Exchange traded funds (ETFs) are closing in on their counterparts, the actively-managed mutual fund and the hedge fund.
Experts are reporting that the global market for ETFs will grow to $2 trillion in 2011 from the current $800 billion. Bloomberg’s Michael R.Sesit reports that the forecast says a lot about one of the world’s fastest-growing asset classes and this is significant because ETFs pose a threat to the global fund industry.
ETFs have lower expense ratios, a growing number of thematic and specialty funds, and can trade throughout the day like a stock. They’re attracting flows that would otherwise end up in an actively managed mutual fund or hedge fund. It is not clear whether ETFs are attracting money withdrawn from active funds, but they are without a doubt capturing more of the inflows.
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.