There's Been an ETF 'Explosion,' Bloomberg TV's Barton Says

Bloomberg Intelligence ETF reporter Eric Balchunas discussed ETFs on Bloomberg TV's 'Bloomberg Market' this morning.
By Amanda Schiavo ,

NEW YORK (TheStreet) --There has been an "explosion" of ETFs since 2014, Bloomberg TV's Mark Barton reported on "Bloomberg Markets" Friday morning. There are over 7,000 of these funds around the world and four new launches every day. Barton brought in Bloomberg Intelligence ETF reporter Eric Balchunas to discuss "whether this is ETF overkill."

"I think people look at ETFs as the vehicle of the future," Balchunas said. "Right now they have about $3 trillion in assets, but some people have estimated they're going to go to six, seven, eight, even $10 trillion as they slowly bleed out mutual funds."

An ETF, or an exchange traded fund, is a marketable security that tracks an index. Unlike mutual funds an ETF trades like common stock on a stock exchange and can experience price changes throughout the day.

In order to attract new buyers ETFs have to be patient. "You've got to wait a while, that's the thing. If you look only 5% of the 40% that have over $100 million are within three years old," Balchunas said.

The reason it takes so long for ETFs to get money is because they don't come with the distribution fees and loads that mutual funds do. The system makes it easier for those funds to get money, whereas ETFs "have to make money the hard way," Balchunas continued.

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