“This is a market defined by fairly low barriers to entry, but very high barriers to long-run success,” Johnson said in the article, noting that scale and distribution key drivers of success. “The combination of the world’s largest ETF provider with one of the largest brokerage firms won’t make it any more challenging for new firms to enter the ETF market, though it could make their odds of succeeding slightly slimmer.”
Nevertheless, niche strategies have a place in the ETF market. For instance, low-volatility ETFs have attracted a lot of attention as investors sought equity exposure hedged against potential market oscillations. It is up to would-be providers to find the right strategy. [Low-Volatility ETF Doubles S&P 500 Risk-Adjusted Return]
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.