Most of the ETF providers have shifted the focus from product development to superior product management. This month, Invesco PowerShares announced they would close up 13 funds by march 7, 2013, a move that has caught the attention of institutional investors.
“Every time a provider leaves the market, institutions become more hesitant,”Alex Papazian, senior analyst at Cerulli Associates, said in the article.
Publicized poor trade executions and ongoing market structure debates still expose the vulnerabilities of ETFs, which trade on secondary markets and in primary markets through authorized participants, reports Weinberg. The larger investment customers are going to want an improved trading experience, with plenty of liquidity and sound trading practices before they jump into the business.
Tisha Guerrero contributed to this article.