As the exchange traded fund (ETF) industry continues its major growth spurt and it becomes increasingly evident that they’re here to stay, mutual fund companies are increasingly left with little choice but to join in with their own offerings.
As the old saying goes, “If you can’t beat ’em, join ’em,” and that is just what certain mutual fund providers have decided to do, in the contest for market share. Janet Paskin for The Wall Street Journal reports that now a handful of major mutual fund firms are jumping into the field with products that go back to the original form ETFs took—straightforward index products.
So far, PIMCO has launched two bond-focused ETFs, while heavyweight Charles Schawb is upping the competition with an ETF family of their own. Old Mutual is a global financial firm from South Africa which is registered to offer ETFs that track the FTSE Indexes. Russell Investments has also declared they are ETF industry entrants as well. Asset managers John Hancock Advisors and Jefferies Asset Management filed with the Securities and Exchange Commission (SEC) for a line of ETFs.
The flood of new interest in the ETF arena is a welcome event, as investors stand to gain everything from this. Higher quality products, more choices and lower fees as a result of competition are just two of the benefits. High fees, poor performance and the lack of ability to trade intraday are a few of the reasons investors are finding mutual funds less appealing than ETFs.
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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.