Among the list of accomplishments for the industry in 2010 are the introduction of more than 170 new funds and the climb above $1 trillion in assets under management. Statistics like that are just a starting point because it is becoming more clear by the day that ETFs have been legitimized as an asset class and mutual funds are quite vulnerable to the continued success of ETFs.
That's a good segue because today I want to take a look at, in no particular order, four themes ETF investors need to keep an eye on in 2011.
Emerging Markets: Does The Party Continue?
The answer is probably "yes," but the key is not only knowing that emerging markets will continue to be a desired destination for inflows, but also knowing WHAT markets are going to outperform. Sure, an investor could have put money into the iShares MSCI Emerging Markets Index Fund (NYSE: EEM) or the Vanguard Emerging Markets Stock ETF (NYSE: VWO) in 2010 and done alright by getting exposure to a broad group of emerging markets. On the other hand, as the chart below shows, picking the right individual markets was the better strategy and that is likely to continue this year.
ETF issuers and brokerage houses are taking a page from the airlines' playbook and when one does something to cut commissions on ETF trades, others seem to follow suit. In fact, a recent Bernstein analyst report noted low, or in some cases, no commissions are hurting the brokers. Bad for them, good for you. Combine the popularity of ETFs with the fact that several brokers and ETF issuers already offer free trading on ETFs and the environment is perfect to be trading these products. I expect more of the same in 2011.
It's hard to know exactly how many new funds will come to market this year and history has shown an issuer filing to introduce a new fund doesn't mean that fund will ever see the light of day, but this much is clear: There is no dearth of new ETF ideas. I recently saw a noted ETF analyst compare new ETFs to stock IPOs and he made a good point, saying that a new ETF should not be treated the same way as an IPO. You don't need to be in on a new ETF on the first day or first week for that matter. That said, you don't want to wait too long with the right fund. As ETF Profit Report subscribers can attest to, new ETFs can deliver stellar returns and do so quickly.
Increased Awareness Of ETFs
I'm not convinced that this theme will directly impact the performance of individual ETFs, but consider this: Exchange traded products are approaching their 20th anniversary in the U.S. and most investors still don't know much about them. A recent report by Mintel says that six in 10 investors ignore the asset class altogether simply because they don't know what ETFs are. The report goes on to say that only 54% of current ETF investors feel comfortable with their knowledge of ETFs.
This means there is still tremendous growth potential for the ETF business and the smart firms are going to educate their clients about these products. The more informed an investor is about ETFs, the more likely he or she is to invest in one, and that's good news for issuers, brokers and investors. Let's just say mutual fund issuers would prefer investors remain ignorant about ETFs and leave it at that.
This newsletter has 14 open ETF positions in its recommended portfolio, with 30% in cash.
All 14 are up in value, with an average gain of 14.52% over short time periods (the newsletter may change positions each week).
In the list of 16 recently closed out positions, only one ended up with a loss.
Is this the type of (almost mathematically impossible) accuracy you'd like to see in your own portfolio?
Then get the details HERE
For more information and archived issues, visit http://www.globalprofitsalert.com
Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Todd Shriber, Kelley Damiani and J. Daryl Thompson.
Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph:
This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com