Northern Trust

(NTRS) - Get Report

is shutting its NETS line of exchange traded funds -- which listed last year and focused on individual countries. iShares got a 12-year head start in this space, so NETS never drew enough assets to ensure viability.

Although ETFs have been around in the U.S. since 1993, they have only begun to proliferate in a meaningful way in the past few years. Exchange traded funds are now a popular wrapper for investing, and companies have tried to meet demand by delivering more funds, some specialized and others broad-based. But not every fund can be a hit and, thus, some must close. (A point of clarification: If you own an ETF that closes, it will pay out the net asset value calculated on the final day of trading. That may create an unwanted taxable event but not a wipeout.)

ETFs will continue to evolve, as will portfolio construction, with new products, and it behooves investors to stay current on new listings and explore whether they could play a role in portfolios.

iPath, the ETN brand for Barclays Global, just filed for two ETNs that will track the VIX futures, one with a one-month expiration and the other five months. The potential for these as a portfolio hedge is exciting and worth studying. Unfortunately for most, me included, VIX is complicated. The ETNs will not track the "spot" price of VIX but instead derivatives of VIX that behave differently than the cash market. There will be a use for the VIX ETNs, though it may not be what most people think or hope for.

There will continue to be me-too, or copycat, funds. Just in the past few days, iShares listed

S&P/Citigroup 1-3 Year International Treasury Bond Fund

(ISHG) - Get Report

and the

S&P/Citigroup International Treasury Bond Fund

(IGOV) - Get Report

. IGOV has a longer maturity than ISHG and is similar to

SPDR International Treasury ETF

(BWX) - Get Report

. Not coincidently, SPDR listed its own

1-3 Year International Treasury ETF

(BWZ) - Get Report

. Yes, with almost the same ticker.

This exists elsewhere and will repeat itself in the future. It is not necessarily wasteful. The bigger ETF providers want to sell a full suite of products to allow access to whatever segment comes into favor. And they have the financial backing to do so.

There will be more innovative products. I was interviewed twice this week about "alternative" ETFs. One bias was skeptical and the other could not get enough concept funds. Where there is a buzz, there will be plenty of funds, but you and I will probably need few of them.

There has been controversy in the ETF world because some investors have realized that levered and inverse funds don't necessarily capture the effect they had hoped for. (Eric Oberg has written several articles about this.) The combination of up-and-down days could either deliver a result hoped for over a long period of time or not; there is no way to know ahead of time. This has been a bigger issue for narrower funds like the

ProShares UltraShort FTSE/Xinhua China 25 ETF

(FXP) - Get Report

and the

ProShares UltraShort Real Estate ETF

(SRS) - Get Report

. I've written several times about using

ProShares UltraShort S&P 500

(SDS) - Get Report

as a portfolio hedge for clients earlier in the bear market and was pleased with the result.

Where there was one controversy with ETFs, there will be others that make the importance of learning the ins and outs all the more important. Based on how this bear market has unfolded and the many professionals who got it right, it makes sense to question whether an investment adviser can add value or not. If you decide not, you will have more work to do. ETFs will help with this task, even if some don't behave as hoped for and others close down.

At the time of publication, BWX was a client position, although positions may change at any time.

Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback;

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