There are patterns in the markets that tell us we are approaching the late part of the cycle. Words like bubbly or frothy start to appear in our vocabulary and charts with exponential growth become more frequent. But it’s usually a stock, a commodity or a crypto currency. If you look at the chart below, you can see the number of ETFs created since 1994. The chart became vertical right before the pandemic with the approval of rule 6c-11, that allowed sponsors to launch ETFs more efficiently. Since then, we’ve had an avalanche of ETFs launches. Ironically, the number of stocks IPOs is low, indicating a cold market for new entrants, but not for ETFs. Is this trend sustainable?
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