Exchange traded funds (ETFs) are proving to be an irresistible lure for money managers and a growing number of investment banks. But will this new population become a survival of the fittest?
The ETF industry has taken off at high speed, and many providers and managers are trying their hand at the business. Some firms have already come and gone from the ETF industry, including Northern Trust and London & Capital, which had the SPA ETF line. Both firms had good ideas, but it underscores the growing competitiveness of this industry.
Thao Hua for Investment News reports that the challenge of the industry is attracting skill masters such as PIMCO and Russell Investments. Other big firms that have come on board or plan to include Charles Schwab, T. Rowe Price, Jefferies Asset Management, Goldman Sachs, ETF Securities and John Hancock.
The climate of the industry now requires that ETF providers not only introduce viable products, but that they also need marketing and distribution heft. [How to Find the Right ETF.]
Global ETF assets surpassed the $1 trillion mark at the end of last year, up a whopping 45.7% from a year earlier, according to an annual ETF industry review. “The fact that these firms have dropped out speaks to the fact that it’s not easy to compete in the ETF market,” Loren Fox, senior research analyst at Strategic Insight Mutual Fund Research and Consulting, told Hua for the story. [Alternative ETFs: Sophisticated Strategies, Simple Package.]
For more stories about ETFs, visit our ETF 101 category.
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.