The new trend in the world of market and investment is ETF (exchange traded fund). Since day one it started to operate, it has been continuing to gain popularity among investors. Mutual fund is the competitor. A number of investors had switched to ETF over the past few months. Analysts predict that mutual fund might no longer surpass the ranking of ETF.
$95 billion poured from January to November 2011 in United States, according to Deutsche Bank. It overtook the record of mutual fund which was only at $34 billion. Investment Company Institute recorded $1.05 trillion ETF assets in United States by the end of 2011.
Moreover, several economic experts estimate that its growth is going to climb from 15 percent to 20 percent this year.
Invesco PowerShares’ Senior Vice President, Ed McRedmond noted that ETF market’s popularity is because of the expansion of asset classes. Corporate investors and Chief Financial Officers have found out that ETFs easily address their needs of investing parameters.
McRedmond added, “ETF has transparency. Holdings are determined every day.” It has become the advantage of ETF against mutual fund which is revealed every quarter. One still has to wait that long to know the progress of holdings.
A lot of investors are attracted to it because of its urgency of results. Companies that are in the middle of trouble could determine early financial issues.
Finally, every minute is crucial and important for investors. Buying and selling can be done any time of day unlike market funds that can be transact at the end of the day only. More often, ETFs work with investors’ needs.