As exchange traded funds become more popular, we are finding more new ETFs to choose from. Some say there are too many and that all niches have been filled. We disagree. ETFs will eventually be judged like conventional mutual funds.
For example, if you’re looking for a small-cap growth ETF, you’ll look at track records of the various ETFs in that asset class. Competition is wonderful.
We’ve seen traditional indexes altered, which shows there are more possibilities out there.
Jen Ryan with TheStreet.com reviews the proliferation of ETFs and concerns that there is not enough in assets to keep some of the ETFs around. Of 320 ETFs, 81 had less than $50 million in assets and 38 had less than $25 million. The S&P 500 SPDR (SPY) is the largest with 16% of the market, next is iShares MSCI EAFE (EFA) with 9% and third is Nasdaq 100 Trust (QQQQ) with 5%.
Some of the smaller ETFs, in terms of assets, include First Trust Dow Jones Select Microcap (FDM) with $18 million in assets and streetTRACKS Dow Jones Wilshire Mid-Cap (EMM) has $16 million. Last month we saw the closing of the SPDR O-Strip with $5 million in assets.
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.