We have been discussing for quite some time the challenges facing the ETF industry. In part driven by a rush for shelf space the leading players in the industry are creating ever more niche-like products and a slew of me-too competitors. The question is whether the industry is sacrificing the clarity of their investment story in exchange for a rush to market share.

Diya Gullapalli in the Wall Street Journal acknowledges some concerns that exchange traded funds have "drifted too far from their roots." While the industry rushes to introduce more funds in narrower niches some analysts are taking note.

Some issuers concede the trend could be going too far. "I do wonder sometimes if we're getting too niche on certain things," says Jim Ross, a senior managing director at State Street Global Advisors. State Street's SPDR 500 Trust (which stands for Standard & Poor's Depositary Receipts) has been tracking the S&P 500-stock index since 1993 and is the oldest and biggest ETF.

Investors are "better sticking to broad styles," says Gus Sauter, chief investment officer at Vanguard Group, a mutual-fund company that specializes in index funds. Vanguard itself has some ETFs, which are created as share classes of its broad index funds. "We're probably closer to the end of our ETF development than the beginning," says Mr. Sauter. The firm saw its ETF assets almost double last year to $11.3 billion but launched only three new products, all internationally focused.

This rush for shelf space continues to entice smaller firms to launch their own ETFs. Jen Ryan in the Wall Street Journal reports on some of the firms trying to nudge their way into the ETF marketplace. One upside is that these firms are often the first movers in terms of introducing novel products.

Ann Davis also in the Wall Street Journal looks at the implications of the soon-to-launch silver ETF. The challenge for investors is analyzing whether the launch will be the last gasp in this extraordinary move upwards, or simply a waypost in a long-term bull market.

Greg Newton at Naked Shorts has an article up on Morningstar's decision to extend their ranking system to ETFs. Newton notes the "random volatility" that can happen to star-ratings based solely on how the funds are categorized. Even Morningstar acknowledges the limitations of their fund ranking system.

Random Roger pointed to the previous article, and weighs in on the concept as well. Roger thinks the backward-looking, quantitative system is nearly "worthless" and longs for some forward-looking analysis.

You can also check out this earlier post that discusses how some investment advisors might be misuing ETFs in their portfolios.