During the first nine months of 2012, new ETFs launched are down 34% from the year-ago period while ETF closures have jumped by nearly 200%, according to Reuters.
Firms realize there are very few opportunities to find a niche that is not already covered, said Tim Strauts, ETF analyst at Morningstar, in the report.
There are 33 ETF providers in the U.S., but the top three firms account for 84% of the assets. [The Rich Get Richer in ETFs]
Russell Investments is closing all its ETFs except one, and Scottrade’s FocusShares is exiting the business altogether. [ETF Closures Reveal Fierce Competition for Market Share]
“It has never been easy to be in this business, but the challenges have changed,” Ben Cukier of FTV Capital said in a recent report. “It used to be that advisors didn’t know what ETFs were, but now there are thousands of ETFs out there and the challenge is how to get the advisors’ attention.” [Smaller ETF Firms Feeling the Heat Amid Consolidation]