Tom Lydon, publisher of ETF Trends, has been managing client money for over two decades and is one of the foremost experts in the exchange traded products industry.

Tom recently sat down with Washington Bureau Chief Mark Hamrick to discuss the evolution and advantages of ETFs, how advisors and investors are increasing usage of these products and what the future holds for ETFs.

“After managing money for a few decades and being a huge fan of mutual funds, we saw that ETFs were starting to gain popularity,” said Lydon. “Once you lift up the hood, you understand a few things. Number one, they’re transparent. They’re index-based for the most part. And because you don’t pay a manager, their fees are very low and they’re tax-efficient. We began in the early 2000s shifting client assets. In the mid-2000s we found ourselves wholly owning ETFs and we had to educate clients about what ETFs are about.”

Lydon also discussed with Hamrick the diversification advantages offered by ETFs and their increased popularity in client and self-directed portfolios. [Advisors Should Evaluate Clients’ ETF Needs]

“Five years ago I wouldn’t say so (that American were knowledgeable of ETFs), but today, investors have really latched on and gotten involved with their portfolios. Technology has helped considerably with providing more information and more access to research. It has been a perfect environment for ETFs and more and more investors have been utilizing ETFs to diversify portfolios,” said Lydon.

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