More ETFs On the Way

By Arthur B. Hill - Wed 05-Mar-2008

The Securities and Exchange Commission (SEC) is paving the way for more ETFs. Proposed changes will make it easier to create ETFs by removing the requirement for SEC approval. In addition, the SEC is going to give Mutual Funds more latitude with ETFs. Mutual Funds can currently hold only 3% of another fund's shares. The relaxing of this guideline will allow Mutual Funds to take bigger positions in ETFs. This will surely increase the demand for ETFs. There are currently over 600 ETFs and ETNs trading in the market. These new rules will make it easy to surpass 1000. For comparison, there are some 8000 Mutual Funds right now. Therefore, it could still be a while before ETFs and ETNs catch up with Mutual Funds. --------------------------------------------------------