As specialized exchange-traded-funds expand into additional market sectors and niches, some observers believe investors are becoming confused and the overabundance is pushing ETFs further from their roots as low-cost, tax-efficient investments, The Wall Street Journal reports.
Typically, ETFs track benchmarks such as Standard & Poor's 500-stock index or the Dow Jones Industrial Average, but they are increasingly expanding into domestic exchanges and concentrating on focused portfolios.
The newer funds target specific sectors and industries, as well as commodities, currencies and precious metals. Some analysts say the complex ETFs, which open sectors and strategies previously difficult for individuals to access, could put investors at greater risk of losing money.
On the other hand, some observers see the ETFs as a burgeoning industry in a development and growth stage similar to that of mutual funds in the 1990s.