Pisani: Why ETFs May Boom Soon

April 10, 2009 9:43am ETF BASIC NEWS

bob-pisaniCNBC reporter and Trader Talk blogger Bob Pisani says Morningstar predicts that exchange-traded funds (ETFs) may soon see a rich inflow of investor money.

In his regular CNBC 101 investor segment, Pisani explained why.

 “I’ve championed ETFs,” he said, as a low-cost way to play the market, with “lots of diversification and lots of products to choose.” But there’s been a problem keeping the funds from reaching their full potential: they cannot penetrate 401(k)s, thanks to brokerage fees, which obstruct cost-dollar averaging.

He notes that that 401(k)s currently hold some $2.5 trillion; there is only $541 million in ETFs. (yes, that’s trillions vs millions.)

But Pisani reports that Morningstar has projected that 10 percent of 401(k)s could be rolled over through the next several years, bring a torrent of cash to largely unexploited ETFs — potentially boosting ETFs by nearly 25 percent.

Source: www.cnbc.com

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