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ETF Insiders Explain Where the Industry Is Headed

Global X created the fund, and these investors became clients and bought the fund. Del Ama said that the company's product development since then has been driven by client demand.

The recent launch of the Global X MLP & Energy Infrastructure ETF (MLPX) is another example.

Clients want access to the space, but investing in master limited partnerships is complicated because of the tax implications. And although MLPX is not perfect, it is arguably simpler than the other MLP funds.

Bob Holderith, president, and Richard Kang, CIO, Emerging Global Advisors

Emerging Global Advisors says it tries to be a much different and more innovative type of firm. It starts by having its office in a Chelsea loft with the feel of a tech start-up. Rent on the offices is about half what the company's Midtown competitors pay, according to Holderith's estimates. The offices have a large lounge for brainstorming and a shower area because many team members are avid cyclists who ride to work.

Holderith and Kang mentioned the same basic ETF benefits discussed by the other executives. EGA obviously focuses on emerging markets, but it also pays very close attention to changing trends in emerging-market investing and is willing to make changes to its funds to continually provide what management calls "better beta." Beta here has the same context as noted above.

Examples here include recent new funds excluding Taiwan. In recent articles about these new funds, I have noted that Taiwan is not universally considered an emerging market.

Based on several factors, including GDP per capita, EGA chooses to exclude this economy from its funds. The company recently announced changes to its Beyond BRICs ETF (BBRC) to take in more frontier markets. The liquidity in markets such as Oman and Nigeria, say Holderith and Kang, is as good as the smaller emerging markets, and they say there will be increased demand for such frontier markets.

The day before I met with EGA, the company announced it was closing 12 of its funds, including their suite sector funds. This is a major reduction in the number of funds offered, but it does not make a dent in the company's assets under management.

The firm plans to bring more core equity funds to the market and more thematic funds.

One long-term focus is the emerging-market consumer. EGA's home-run fund has been the EG Shares Emerging Market Consumer ETF (ECON). In addition to focusing on the emerging-market consumer, EGA also is planning to roll out a suite of emerging-market bond funds in the near future.

At the time of publication, Nusbaum had no positions in securities mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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SYM TRADE IT LAST %CHG
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MLPX $18.66 -0.53%
ECON $26.81 1.40%
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