In the late 1960’s my father and I would drive to the next town each Saturday morning to get the most recent copy of Barron’s. At the time, the mutual fund section was about 6" x 6" and listed approximately 200 funds.
In 2000 there were over 10,000 mutual funds. But in the past three years the number of mutual funds have been declining at a rate of 500 a year; mostly due to fund companies merging and some just killing off poor performing funds.
Comparably there are just 213 exchange traded funds and assets represent just 4% of total mutual fund assets. Murray Coleman from Investors Business Daily reported some on Wall St. are concerned the ETF market is becoming saturated. In reality, we may just be getting started.
Competition plays an important role. The marketplace probably doesn’t need twelve micro-cap ETFs, but if there were twelve, you can bet the best performing funds of the group would garner the most assets over time. The worst performers would be forced to either improve performance or go away.
Sometimes it’s not easy getting a new ETF idea launched as Gregg Greenberg from TheStreet.com reports.
Investors and advisors have a hearty appetite for additional ETFs. More cowbell.
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.