6. Schwab will launch an ETF supermarket.
Not quite. But considering the moves made by Fidelity and TD Ameritrade, which began selling 100 ETFs commission-free on its platform this year, some might be willing to bet that it’s only a matter of time before Schwab does the same.
7. The Federal Reserve’s interest rate hike will catch fixed-income ETF investors by surprise.
We admit it: we were dead wrong on this one. In fact, rates did the opposite this year and plummeted. It’s another case of the U.S. economic recovery taking longer than expected. Many believed the economy would have been further along at this point, which would have led the Fed to raise rates. Regardless of how long it’s been, the Fed will raise rates at some point, so watch for signs that it may happen and be ready to act.
8. Global ETF offerings will expand.
And how! Not only did we see more single-country ETFs launch, including Market Vectors Vietnam (NYSEArca: VNM), Global X FTSE Norway 30 (NYSEArca: NORW) and iShares MSCI Poland (NYSEArca: EPOL), but providers got even more creative with it. A number of small-cap single-country ETFs appeared, including Index IQ South Korea Small Cap (NYSEArca: SKOR), along with some sector-specific single country funds, such as EGShares Brazil Infrastructure (NYSEArca: BRXX). If you’re an investor looking for global exposure, it’s safe to say that you have more choices than ever.
9. We’ll see more creative uses of ETFs: for example, in life cycle funds, ETFs of ETFs, separately managed accounts.
This has absolutely been true. More mutual funds of ETFs and ETFs of ETFs launched, such as the AdvisorShares Mars Hill Global Relative Value (NYSEArca: GRV), which is an actively managed ETF of ETFs. We’ve also seen providers get more creative when it comes to giving exposure to certain asset classes. A case in point is iShares‘ line of municipal bond ETFs with an end date, which trade like other ETFs and generate monthly income but they adjust the end-date distribution in line with the monthly payouts.
10. Emerging market ETFs will be at the top of the performance charts for 2010.
True, true, true. Emerging markets were an investor favorite this year, thanks in large part to lackluster growth in developed economies. Although commodities look like they’re going to be the ones sitting at the top at year-end not far behind are a slew of emerging markets. Some of the best ones so far include iShares MSCI Thailand (NYSEArca: THD), iShares MSCI Peru (NYSEArca: EPU), Global X/InterBolsa FTSE Colombia 20 (NYSEArca: GXG) and iShares MSCI Chile (NYSEArca: ECH).