For instance, old mutual fund providers will have to adapt to how they distribute products as ETF-centric advisors will invest differently. Advisors who use ETFs are also a different breed of investors. They are tech savvy and access more information online, so providers will need to treat distribution differently.
“The phrase that you hear a lot of the times is ‘ETFs are bought not sold,'” Nadig said on the podcast. “You have to create investment demand some where because you can’t really compensate a wholesaler for getting XYZ advisor to buy X amount of product.”
Nevertheless, these new entrants may gain traction by capitalizing on some of their individual disciplines. Their money managing expertise may provide ETF strategies that help hedge against negative effects of rising rates or a rising dollar in the period ahead.
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.