New ETFs: Too Much too Soon?

Last year, 205 exchange traded products debuted in the U.S., but in a sign of the increasingly competitive fight for investors’ attention assets, by late in the year, close to half 2014’s new ETFs had less than $10 million in assets under management. Some of this year’s new ETFs have found rapid success, including the SPDR DoubleLine Total Return Tactical ETF (NYSEArca: TOTL), CSOP FTSE China A50 ETF (NYSEArca: AFTY) and the iShares Exponential Technologies ETF (NYSEArca: XT). [Fast Success for Some new ETFs]

However, few new ETFs quickly reach the acclaim and asset-gathering proficiency of a TOTL, PureFunds ISE Cyber Security ETF (NYSEArca: HACK) or First Trust Dorsey Wright Focus 5 ETF (NasdaqGM: FV).

That is to say there are no guarantees on any ETF’s success. Since the dawn of the U.S. ETF business, over 500 funds have closed.

“To put this number in perspective, a grand total of 2,207 ETFs and ETNs have been listed on US exchanges.  The 500 closures represents a 22.7% mortality rate,” notes Ron Rowland of Invest With an Edge.