For example, the PIMCO Total Return ETF (NYSEArca: BOND) provides the average investor exposure to the investment strategy behind Bill Gross’s flagship Total Return fund. Since it began trading in March, the ETF has attracted almost $2.8 billion in assets. [Bill Gross Touts PIMCO Total Return ETF’s Active Approach]
With the greater use of ETFs amongst independent advisors, Thomas expects ETFs to continue to attract assets, even at the expense of other investment products. For instance, $1.5 trillion has come out of equity mutual funds since 2008, and the ETF growth story has in part benefited from the exodus from active mutual funds. Additionally, some investors are using sector ETFs rather than trading individual stocks.
Moreover, increased competition, especially among the large ETF providers, has helped drive down costs – Schwab is winning the ETF price war after recently announcing the ultra low expense ratio of 0.04% on some of its ETFs. [ETF Fee Cuts: Almost a ‘Free Lunch’]
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.