Exchange traded funds (ETFs) and the indexing industry has come a long way since the days of the first four indexes: the S&P, Russell, FTSE and MSCI. ETFs have helped the recent Dow Jones Indexes grow and compete. John Prestbo, executive director of Dow Jones Indexes, says he believes the main thing that has changed about indexing is the pace, reports Heather Bell for Index Universe. The Intellidex and RAFI ideas are interesting to Prestbo, but the idea and the execution are two different things. One concern of his is the debate between fundamental indexes and market-cap indexes. He says that although both are indexes, neither are the kind creator market-cap index creator John Bogle had in mind and that the real issue is a matter of semantics.
As for the new, more narrowly-focused ETFs, such as the nuclear energy ETF, Prestbo says they might seem outside the norm for now but could quickly become the commonplace. When asked if ETF assets will ever rival those of mutual funds, he says it’s possible if enough ETFs are created. The volatility ETFs have experienced recently is the pull between greed and fear, not a result of the increasing speed of the market, he says.
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.