Investopedia: ETFs aren’t in bubble mode

Exchanged traded funds have enjoyed great popularity recently, raising concerns in some quarters that they may be introducing froth to equities markets.  But not everyone is convinced. With other asset classes seeing upticks in inflows, bulls argue there is a lot more room for ETFs to run, boding well for ETF providers.

According to Toroso Investments, ETFs represented just 2.25% of the equity markets back in 2012. When compared to other investments, ETFs are still small. MarketWatch found that mutual funds are held by 24% of the market while international investors hold 15% of corporate stocks. Meanwhile, households in the U.S. own 37% of the corporate equity market. Because of their relative size compared to other investment types, Toroso Investments is among those that don’t think ETFs are in bubble territory.

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