It’s no news that the exchange traded fund (ETF) business is booming. The total number of ETFs was 542 as of the end of June, and 162 of those were launched in the first six months of this year, according to Scott Burns for The Dallas Morning News. Oodles more are on the way. To get an idea of how fast this industry is growing, Burns looks to the history of mutual funds and index funds for comparison:
- It took mutual funds 56 years before they reached the same number ETFs have in 14 years.
- It took index funds 25 years before their numbers reached 542.
With so many new ETFs on the way, they will enter a market already overflowing with choices. More options provide investors with more opportunities to find ETFs that match their financial goals. However, this also means that investors will have to do more research to understand the differences among all the ETFs. In a world with better educated investors, everyone wins.
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.