Should the old guard of active managers of traditional mutual funds feel threatened by the actively managed exchange traded fund (ETF) coming to the market, and establishing a solid investor following?
Apparently, the mutual fund industry has been given fair warning that the weakness seen in the actively managed ETF sector will not last, and that the conservative market outlook regarding active management is simply a sign of the times. As of right now, the active management debate is not in favor of this style of investing, says N.A. for The Mutual Fund Wire. But is the mutual fund industry downplaying the threat these ETFs could pose? Fund research shop FRC seems to think so.
As of now, mutual fund enthusiasts feel somewhat protected that active ETFs will not pose much of a threat to the industry already in existence, and that these types of ETF still face a number of bumps in the road before they will be embraced by all investors.
But active ETFs are just getting started – they’re still new in the marketplace and we’ve been in challenged markets overall, which has put a damper on asset flow. But they’ve got tax advantages and lower costs, something most mutual funds don’t have. This makes actively managed ETFs a threat to be reckoned with and will give mutual funds a run for their money in the long run.
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.