Will 2007 be the year for fixed-income exchange traded funds (ETFs)? ETF providers are covering every area of the bond market, much as they’ve done with stocks. John Spence of The Wall Street Journal reports that at the end of November 2006, 6 of the 333 ETFs listed on U.S. exchanges tracked bond indexes. The rest were tied to international and domestic stock benchmarks. Experts think were going to have some competition in the other end of the asset-allocation equation. We included a boost in bond ETFs in our ETF trends for 2007 report.
Morningstar is at the forefront of this movement as they’d like to make bond index data more available. In addition, they are launching a proprietary family of investable bond indexes to license as the basis of ETFs and other financial products. Barclay’s Global Investor’s and Vanguard Group are close competitors in the bond ETF arena. Barclays launched 8 new bond ETFs this year and Vanguard filed to add 4 more to the selection.
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.