I read The Reformed Broker‘s recent post, ETF Inflation and Brown’s Law of Wall Street Product Creation, with some interest, as we cover so many new ETF launches here at ETFdb. By the way, although you could call this post a rebuttal to that link, I do have a lot of respect for The Reformed Broker–it’s in my Google Reader subscriptions–and recommend it as daily reading. But in this case, I don’t agree with the opinion of Joshua Brown, who pokes fun at the ETF issuances this year by referencing Brown’s Law of Wall Street Product Creation: “Wall Street products decline in quality, popularity and necessity with each iteration after the original.”
Now, I can’t argue with the overall sentiment of Brown’s Law. But I don’t think it’s universally applicable: did mutual funds decline in popularity after their initial wave of popularity? And can we really conclude that ETF issuances are overdone, when, until recently, our ETF choices for exposure to the investment-grade corporate bond market–a huge sector of a huge asset class–total a whopping one single fund?
[click to continue…]
{ Comments on this entry are closed }
