“In this way, the proliferation of ETFs challenges the traditional alpha/beta and active/passive demarcations,” Fox added.
ETF providers are moving beyond the plain vanilla, passive indexing strategies that mimics many well-known indices to creating ETFs around hand-tailored indices that provide similar strategies as active portfolio managers. These types of new ETFs now make up 16.2% of total U.S.-listed ETF assets, compared to 4.2% at the end of 2006. [Index ETFs with Active Strategies]
Strategic Insights projects U.S.listed ETFs will add on $100 billion in net new inflows for 2011, with 20% to 25% coming from redemptions out of mutual funds.
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.