SMART INVESTOR: Don't Be Fooled By The Illustriousness Of The ETF
Matthew Boesler/Business Insider, data from Bloomberg
ETFs may be taking the investment industry by storm but they could be dumbing down active investment management.
The reason? They're more like regular old index funds than most managers would care to admit.
Here's why that's a big problem, per Haigney:
By embracing ETFs, active managers have wholeheartedly embraced indexing. We don’t have anything against indexing, in fact in most cases it’s the right way to go. But remember that the only reason an investor pays an active manager is to get investment returns above and beyond the index. When active management strategies heavily rely on the use of ETFs, investors get stuck with indexed returns, with very little chance for relative out performance.
For years, active managers have vehemently denied that they shadow their respective index benchmarks. They fought the case for indexing tooth and nail. But ETFs have turned out to be the active managers’ solution to indexing; it’s a classic case of if you can’t beat them join them. Gone are the days when many firms would highlight the ability of their research departments, and how, through diligent research, they could deliver exceptional investment returns.
- A centenarian who starts her day with gentle exercise and loves walks shares 5 longevity tips, including staying single
- A couple accidentally shipped their cat in an Amazon return package. It arrived safely 6 days later, hundreds of miles away.
- FSSAI in process of collecting pan-India samples of Nestle's Cerelac baby cereals: CEO
- Unemployment among Indian youth is high, but it is transient: RBI MPC member
- Private Equity Investments
- Having an regional accent can be bad for your interviews, especially an Indian one: study
- Dirty laundry? Major clothing companies like Zara and H&M under scrutiny for allegedly fuelling deforestation in Brazil
- 5 Best places to visit near Darjeeling