Exchange traded fund (ETF) providers may soon introduce new income-oriented products to cover the rising needs of the retiring baby boomer generation.
The market place already offers fixed-income ETFs, but the industry may start to incorporate managed distribution or an income stream that flows to the investor without having to sell the ETF, writes David Hoffman for InvestmentNews. Experts believe the fund’s structure will help ease investors into retirement. (Do fixed-income ETFs work like they should?)
However, the development of actively managed ETFs still remains unsettled. The Securities and Exchange Commission (SEC) requires ETFs to provide full transparency and this polemical issue has active managers irked.
Proponents of actively managed ETFs say it is only a matter of time before this ETF theme catches on because ETFs, unlike mutual funds, allow investors to pay capital gains taxes on the final sale of the investment. (Don’t count out actively managed ETFs).
Nevertheless, before actively managed ETFs can gain widespread acceptance, this ETF type will have to show that it can add value and it may take “three, four or five years to see what the real end story is with true active ETFs,” says Martha G. Papariello, a principal and head of the financial adviser services unit at The Vanguard Group Inc.
For more information on actively managed funds, visit our actively managed ETF category.
Max Chen contributed to this article.
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.