“Just because an [investment product]is cheap doesn’t necessarily means it’s good,” Rosenbluth added.
For example, the rising number of so-called smart-beta, or factor-based index ETFs have shown attractive long-term outperformance, compared to traditional capitalization-weighted benchmark indices. However, these alternative index-based ETFs come with higher fees.
“If you are fine with tracking the S&P 500 index, then maybe you can go for the lowest fees,” Rosenbluth said. “If you are trying to achieve outperformance, you may have to pay a little more.”
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Financial advisors interested in catching up on any missed panels at the ETF Virtual Summit can still see it on demand at ETF Virtual Summit registration.