Although this year has seen some small exchange traded funds (ETFs) get axed by their providers, the ETF industry’s growth is far from over.
In any industry, there are going to be success stories and not-so-success stories. The ETF industry is no exception. That doesn’t make the recent spate of closures any easier to swallow, however.
Aaron Pressman for Reuters reports that until 2008, the industry had never shut down more than a handful of funds in a given year. The financial crisis and the collapse of some major firms prompted managers to close 58 ETFs and ETNs in 2008 and 56 in 2009. [Shariah ETF Closes Its Doors.]
So far this year, 37 ETFs have closed, but on the flip side, more than 150 new funds have come to market. On top of that, competition in the industry has remained as fierce as ever as brokerages and providers slash fees and commissions to lure new money. [5 Signs An ETF May Close Up Shop.]
One ETF industry insider reveals that the best thing for an investor to do when they are invested in an ETF closing up is use a limit order to sell their shares before the last day of trading to avoid getting caught up in the liquidation process. [Your ETF Is Closing; Now What?]
Tisha Guerrero contributed to this article.
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.