ETF Popularity Sparks Cottage Industry

With more exchange-traded funds being offered and their assets swelling to $350.3 billion, companies have begun to launch ancillary products and services, such as newsletters and ETF funds-of-funds, including target-date ETFs, The Wall Street Journal reports.

But not everyone believes an ETF fund-of-fund is a good idea because its higher fees defeat one of the main benefits of ETFs. With an ETF fund-of-fund, “you have automatically surrendered the low-cost advantage of ETFs,” said Dan Culloton, an ETF analyst with Morningstar.

ETFs are hugely popular; in the 12 months ended September, their assets rose 35%, whereas the total assets of all mutual funds increased 1.4% to $9.722 trillion.

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