MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Wednesday, July 3, 2013 Firms Are Running Out of ETF Ideas Fast ETF innovation is coming to a halt, according to the WSJ's Jason Zweig and Joe Light. Only 70 ETFs and other exchange traded products launched from Jan 1. to June 30, down 44 percent from 126 in the same period in 2012. Fund companies are trying to find new niches that haven't been served but it's proving harder as so many ETFs have already entered the market. Nigerian ETFs, ETFs that use forensic accounting and just yesterday, the Bitcoin ETF, are just a few examples of just how much companies are struggling to think of new, more innovative ETFs. The lack of new ideas hurts investment companies that collect fees from ETF investors. The smaller ETF operators are hurt most, however: James Ross, senior managing director at State Street, said the most established ETF operators can eke out a profit on funds that bring in just $100,000 in annual revenue, because those firms spread the costs of back-office chores such as customer service and handling legal matters across many funds. Firms just entering the business might need to generate at least $250,000 a year, said Ross. Many analysts and asset managers consider a fund successful if it gathers at least $100 million in assets. ETFs that gather less than $50 million could be in danger of closing, they say.More are closing as well, with 42 ETFs and other exchange-traded products closing this year so far compared to 17 closures during the same period last year. The WSJ's Liam Denning also criticized the diversity of ETFs in light of the Winklevoss twins' new Bitcoin ETF. To read the whole story, click here. here and here. Printed from: MFWire.com/story.asp?s=44722 Copyright 2013, InvestmentWires, Inc. All Rights Reserved |