ETFs Expected to Continue to Expand in Assets, Breadth

Exchange-traded funds will continue to expand, fund executives said at the Investment Company Institute’s General Membership Meeting last week, Dow Jones reports.

They will continue to attract assets, chase niche markets and expand into new asset classes, such as commodities and currencies, with some of the biggest growth possible in fixed-income ETFs. “Fixed-income is hugely untapped,” said Noel Archard, head of iShares product development at Barclays Global Investors, which along with Vanguard, are the only two companies currently offering fixed-income ETFs.

While there’s been talk of actively managed ETFs for years, speakers said they are certain to be introduced once the Securities and Exchange Commission can figure out how an actively managed ETF would work.

Martha Papariello, a principal with Vanguard, agreed that ETF growth will continue, but at some point, that growth could cause funds to shut down due to small size, which would create confusion in the marketplace.