ETFs Dead? Not So Fast

By Tom Lydon | September 04, 2008 | 5:49 PM | 0 Comments

Exchange traded funds (ETFs) have seen growth slow over the past three months. During this period, assets under management globally shrank by a substantial amount.

While there have been a number of ETF closings in 2008, primarily because of slow asset growth, ETFs are not dead.  We're in the midst of a bear market - it's not a time where most people can expect to see a ton of new money flowing into the markets. \

Especially after a day like Thursday, in which the Dow plummeted a whopping 344 points. Who wants to put their money in then? The markets aren't exactly laying out the welcome mat.

ETF providers certainly don't seem to be bearish on their industry. All indications are that they're proceeding as they normally would. As of Aug. 7, there were nearly 550 ETFs and exchange traded notes (ETNs) in registration.

 When the markets turn back and start moving up again, it's not to say that there will never be another ETF closure again. In fact, competition might only heat up as the challenges for new entrants become more intense. 

We don't think it's time to call the death of ETFs. Not even close. As we begin our steps toward economic recovery, look for this industry to once again resume its stellar growth.

 

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