Cash rolled into ETFs today will presumably be establishing a very low cost basis. Future appreciation won’t put investors in a risky capital gain situation because the highly diversified nature of the ETF. The transparency of an ETF will allow investors to slip in and out of these funds as desired, at anytime of the day, as flexibility is another feature, reports Herb Morgan for Forbes.
The recent bear market highlighted an overlooked byproduct of the stock-picking strategy: as bull markets accrue capital gains, those investors become reluctant to sell even a small portion of their holdings. Many investors were burned as they held single stocks, but with ETFs, the risk of the failure of one stock is buried deep by diversification and relieves investors from having to buy or sell individual stocks.
These are just a few of the reasons the ETF industry has become so successful and popular. Deborah Fuhr, managing director and global head of ETF Research and Implementation Strategy at Barclays, just released her first quarter ETF industry report. Fuhr is one of the most respected ETF experts in the industry.
- At the end of the first quarter, there were 1,635 ETFs, 2,857 listings and $634 billion in assets worldwide
- Year-to-date, assets have declined by 10.9%
- The average daily trading volume has increased by 10.4% year-to-date
- There are currently plans to launch 729 new ETFs
- iShares is the largest provider in terms of both products and assets (iShares was recently sold)
Professional investors can contact Barclays with their current contact information (name, company, title, mailing address and phone number) if they would like to receive copies of the reports.
Barclays Global Investors
Murray House, 1 Royal Mint Court
London EC3N 4HH
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.