The markets are ripe for the ETF structure to be exploited. The efficiency, transparency and flexibility ETFs offer make them a premier packaged product choice. Mutual fund investors require more transparency of holdings, lower fees and more liquidity options than end of the day pricing and ETFs are delivering. For individual stock investors, ETFs offer the liquidity of stocks AND the diversification of funds — the best of both worlds.For doomsday “investors” buying gold coins and melting down the family jewelry, there are attractive physically backed gold ETFs — solutions that just don’t exist in the mutual fund world — priced at .25 bps a year!
As the fiscal drama unfolds the future will only be brighter for ETFs. Higher taxes coming? ETFs are a tax advantaged structure, just read the prospectus. Lower return environment looming? ETFs are at the cutting edge of fee compression and fees matter more in a lower return environment. Searching for alternative strategies? ETFs are delivering access and ETPs (exchange traded portfolios) are expanding the set even further. Need to hedge? Geared ETFs are liquid and trade millions of shares a day in all types of asset classes.
Perhaps that’s why ETFs, with an asset base about 12% the size of mutual funds and minimal access to the defined contribution market, took in more than 30% of all inflows into funds in the first half of 2011.
ETFs are the future and the future is now.