Maybe you can’t hear that big sucking sound now, but in the next twelve months the media will be talking about money shifting from conventional mutual funds to Exchange Traded Funds (ETFs). Tyler Mordy, Research Analyst with Hahn Investment Stewards & Company Inc., recently wrote a paper outlining why more wealth management assets will be allocated to ETFs.
"With money market vehicles offering low real returns and developed
equity markets clinging to expensive valuations, securing long term
healthy returns will be more challenging than ever. ETFs have granted
investors the opportunity to divert holdings from conventional
investments into asset classes with more attractive valuations and
greater growth prospects.
Combined with prudent asset
allocation strategies, ETFs are bringing sophisticated investment
options, traditionally reserved for high net-worth or institutional
sized portfolios, to the individual investor at far lesser cost. Wealth
managers can now assemble quality global portfolios exclusively using
ETFs, allowing them to lower their fees and pass the savings onto
clients. The threat to the typical business model of asset management
firms is enormous."
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.