Smaller Firms Entering ETF Marketplace

Only three months have gone by since the passing of 2005, and already the ETF arena seems to have changed, according to The Wall Street Journal.

At the end of last year, ETFs were primarily offered by Barclays Global Investors, State Street Global Advisors, Vanguard Group and PowerShares Capital Management, with most of these funds focused on a specific sector.

Now, however, "smaller fund sponsors are contributing to the expansion of the ETF marketplace," with a wide variety of offerings, according to Ron DeLegge, publisher of ETFGuide.com.

Rydex Investments is an example of one of the smaller provider of ETFs, as it ended 2005 with three ETFs. Two were traditional stock-based ETFs and one is a currency-based product. However, Rydex is on the move to expand its offerings. as the company recently filed for six new currency-based funds that act like ETFs.

First Trust Advisors, another little leaguer, launched its first ETF in October and plans at least 20 more by the end of 2006.

In addition to little leaguers, there seems to be many firms eager to enter into this rapidly growing industry for the first time. Deutsche Bank, for example, launched its very first ETF in February. This ETF is designed to give investors access to a range of commodities and it the first of its kind. Another firm about to entry the market is ProFunds. The company currently has applications for eight ETFs.

"The larger ETF families will continue to bring new products to market, but it will likely be done complimenting their existing ETF line-up," said DeLegge. Also, in spite of the new competitors, the four companies that currently rule the ETF arena are expected to continue to dominate the market.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.