The vast majority of the exchange-traded universe’s spectacular growth is coming from new product offerings, but other types of financial products may be joining the ETF party.

In June, the First Trust Value Line 100 ETF (AMEX: FVL) debuted on the American Stock Exchange. Managed by First Trust Advisors, the $300 million portfolio was originally a closed-end mutual fund, and its transition is just the second of its kind.

Unlike ETFs, closed-end funds have a fixed number of shares and cannot create more shares to accommodate new money. First Trust is hoping the fund’s new life as an ETF will help it to attract and retain more assets.

Could this signal a chain reaction where more closed-end funds convert to an ETF structure?

It might, but ultimately the investment strategy behind the fund would have to be replicable and transparent. Such a conversion would likely work only for closed-end funds with a highly quantitative approach or ones closely tied to index strategies; after all, truly actively managed ETFs have yet to be launched.

The First Trust ETF follows the Value Line 100 Index, which selects top stocks ranked by Value Line’s Timeliness Ranking System.

“The conversion of FVL from a closed-end fund into an ETF allows us to maintain the same investment strategy and the integrity of the process: two key benefits to investors,” assures Dan Waldron, senior vice president of First Trust.

Ron DeLegge is the San Diego-based editor of www.etfguide.com.