An Expert Take on ETFs: New Markets, Future Growth

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Daniel,
I believe market makers actually profit from the spread between the underlying NAV and the price of the ETF. They do so during the creation/redemption process.Someone correct me if I'm wrong.
It seems like new ETFs are being created (at least the most interesting and innovative ones) to provide ways to gain exposure to previously difficult and illiquid asset classes or strategies like fixed income, Commodities, emerging/frontier markets, and institutional strategies. So I don't think the market makers' source of profit is related to the amount of products being launched.
For a look all the ETFs under registration, and the latest stats on Assets Under Management for the most liquid ETFs, I would suggest checking out www.indexuniverse.com/etfwatch

Fernando of GA 5:40PM August 12, 2008

There are lots of reasons why ETF's might be good for investors who buy and hold them a while. But I do wonder how much money siphons off to the market makers every day who are profiting on the spread between bid and ask while these things trade all day every day. This may be one of the reasons why new ETFs are being created faster than mice a-breeding. Can anyone comment on that?

Daniel David of NM 11:11AM August 12, 2008