A glut of exchange traded funds (ETFs) have hit the markets in recent years. That has some people asking how much is too much and if ETFs are there yet.
A top industry leader says no, the market is not over-saturated right now. According to Ignites, the ripest areas for ETF growth are in active, alternatives and fixed-income, all of which are areas in various stages of early growth and still have plenty of opportunities. [The ETF Surpermarket Has Arrived.]
To put this in perspective, excluding all the various share classes in existence, there are 1,066 registered ETFs. That does not come near the nearly 7,000 open-end mutual funds in Morningstar’s database. There is plenty of market demand that needs to be met, which mutual funds cannot satisfy.[Regulatory Turf War Affects ETFs.]
Of course, there may still be ETF closures soon and in the future, but this does not mean anything. It is simply an evolving industry and specific areas may be too crowded.
Also, expect growth to come from new entrants in the space. This will occur as fund companies embrace the ETF wrapper and as banks and other platforms look to capture new clients and monetize the assets already on their books.
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.