In the past five years, ETFs have tripled in number to 1,450 while assets have more than doubled to $1.3 trillion, according to Bloomberg.
However, some ETF providers are shutting down funds that have failed to gather significant assets.
“There’s been much made of the shockingly high pace of ETF launchers,” Michael Iachini, managing director of ETF research at Charles Schwab Investment Advisory, told Bloomberg. “With that comes the realization some products get launched and don’t really find investors who want to buy them. In order to succeed in the ETF space, a product has to either be first or better.”
Inflows to exchange traded products listed around the globe slowed to $9.5 billion in October from $43.3 billion in September, which was the best month of the year. Year-to-date global ETP flows of $192.3 billion have already surpassed 2011’s full year total of $173.4 billion. ETP flows for the January-October period were the strongest since 2008, according to BlackRock.
“You can be successful being a smaller provider,” said Deborah Fuhr, co-founder of research firm ETFGI, in the Bloomberg story. “But many people think if they’re going to enter a business, they want to be one of the top players, and breaking into that top three is something that’s challenging.”