Will Investors Demand Higher than Market Returns from ETFs?
Questions surrounding the underlying purpose of Exchange Traded Funds (ETFs) have begun to arise, with a number of analysts suggesting the ETF industry may be at an inflection point currently as investors demand a wider variety of options to suit their risk-taking preferences.
Typically viewed as a conservative "take-the-market-return-and -run" investment strategy, ETFs provide exposure to broad stock indices or sectors with unmatched diversification and rock bottom fees. This means of investing in a passive manner is one of the key drivers of growth in ETFs globally, with trillions of dollars now floating around in ETFs today.
For those who wish to have access to both the diversification power of an ETF and the agility of an actively-managed fund, the expectation that more trading ETFs, funds that actively buy and sell stocks based on algorithms, will propagate and become more mainstream is beginning to take hold.
Outright obsolescence of traditional fund managers, stock pickers, and analysts may be far away on the horizon, however the demand for greater innovation within the ETF sector remains strong.
Invest wisely, my friends.