Thursday, March 18, 2010

J.P. Morgan (NYSE:JPM), Goldman Sachs (NYSE:GS), T. Rowe Price (Nasdaq:TROW) Launching ETFs

Investment Banks and ETFs

J.P. Morgan (NYSE:JPM), Goldman Sachs (NYSE:GS), T. Rowe Price (Nasdaq:TROW) are all looking at launching ETFs in the future, and most of these will be actively managed exchange-traded funds, built to generated higher fees than their passively-managed cousins.

ETFs continue to grow as a very popular alternative for investors, especially those who like to put their money into an investment vehicle and let it ride.

The question which remains to be answered is why someone would invest in an actively managed ETF and pay more, when they already essentially can do that with thousands of mutual funds. It makes little sense to me, but maybe investors will think there's more to it than that, and will give them a try.

These types of ETFs will take a long time to take off, and similar to other investments like them, will need to build a track record which proves they can outperform index-based ETFs. That and prove the added fees are worth the price. It'll take years for that to come about, so this is a long term play by all these companies.

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