The financial meltdown felt around the world is certainly not the ideal condition for a new exchange traded fund (ETF) to launch into the market.
There are more than 500 new products awaiting approval in the pipeline, but it is hard to tell if they will see the light of day as the credit crisis gives way to an increasingly uncertain environment without much promise.
John Spence for MarketWatch parallels the housing and credit bubble to that of the ETF bubble. For example, by the end of the third quarter there were 681 U.S.-listed ETFs overseen by 20 managers with assets totaling $540 billion. Currently, there are plans to launch 601 new ETFs, with 486 of those in the United States alone.
We’ve said it before: while, yes, some products will launch and fail, others will grab hold of investors. We’re going to see an influx of new money into the ETF industry when the market makes a turnaround. Investors who got burned by high fees and a lack of transparency in their mutual funds are going to find ETFs a sight for sore eyes.
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.