John Sullivan of AdvisorOne sat down with Morningstar ETF strategist Scott Burns this week at the Morningstar conference in Chicago to ask, What's coming up in ETFs? The recently promoted Burns offered Sullivan the benefit of his crystal ball, discussing consolidation in the ETF industry, the future of actively managed ETFs, and what investors are likely to demand next.

On the possibility of consolidation in the ETF space, Burns said:

There’s a certain level of creative destruction that never happened all at once in the mutual fund space. Creative destruction happens in the mutual fund space, but it can be masked easier by rolling closed funds into other funds, for instance. The rapid maturation of the ETF space meant that the creative destruction would be just as rapid—and more high profile.

Asked where investors will look for yield, Burns responded:

Investors are looking for broader solutions; those with exposure to global markets, as well as continued demand for alternative products. You have two types of ETF products right now: the traditional structured products that came on the exchange, and then you have more of the ETF “tools” that are being developed. The ETF tools will never be part of a core portfolio. As it is often said, ETFs began as structured products that came on the market and they remain structured products on the market.

See the full interview for more. 

Edited by: Chris Cumming


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