The rise of the exchange traded fund (ETF) has brought with it a change in the way many investors think about investing. With a truly low cost and no frills way of passively investing in the stock market, a strategy which has traditionally produced higher returns than investing in nearly any other asset class over the past decade, investors certainly have a lot to cheer.
Indeed, a number of financial institutions relying on a high-fee model will go by the wayside, in capitalistic fashion, but on the whole, investors will be made better off in the long term.
The rise of actively traded ETFs or "strategic" ETFs which trade stocks based on a specified algorithm or methodology have provided investors with new ways of actively investing in financial markets.
The old-fashioned passive investing model has suddenly become active, challenging the way we think about money managers in a world which is becoming more and more automated.
I believe that this growth trend in active/strategic ETFs is only just beginning, and with more data likely to be highlighted in the months and years to come, I anticipate computers will do what they do best - remove biases and do the same (or better) work that the human brain can do at a fraction of the cost.
With investors having little to do but gain from such technological advancements, the market should expect cash inflows to continue to pile into this sector, away from money managers.
Invest wisely, my friends.
