The recent closing of Scottrade’s FocusShares, and Russell Investments ETFs, are examples of the smaller players feeling the competitive heat, and with this comes fewer choices for investors.
“ETF experts suggest this type of monopolistic competition creates lower prices because it’s the only way to gain market share when wooing consumers faced with choosing from three large competitors with no discernible differences,” Ashworth wrote. [Sec Warns on ETF Risks]
The danger of smaller ETF providers shutting their doors, or consolidating, is that the choices will be less varied for investors and prices could be affected.
Tisha Guerrero contributed to this article.