ETF Watchers Weigh Innovations
Euromoney, is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024
Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement
BANKING

ETF Watchers Weigh Innovations

Advisors and analysts praised actively managed exchange-traded funds but said investors should be careful with certain innovative offerings.

They said the tax and trading advantages of index ETFs will carry over to the active versions but noted that some new ETFs are more appropriate as satellite holdings than as core holdings.

"If it's a good wrapper or index, it maybe even a better wrapper for active," said Jim Wiandt, president of Index Publications and IndexUniverse.com.

Richard Ferri, ceo of Portfolio Solutions, welcomed ETF innovation but warned that leveraged ETFs can be dangerous, as they carry twice the volatility of the market. He said they should not be core holdings. Rydex Investments recently launched four leveraged sector ETFs.

Ferri added that newer indexes from companies such as MSCI Barra are designed with ETFs in mind--they are made to be more than benchmarks. He said the indexes have features that limit turnover and cut trading costs for ETF investors.

More stories from Fund Action

Gift this article