Too Many ETFs?

Paul Mazzilli, director of ETF research at Morgan Stanley, agrees.

"I think some of the things that are coming out are far from what ETFs are all about," he says.

"The concept of ETFs was broad-based diversified indexes that are pretty passive, low-turnover, high tax efficiency and relatively low fees" he says, adding that many of the new products have high turnover rates, and that makes them less tax efficient -- and more expensive. They are coming into the space mainly because ETFs are hot.

"I would hate for people to buy things that don't work out and say ETFs [in general] are horrible," he adds.

In addition, many observers are concerned that a good number of these new ETFs won't be able to accumulate sufficient assets, a situation that could cause many of them to fold.

When the day comes that there are 500 U.S.-listed ETFs on the market, "I still think that 20 of them are going to have 50% of the market," Mazzilli says.