Exchange traded funds have matured from basic indexed portfolios tracking major stock benchmarks such as the S&P 500 to branch out in new areas such as fixed income and commodities.
“The next dimension of ETFs will be focused on addressing modern investor needs, assist advisers in their increasingly complex task of constructing portfolios that deliver better risk-adjusted returns and deliver value for the fee charged,” says Barry Gordon, president and chief executive of First Asset and XTF Capital, in a Financial Post report.
He cites three important ways that ETFs have evolved to become a key part of the investment landscape:
- ETF providers have become more sophisticated in their ability to come up with different ways to view the investable universe, and have developed new ways to deliver those solutions
- Acceptance by both retail and institutional investors of ETF products delivering exposure to more than simple capitalization weighted indexes
- More skilled and competitive market makers, willing and eager to work with ETF sponsors to deliver their proposed investment solutions to investors in ETF format
There is currently more than $1 trillion invested in U.S.-listed ETFs. [ETFs or Mutual Funds?]