The Benefits of Index ETFs
I was reading this article in Barron’s this weekend. It’s about the dangers of relying on the back tested data of new index ETFs. It is a good article. It cited a statistic that new index ETFs with an available back test raised more assets. This is making the point we have been making for a while about active ETFs, which is they will not just explode with assets overnight. Investors will do their due diligence on the manager and strategy. For experienced managers, this time frame can be shorter (or really short, as in the case of NYSE:BOND). For less known managers it will take time to build a following. Thankfully the launch of BOND has quieted the “when will active ETFs take off” stories.
On a side note it was funny, that as I was reading the article, there was an ad for a made up index. (which is a fine ETFs, just pointing out the irony).