Have you ever wondered what goes into determining whether an idea is good enough to become an ETF? As the ETF market continues to expand with new product launches almost every few days, one could argue it doesn’t take much to turn someone’s ideation into another exposure trading as an ETF.
Speaking from experience, what used to matter for launching ETFs doesn’t seem to matter anymore. At one time, first-mover advantage was a big deal. It’s not so much anymore.
Providing access to an untapped segment of the market was considered innovative. I would argue just about every asset class is now covered. Fees weren’t a big part of the investment consideration. Now they are the lead reason some investors choose to buy an ETF.
The ETF industry, in many ways, is following a similar path to that of the technology industry. The market has gone from pure innovation and differentiation to the “copycat” app business. Most ETFs on the market are all playing in the same place with just minor variations of each other.