Last year, a new ETF came on the market each week, according to data compiled by the Investment Company Institute. That has some advisers and money managers concerned the field is getting saturated.
"The average consumer is going to be more confused than ever," said Jon White, president of Beacon Hill Financial in Orlando, Fla. "It's getting to be like mutual funds, where people are going to be inundated with choices."
In the past three years, net assets in ETFs have nearly doubled. At $312.8 billion, they're still a shadow of mutual funds' $9.2 trillion. But they're growing faster. From the end of 2004 through last month, open-end fund assets grew 13.4% compared with 38.3% for ETFs
IBD has a story about proliferation of ETFs. From time to time some thing catches investors fancy and then the wall street machine churns out enough supply to meet the growing appetite. It was also an ideal product for mediocre money managers to push to clients.
Supported by large scale advertising and efforts by money managers and advisers, investors have believed ETF is the solution to investing problem. Life is never so easy. An trading instrument or vehicle is never an answer to investment strategy.
Investors/traders are better off focusing on developing stock picking strategies than blindly buying the ETF hype.
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