Ian Salisbury of The Wall Street Journal reports on the new exchange traded fund products that are aimed to attract investors from mutual funds. Thus far, the SEC has only approved ETFs that track indexes. With a limited number of indexes, ETF providers are now tweaking the indexes in the hope of offering investors more options and better returns. They are competing for actively managed money.
How are the providers doing it? Smaller ETF players, such as PowerShares, WisdomTree and Deutsche Bank are rolling out new ETFs that use formulas to select stocks belonging to a well-known index.
In May, ETF assets reached $325 billion and have grown 36% over the last year. There is still a way to go in order to reach mutual fund assets of $9.32 trillion.
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