“In short, investors need to know exactly what they are buying when they invest in ETFs and related products,” according to the paper. “The ETF industry today, however, is not doing a sufficient job in explaining those differences consistently.”
BlackRock said transparency is a key theme the ETF business needs to focus on.
“When they were first introduced more than two decades ago, ETFs helped bring a new level of transparency to the financial industry. Most ETFs continue to provide clear and transparent information about holdings and fees,” the firm noted. “Transparency in the ETF industry can and should be improved for the benefit of investors. This means transparency regarding the structure of products; transparency regarding the holdings of products; transparency about fees charged; and transparency about any counterparties, whether they are used in either securities lending or with swaps.”
The bottom line for investors is never forget to perform some research and due diligence before purchasing ETFs or any investment.