“You still have $700 billion-plus in assets,” he says. “When you go through volatile markets, when people go back into equities, they favor indexing and ETFs.”
Tony Davidow, executive vice president and head of distribution at IndexIQ, adds that he feels ETFs will grow at the expense of mutual funds. “There’s trillions in mutual funds. Those assets went down, and ETFs will ultimately be the beneficiary of those flows.”
Negative news about hedge funds recently may have soured investors on the strategy, but Mazzilli and Davidow aren’t worried about that. In fact, they see it as one glaring hole within the industry in general.
“The issues have been more structurally. The lack of liquidity, they’re difficult for investors to get out of. Madoff is a perfect example of a lack of transparency and what it means to invesors. We’re capturing the positive attributes,” Davidow says.
Those are: liquidity, transparency and a reasonable cost structure. “Isn’t that what all investors are looking for?”