operates and how it does in the market before they dive in. [The Basics of Trading with ETFs.]
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.