The Volume Explosion In ETF’s Has The Marketplace Scrambling

explosionThe ETF marches on. Traders Magazine Online (14 July) reports that the volume in ETFs is exploding. According to the article, from last September through May, “ETF consolidated volume averaged almost 49 billion shares a month. That is compared to almost 20.5 billion a month on average from the same period one year earlier.” “This 150% jump follows a report where the NYSE found ETF consolidated volume on average doubled in comparable nine-month periods,” Keith McCullough From Research Edge Reports.

“In other words, not only is ETF volume growing tremendously, it is growing at an accelerating pace. We hold no degrees in rocket science – nor in any science – but we wrote earlier that the entry of such behemoths as PIMCO in to the ETF space all but guarantee that this market will soon top one trillion in assets.  Now, according to the Traders Magazine article, it appears that even the sky may not be the limit,” McCullough Rpeorts.

The article reports that Knight Capital has hired a team of fifteen ETF sales-traders to take advantage of “a tidal wave of volume and liquidity in the ETF space.” In fact, Knight is going after a whole new customer base. “We’re seeing more traditional mutual fund managers converting more into ETF format for the lower cost structure and transparency that ETFs provide,” says a co-head of Knight’s ETF group.

McCullough continues saying that “Traditional asset managers have been steadily increasing their ETF exposure, using them for “core holdings, beta exposure, alpha generation, various hedging strategies. Whether you’re bottom-up or top-down, they can be very useful.” Something for everyone, it would seem. Indeed, the article makes the following observation: “a traditional asset manager with money for a new account may want to be invested right away. Simultaneously, he also wants to wait two weeks to do some research on some stocks. While doing that research, he can invest the money in a value ETF and, at least, get the exposure until he has the individual stocks he wants to buy.”

Traders Magazine ETF Article: HERE

Full Story: HERE


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