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Wednesday, September 05, 2012

The ETF Biz Has a Long Tail

News summary by MFWire's editors

The 929 ETFs with less than $100 million in assets each hold only 1.7 percent of all ETF assets. The Wall Street Journal's Ari Weinberg writes about that long tail of the ETF industry, which accounts for 62 percent of the total number of ETFs in the marketplace.

The WSJ notes that tiny ETFs can hurt investors thanks to large bid-ask spreads, lower liquidity, and the potential for the ETF shop providing such an ETF to shut it down or leave the biz altogether.

On the flip side, the WSJ reports that, according to data from XTF, the 22 ETFs with more than $10 billion each make up almost half of all U.S.-based ETF assets. The biggest ETF, the $104-billion SPDR S&P 500, accounts for 8.5 percent of ETF assets and one-third of the dollar-weighted average daily trading volume. And the big three providers BlackRock's iShares, State Street Global Advisors and Vanguard manage 80 percent of the market. 

Edited by: Neil Anderson, Managing Editor

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