Saturday, April 2, 2011

ETFs A-Plenty!

I remember when ETFs had just hit the big time. They were all index funds, and mostly targeting broad based indexes at that. Not any more. Every year, hundreds of new ETFs hit the market and in increasingly narrow focus.

Last year saw 217 new ETFs and March of 2011 alone saw 700-800 new issues enter the pipeline! It's important to note that not all issues in the pipeline will become available to investors, but ETFs are clearly the hot new medium in investing.

Here's a CNBC article highlighting newly minted, narrow focus ETFs, including:

  • A Smartphone Index
  • Bear Market Index Funds
  • U.S. Denominated Debt

As the articles points out, these micro-niches ETFs are playing to a small market and are thus more risky since it's not only easier to get caught without a buyer when you're looking to sell, but the fund can close due to lack of interest.

I'll stick to the original, broad based index funds thanks.

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