Exchange traded funds (ETFs) are getting their chance to shine, as investors have gone away from riskier stock strategies and are looking for a safer bet.
Low Fees, Transparency. The actively managed mutual fund saw outflows of $185 billion, while ETFs saw inflows of $138 billion through November 2008. Lower fees and solid stability are attributes that ETFs possess, and since many actively managed mutual funds did not have stellar performance last year, this could be the ETFs chance for gaining their fair market share.
John Spence for The Wall Street Journal reports that ETF products continued to enjoy healthy inflows, even though total assets fell during last year’s selloff. ETF assets fell by 20% in 2008 through November, to about $482 billion, despite the $138 billion in net inflows for the period. Fund giants such as Fidelity and Vanguard have reported heavier interest in ETFs over traditional mutual funds, as well.
The Time Is Coming. This is why we believe that ETFs are going to get more than their fair share of the assets when the markets turn around. Investors who are braving the markets want the transparency and low cost, and they can’t get that in most mutual funds.
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.