All About the ETF (Exchange Traded Fund) The Proliferation (Part 2)

Earlier here in the first part of our ETF Post from our coming Q2 Newsletter, we spoke of the creation and massive growth.

The original Index ETF, was called by its ticker, SPY AKA Spider!

If They Buy, Wall Street Will Build – Beginnings of a Problem

Wall Street is just like many other businesses, in that if someone will buy it, they will build it. Recall the rush to bring “.com” companies public in the late 90’s, due to the insatiable appetite by investors, who were also experiencing the newly minted power of the internet itsself.

The following, again from IShares and Visual Capitalist shows the proliferation of various types of ETF’s.


Dangers in the Making

Once a single Index ETF, now a plethora of over 6000 and counting different ETF assets.  Given the fact that investors do not need duplicate index ETF’s, many new ETF’s do not track anything, and can even get into the woods in uncharted, unique and illiquid types of assets.

US Exchanges are currently logging a shrinking number of public companies due to cost, liability, red tape, and mega mergers.

There are only about 5000 US Traded companies on the exchanges, with a much larger, but very small capitalization of international companies. With this in mind, there must be tons of overlapping ETF holdings.

There are also fledgling ETF’s that will likely never gain traction.

Next Up, The Dangers and What To Avoid…

Have a Great “Proliferation of ETF’s” Day!

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

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