Burden of Proof Is on Providers for Actively Managed ETFs
March 4th at 2:00pm by Tom Lydon
Providers of actively managed exchange traded funds (ETFs) will have their work cut out for them as they try to sell them to investors.
The challenge for them, says Marvin Appel for Investment News, will be to retain all the advantages ETFs currently offer while adding more value on top of it. The burden of proof is going to be firmly in their court.
An actively managed international equity ETF could actually be a useful tool, Appel says, because they’re more likely to impose trading restrictions on shareholders. If the bid-ask were low, such a fund could actually work.
But overall, Appel says, and we agree: active ETFs are not likely to take the market by storm. However, they give investors more choices, and if it turns out that’s what they want, they will continue to get it.
