Dreyfus Planning ETF Foray

by on June 12, 2010 | ETFs Mentioned:

The number of firms gathering around the gates of the ETF industry continued to grow this week, as Dreyfus Corporation filed preliminary paperwork with the SEC to pave the way for the mutual fund company to offer ETFs to U.S. investors. The exemptive relief filing, one of the first steps towards launching a line of ETFs, was light on specifics, noting that proposed funds could invest in either fixed income or equity securities in both U.S. and non-U.S. markets. The filing noted that Dreyfus plans to offer actively-managed ETFs, a corner of the market that has been slow to gain traction but that many believe is poised to experience tremendous growth.

Dreyfus joins a number of well-known mutual fund firms who appear to be preparing to make a splash in the ETF industry, including Eaton Vance, Legg Mason, and T. Rowe Price (see Handicapping The Active ETF Race). Plans to jump into the ETF space have been complicated somewhat by an SEC review of exchange-traded products that use derivatives, a group that includes leveraged ETFs but covers many actively-managed ETFs as well.

Unlike many of the other firms lining up to make a splash, Dreyfus is already active in the ETF space; the firm has partnered with WisdomTree on a number of currency products, including the ultra-popular Emerging Currency Fund (CEW) and Chinese Yuan Fund (CYB).

The coming twelve months are shaping up as an unprecedented period of activity for the ETF industry. As the product pipeline has continued to fill with interesting ideas, the number of issuers expected to throw their hats into the ring has surged; the number of ETF issuers could top 60 a year from now, up from less than 20 as recently as 2009 (see Five Bold Predictions For The ETF Industry).

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Disclosure: No positions at time of writing.