As exchange traded funds (ETFs) grow in importance, they are also growing in numbers. Bill Cara for Forbes asks, "Does the market really need 898 ETFs, and counting?" His take revolves around computers and number crunching, and what is an ETF but a combination of numbers that can be sliced and diced by investing style, by sector, by geography, or by customized construct, for bonds, currencies, commodities, dividends etc., etc. Cara’s take for ETFs-Who needs baseball stats? The world of algorithmic trading lives for the numbers accounting for these ETFs. Mere retail investors loose neurons everyday and cannot hope to keep up.
I love Bill’s work, but would like to see individual investors get a little more credit. We lived with over 11,000 mutual funds at one point and most never performed in line with their benchmarks. Sure, with only 400+ ETFs we have more asset classes, sectors and global regions AND investors need tools to help them analyze the pool of ETFs and make decisions. As long as billions of dollars continue to flow into ETFs, expect more to hit the market. In addition, we’ll see more tools from those is the industry that hope you use them.
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.