The 10 Most Actively Traded ETFs In The World

Michael Johnston submits:ETFs have surged in popularity in recent years in part because of the numerous advantages they offer over traditional actively-managed mutual funds: lower costs, potential tax efficiencies, intraday trading, and enhanced transparency. But ETFs aren’t without potential drawbacks of their own. Although most funds appear relatively simple on the surface, there are some rather complex nuances as well.

Exchange-traded funds continued to attract assets in 2012 while money has been exiting  equity mutual funds. Still a majority of assets continue to be invested in actively managed products: As of the end of 2011, of the nearly $13 trillion invested in funds, index and exchange-traded funds comprise only about 8 percent, according to the Investment Company Institute.

By Jarred Cummans:The ETF industry has long been known for the many advantages that it offers over competing mutual funds and other investment vehicles. One of the most significant upsides that exchange traded products have is their relatively low expenses; investors can gain exposure to asset classes of all kinds for a reasonable price.

Michael Johnston submits:Momentum continues to build behind actively-managed ETFs, as one of the most successful issuers of these products has stuffed yet another offering into an already full pipeline of ETF ideas.

Michael Johnston submits:To this point, much of the tremendous growth in the ETF industry - we now have close to 1,200 U.S.-listed exchange-traded products with aggregate assets approaching $1.1 trillion - has been attributable to “passive” products, those that seek to replicate the benchmark of an index.

Michael Johnston submits:The surge in ETF assets over the past several years has been driven by a number of factors, as investors have embraced the enhanced liquidity and tax efficiency these vehicles offer relative to traditional mutual funds and the improved diversification relative to individual stocks and bonds. But a big driver of the growth in ETF assets is related to costs, as the vast majority of exchange-traded products are considerably cheaper than traditional actively-managed mutual funds.

Michael Johnston submits:ETFs have experienced widespread adoption from investors around the world in part because of their simplicity. Near total transparency, intraday trading, and a (generally) more straightforward tax situation all make ETFs appealing to everyone from buy-and-holders to active individual and institutional investors.

Michael Johnston submits:When rattling off the advantages that ETFs hold compared to traditional actively-managed mutual funds, most investors usually start with the issue of expenses. The easiest comparison to make involves expense ratios, the fees charged by ETF and mutual fund companies for investing in a product. Though some mutual funds offer single-digit expense ratios, most actively managed products charge in excess of 1% (the average for the mutual fund industry is in the neighborhood of 1.4%).