After a huge lull in 2009, this year has seen a record pace of ETF launches–90 new funds coming to market in the first four months of the year. A total of only 134 new ETFs were launched all of last year, down from 198 in 2008 and 227 in 2007.

Investors continue to develop an understanding of ETF products and the varied roles they can play in portfolios and that has drawn the attention of managers. Through April, more than $16 billion in new cash was added to ETFs.

Another major driver of the rush to market is the fact that many asset managers view ETFs as low-impact ways to add to profit margins given the low expenses involved in launching and running a new ETF. That makes it a cheap proposition to throw an idea at the wall and see what sticks.

Interestingly though, after years of criticism that the stream of new ETFs was becoming ever more esoteric, the trend is shifting towards more traditional funds that go head to head with others already in the market.

In the short term that means it may become more difficult to sort the wheat from the chaff, but over the long haul the competition should have the laudable effect of driving what are already low costs even lower. Going forward,  performance and the expense ratio will become the major differentiators among similar funds and will also serve to help reduce expense ratios.c

An already excellent investment vehicle will continue to improve.

What’s New

Last week saw trading commence in two new ETFs.

United States Commodities Fund LLC, best known for United States Oil Fund (NYSE: USO) and United States Natural Gas (NYSE: UNG), launched United States Brent Oil (NYSE: BNO) on June 2. Tracking the daily changes in the spot price of Brent oil crude as measured by the near month futures contracts traded on the Intercontinental Exchange. With an expense ratio of 0.75 percent, the fund as attracted $9.88 million in assets so far.

The second launch came out of Invesco PowerShares Capital Management, which released PowerShares International Corporate Bond Portfolio (NYSE: PICB) on June 3. Coming on the heels of SSGA Funds Management’s launch of SPDR Barclays Capital International Corporate Bond (NYSE: IBND), the two funds are extremely similar in covering the international investment grade corporate bond market though the SPDR offers broader exposure than the PowerShares offerings.