ETF Edge: January 2011
Welcome to the January issue of ETF Edge. As the calendar turns to 2011, the ETF industry continues to surge ahead and become an increasingly important part of the investing landscape. The past year has been an exciting one for ETF investors, with more than 200 new products debuting across a variety of asset classes. Innovation continued to be a driving force behind the industry’s growth in 2010; while some of the new funds to debut will go head-to-head with existing products, the majority of additions to the product lineup were first-to-market products.
While 2010 was on the whole a good year for the ETF industry, there were certainly some growing pains along the way. Commodity ETFs have seemingly fallen out of favor; excluding physically-backed gold products, this corner of the market actually saw net outflows in 2010. And there were a number of attempts to derail the ETF industry’s growth, including misinformed allegations of “collapsing” funds and a report that blamed ETFs for curbing economic growth and harming the IPO market. As one ETF industry executive put it, some of the vitriol directed at ETFs was so broad and misplaced, the industry was lucky not to be blamed for global warming and the BP oil spill.
So as we head into 2011, it remains clear that education must remain a priority. With exchange-traded products continuing to multiply in number and becoming increasingly complex in nature, it is more important than ever for investors and advisors to do their homework and understand the drivers of performance.
We expect great things from the ETF industry in 2011. With more than 700 proposed products in registration, expansion figures to be an ongoing theme throughout the next year. And with numerous studies illustrating that ETF “penetration rates” remain extremely low, there appears to be a tremendous opportunity to increase market share and reach into new areas.
In this edition of ETF Edge, we take a look back at some of the major developments of 2010, as well as a look forward to what 2010 may hold for ETF investors. Our outlook on global markets continues to be cautious, though a relatively strong holiday shopping season served as yet another indication that the economy is no longer running on fumes. But opportunities abound, and we see a number of funds poised for strong 2011 performances.
Here’s a look at what’s inside this month’s ETF Edge:
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