Welcome to our latest weekly fund review, in which we peruse the past week's notable fund news and tell you what it means for Foolish investors.

New ETFs' failure to launch
Despite the boom in exchange-traded funds, some new fund launches are having a bumpier ride. At a recent industry forum, participants described the increasing difficulty of obtaining seed capital for new ETFs. According to Lipper estimates, of the 516 ETFs currently available, roughly 25% were rolled out in the past six months. Some industry insiders worry that smaller, less prominent funds may have difficulty introducing new ETFs, and that such funds will lack adequate liquidity if they do survive. Holders of such funds may also have trouble keeping expenses down if a wide enough audience isn't found to buy fund shares.

I'm not exactly surprised by this news. The sheer number of funds introduced lately, and the maddeningly narrow market segments some of these ETFs pursue, should tell you that the ETF market is in danger of overheating. With dozens of firms blindly scrambling to grab market share, it's hardly a shock that funding is starting to dry up.

This is good news for investors, since it will force firms to reconsider the risk of introducing yet another exchange-traded fund. Slower growth may be just what the industry needs right now. Eventually, supply and demand will level off, and all signs suggest the need for far fewer funds to join the market in the future.

American Funds says no to ETFs
I've always liked American Funds and its investment advisor, Capital Research & Management. After hearing CR&M Chairman James Rothenberg's recent comments about the firm's ETF plans -- or lack thereof -- I like them even more. At an annual Morningstar conference this week, Rothenberg told attendees that the firm doesn't intend to launch any ETFs or hedge funds, despite those areas' steady recent growth. Rothenberg stated that introducing such products would merely be jumping onto the bandwagon, a  strategy that doesn't lead to unique investment returns.

Bravo, CR&M! How heartening to hear that someone in the investment industry has the courage to stick with what they know, rather than jumping into trendy products just to gather assets. Then again, assets aren't a concern for American Funds. This fund shop boasts several of the largest mutual funds in existence, and probably has more to fear from asset bloat than anything else. So while its prominent position may make it easier for them to "just say no" to rolling out ETFs, it's still encouraging to hear a fund company exercising restraint in this otherwise red-hot sector.

Lifecycle fund choices proliferate
Lifecycle funds have been multiplying like rabbits. Once they were the domain of only a few experienced money managers; now, dozens of fund companies offer some variation of the concept. 401(k) plans in particular are becoming heavy users of lifecycle funds, since their basic structure -- a fund that adjusts itself from equities toward fixed income as a target retirement date approaches -- appeals to plan participants. However, the sheer choice of and variation in the different lifecycle fund families has started to overwhelm some 401(k) plans. Worse yet, the percentage of equity exposure varies widely among fund families, even for two funds with the same exact target date.

Hopefully, 401(k) trustees will realize that they need deeper due diligence will to fully understand the differences between these funds. It's is an important step to take, since lifecycle investing should be an integral part of every single retirement plan. These funds are practically perfect investments for 401(k) investors who'd rather have professionals handle that all-consuming allocation question. Although lifecycle choices abound, truly good choices are far rarer. Plan trustees should discover which lifecycle fund families are the best before providing any such options to their participants. Countless investors' retirement plans may depend on it.

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Fool contributor Amanda Kish lives in Rochester, N.Y., and does not own shares of any of the companies or funds mentioned herein. The Fool's disclosure policy is fully funded.