In 2013, the bond ETF will continue to be a popular tool. This year, they’ve attracted $52 billion in net deposits through November, reaching a total $245 billion in assets, according to Strategic Insight. There was $3.5 billion invested in the PIMCO Total Return ETF (NYSEArca: BOND) in 2012, a fact that exemplifies the trend toward bond ETFs, and the first successful actively managed ETF. The growth of the actively managed ETF industry will put down more roots since BOND has been able to pioneer the strategy into a product that has generated returns and attracted assets. [How PIMCO Manages Its Active ETF]
The large number of ETF closures in 2012 is a trend that will also be evident going into the new year. Most of the ETFs that have folded have had less than $10 million in AUM. The fact remains that only the strongest and most successful ETFs will survive. This is a natural evolutionary process and is essential to keep the best products coming forward while weeding out the unnecessary.
So far, there are 1,200 ETFs trading on the market. There are about 48 ETFs that make up around two-thirds of all industry assets. There is growing potential but the products that survive will be of the highest quality at the best possible price.
Tisha Guerrero contributed to this article.
Full disclosure: Tom Lydon’s clients own BOND.