State Street Global Advisors‘ Tony Rochte is the head of the firm’s exchange traded fund (ETF) distribution. He’s got a few thoughts on the current state of the ETF industry.

As ETFs make gains on mutual funds and actively managed ETFs loom, many investors and industry professionals must be wondering where we are now, and where we’re all headed.

Rochte sees ETFs as a complement to other investment tools, not a replacement. He also views the 401(k) market as a critical point to the success of the industry. He feels the biggest growth segment for ETFs has been the intermediary or advisor market.

Jesse Emspak for Investors Business Daily reports that Rochte thinks institutions are also continuing to grow their ETF adoption, adding to their proliferation. ETF issuers need to focus more on fixed-income ETFs, as that has so far been an underrepresented area of the market.

Rochte’s four caveats for investors?

  1. Make sure you understand the sponsor
  2. Understand the index that you are buying and what it is based on
  3. Make sure when you buy it is with good execution through a brokerage window
  4. Do not chase performance; always work with an advisor.

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.