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Zacks.com ETF Strategist Eric Dutram highlights: 5 Trends to watch in the ETF industry this year

CHICAGO, Jan. 9, 2014 /PRNewswire/ -- Securities in this article include: Cambria Foreign Shareholder Yield ETF (AMEX:FYLD- Free Report), Horizons S&P Financial Select Sector Covered Call ETF (AMEX:HFIN-Free Report) and ETRACS Monthly Pay 2xLEveraged Closed-End Fund ETN (AMEX:CEFL-Free Report). Eric Dutram looks at 5 Trends to watch in the ETF industry this year.

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5 Trends to watch in the ETF industry this year written by Eric Dutram of Zacks Investment Research:

2013 was a great year for the ETF industry, thanks to strong flows in equity funds, a host of new launches, and demand for low cost products. Due to these trends, assets under management for the total industry crossed the $1.6 trillion level, while the total number of funds surpassed the 1,500 mark.

And 2014 is shaping up to be a solid year too, as many investors remain reasonably bullish on the economy, while Europe is also surging back. Assuming that the QE taper doesn't impact the economy too much, there is plenty of reason to think that stocks can march a bit higher this year as well (see 7 ETFs to Buy in 2014).

Yet even with this solid backdrop, the ETF industry could be in for some surprises this year. There are plenty of untapped markets out there, while there are at least a few dozen funds that have failed to capture investors' interest on the other side of the coin.

Given this, it could be a rocky year for some issuers, though others seem well positioned to take advantage of the market trends. In particular though, we look for the following five predictions to come true for the ETF industry, and dominate the news cycle this year:

New Income ETFs Dry Up

Despite the taper threat, new income ETFs continued to hit the market. A plethora of new products with an income focus launched in 2013, giving investors a variety of options to target income-investments be they in the form of covered-calls, dividend growth, or dividend quality.

While these have been welcomed additions to many investor portfolios, you have to wonder how many more the market can hold. We have already seen a few launched from First Trust in 2014, and I am skeptical that the market will be able to stomach too many more (read 3 Best Dividend ETFs of 2013).

For example, in just the last two months of 2013, investors saw several ETFs hit the market with an income focus. These include a variety of strategies such as the Cambria Foreign Shareholder Yield ETF (AMEX:FYLD- Free Report), the Horizons S&P Financial Select Sector Covered Call ETF (AMEX:HFIN-Free Report), and the ETRACS Monthly Pay 2xLEveraged Closed-End Fund ETN (AMEX:CEFL-Free Report), just to name a few.

Bottom Line: The intense flow of income ETFs slows to a trickle, especially as competition heats up and rates continue to rise.

Emerging Markets Rebound

Although flows into equity products were pretty intense for U.S.-focused funds, emerging markets saw heavy outflows. (AMEX:EEM-Free Report) and (AMEX:VWO-Free Report), the two most popular emerging market funds on the market, were the biggest losers in terms of assets with each losing more than $8 billion. Other emerging market funds also led the list of the biggest outflows as concerns over the taper, a strong dollar, and growth prospects hampered these securities.

However, many of these emerging markets have stabilized in recent trading, and with strength projected in key markets like China, they could be due for a rebound. Plus, with developed markets performing so well, it could lead to some serious strength for exporters in the developing world.

Bottom Line: Emerging Market ETFs will see a rebound, and solid inflows for 2014.

For the full article, please visit Zacks.com at:


Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros http://at.zacks.com/?id=113

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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact: Eric Dutram
Company: Zacks.com
Phone: 312-265-9462
Email: [email protected]
Visit: www.Zacks.com

SOURCE Zacks Investment Research, Inc.

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