Schwab (SCHW) recently hosted the largest ETF press conference to date with more than 80 financial media in attendance. The result was a sort of “state of the union” for the ETF industry.
Schwab’s efforts in putting on this conference were outstanding. What resulted was a dynamic mix of both basic ETF information as well as more sophisticated topics of discussion for more experienced users. In addition to the financial media attending the event, leaders from major providers such as Ben Fulton, managing director of Invesco PowerShares; Sue Thompson, managing director of iShares; Jim Ross, senior manager of State Street Global Advisors; Michael Iachini, director of investment manager research for Schwab; and Peter Crawford, Schwab’s senior vice president were there. Scott Burns of Morningstar moderated the discussion.
Some of the interesting topics that came up were:
- The ETF business is maturing. The industry has surpassed the 1,000-product mark, and is approaching $1 trillion in assets. The general feeling is that this is just the start of a very long period of growth for the ETF industry as more investors discover the funds and use them effectively.
- There’s more competition, which has resulted in a number of positive things for investors. The primary benefits of this growth has been more choices for people looking to trade ETFs and lower costs in terms of both commissions and expense ratios. This is a trend many expect to continue.
- Active management in ETF form is a great idea that hasn’t caught on with investors just yet. While they wait for proof that these funds can consistently generate alpha, providers are lining up to launch their own active suites. Among the names that have filed to launch such funds include JP Morgan, Goldman Sachs, TD Ameritrade and others.
- The so-called “flash crash” on May 6 was of great interest to the media. Few felt that ETFs were in any way the cause of the events of that day. Most pointed to market orders and automated stop-losses as greater contributors than any perceived inefficiencies in ETFs.
Tisha Guerrero contributed to this article.