If any further evidence of the financial services industry's recovery were necessary, just look at the number of new exchange-traded funds in registration. At present, that number is 552, according to Matt Hougan, editor of ETFR, an ETF-focused monthly newsletter.
The race to capitalize on the hottest product in money management was the topic of a panel discussion at the third-annual Inside ETFs conference in Boca Raton, Fla., which attracted more than 800 investment professionals and is co-produced by Financial Advisor magazine.
Benjamin Fulton, executive vice president of Invesco PowerShares, and Noel Archard, head of product strategy, research and development at iShares, participated with Hougan in a discussion panel that was moderated by Ben Cukier, partner at FTV Ventures.
The odds are good that not all of the 552 launches will be successful, and some may not even launch. In 2009, there were about 150 new ETFs launched and 50 existing ETFs folded. However, in 2008 and 2009, two rough years for the asset management business, the ETF industry attracted $300 billion in net new assets.
The most successful ETF launched last year was the iPath S&P 500 VIX, a volatility play that captured more than $700 million in investor money.
Fulton and Archard both noted that when they design new ETFs, they look for vehicles that advisors and investors could want at some point in the future. They may not want it immediately, but if a product satisfies a potential need--such as inflation hedging--it could have long-term legs.