So far in 2011 there have been more than 200 exchange-traded products launched which brings the ETF line-up close to the 1,300 mark. Over the last few years, the exposure accessible through ETFs has become increasingly ‘granular', says ETF Database.
While some of the new products are ‘plain vanilla’ funds linked to well known indices, the majority of new additions offer targeted exposure to specific markets or sectors or more complex investment strategies involving multiple asset classes or sub-classes.
The ETF coverage map is becoming more and more complete as investors now have at least one option for accessing many of the world’s most important economies. Recent launches have included Cloud Computing ETF (SKYY), a Fertiliser/Potash ETF (SOIL), and an Ireland ETF (EIRL).
ETF Database points out that two years ago complaints started up about the over-saturation of this market, and that was when there were about 500 fewer products on the market. But rather than deter new launches, they have accelerated. ETF Database also points out that many of the relatively new products have also done well in terms of accumulating assets.
There is certainly some evidence that certain areas within the ETF industry have grown somewhat too quickly and are positioned for a pullback. There remain hundreds of funds which have failed to attract much interest from investors and are likely losing money for the companies that offer them. At some point, many of the ETFs now on the market will shut down, predicts ETF Database. However, some gaps in the market have not yet been filled and these would include Greece, China Bond, Emerging Markets and India sectors.
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress