ETFs used to be pretty simple. Now those days are long since past. Now new fund launches are focused on narrow niches and unproven strategies. Which is fine. Nobody should expect the ETF industry to stand still. However that does not mean investors should necessarily be buying what the ETF industry is selling.
Josh Brown today talks about the new Global X Social Media ETF ($SOCL) and whether anybody really needs it. Larry Fink CEO of ETF bigfoot Blackrock ($BLK) talks about whether leveraged ETFs should even exist. And a new copper ETF is launching much to the delight of all those copper bulls out there.
The fact is that ETF investors have not done the most basic things to take advantage of the ETF revolution. Michael Johnston notes how in categories where close substitutes exist investors still have significant assets in funds that have notably higher fees. He estimates that investors could save $415 million a year without breaking a sweat.
Every piece of research on fund fees shows a clear relationship between higher fees and worse performance. The math is pretty simple. Before investors think about buying into niche ETFs or leveraged funds they should first take care of the basics that are far more likely to have a bottom-line effect on their portfolio.
Items mentioned above:
Who needs leveraged ETFs? (MarketBeat)
How ETF investors can save big money. (ETFdb)
[earlier] Too much is never enough for the ETF industry. (Abnormal Returns)