ETFs are branching out into ever more obscure parts of financial markets to the extent that it sometimes feels as if ETF picking has become the stock-picking of the 21st century. The problem with so many of these approaches is that they don’t deliver in real life what academic studies promise.
Interestingly I also listened to one podcast about this new etf product, seems solid to me in terms of how they try to capture the overnight return. May I know what kind of issues you see in this etf except the overnight return effect itself?
I spent 40+ years in the investment business and by the time I retired, our universe of equities and approach to asset allocation began to look suspiciously like closet indexing. As a retiree, without access to the depth of information I had when working, I completely agree with your opinion about using well diversified, low cost, ETF's as a better (and cheaper) alternative to active management. As a result, ETF's based on algorithmic, timing, sector, leverage or any other non-index strategy, are really nothing more than active management product with a different wrapper. For certain investors, maybe these products add value, but for the vast majority of long term investors, index ETF's and simple asset allocation rules are likely to produce safer returns over time.
Interestingly I also listened to one podcast about this new etf product, seems solid to me in terms of how they try to capture the overnight return. May I know what kind of issues you see in this etf except the overnight return effect itself?
I spent 40+ years in the investment business and by the time I retired, our universe of equities and approach to asset allocation began to look suspiciously like closet indexing. As a retiree, without access to the depth of information I had when working, I completely agree with your opinion about using well diversified, low cost, ETF's as a better (and cheaper) alternative to active management. As a result, ETF's based on algorithmic, timing, sector, leverage or any other non-index strategy, are really nothing more than active management product with a different wrapper. For certain investors, maybe these products add value, but for the vast majority of long term investors, index ETF's and simple asset allocation rules are likely to produce safer returns over time.