Did you know that a quarter of the market’s ETFs have closed since 2014?
The health of the ETF industry was a topic of discussion on today’s ETF Edge show with CNBC’s Bob Pisani.
ETF Trends CEO Tom Lydon, CFRA’s Todd Rosenbluth, and Invesco’s Dan Draper sat on the panel to go over this very topic.
This news actually comes from a study conducted by CFRA, which reported that 399 of the 1,662 ETFs listed since December 31, 2014, have closed. Meanwhile, just 100 ETFs account for 83% of overall asset growth.
As Rosenbluth explains, if asset managers don’t see their ETFs reaching $100 million in AUM within a couple of years, closures will happen. As he points out, it happened with Invesco, where some acquisitions were made, and later they took a look at their product line, saw how some of those investments no longer made sense, and around 20 ETFs closed early 2019.
“That’s healthy,” Rosenbluth adds. “That’s a maturing part of the industry. But we’re also seeing money going into the largest of the products and the cheapest of the products; that trend continues.”
In talking to Draper concerning how Invesco offers many different products, he noted how the product line-up is client-driven. He said the goal is to have the best solutions run properly for its clients, adding the ETF vehicle is an innovative way to bring solutions. With that in mind, it’s a message to investors that for ETF issuers, it can be low barriers to entry, but a very high barrier to success.
“So, being with larger providers that have all the infrastructure they can really support the products long term is crucial,” he said.
Watch the CNBC ETF Edge segment on the health of the ETF Market here:
For more market trends, visit ETF Trends.