One fund manager chose to launch an exchange traded fund (ETF) over a mutual fund.  According to Aaron Siegal for InvestmentNews, James Huguet’s large-cap investment approach was the basis for this month’s launch of Claymore/Great Companies Large-Cap Growth Index (XGC). Huguet decided to pass on creating a mutual fund as it would take at least three years to get a rating from Morningstar, whereas the 10-year backtesting could give instant credibility.  He thinks fund managers are not embracing ETFs because they fear the ETF will cannibalize their funds.

Whatever the reasons, there is no doubt of the popularity and growth of ETFs.  As with any investment decision, an investor must do homework to know what they are buying, review their criteria for adding a holding and make sure they have an exit strategy.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.

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