Although exchange traded funds (ETFs) are a product of relatively recent financial innovation, senior analyst at Wachovia, Mariana Bush, sees new markets opening for ETF investors.
Heather Bell for IndexUniverse discussed with Bush the direction she felt the ETF market was heading.
In their discussion, Mariana Bush emphasized that the ETF market should keep growing. If there is any sort of slowdown, it would probably be more market-related than anything else. She feels money will just keep going into ETFs because investors seem to increasingly prefer ETFs over mutual funds.
As ETFs begin dipping into new asset classes such as commodities, municipal bonds and buywrite strategies, Mariana Bush feels as though these types of funds make sense because they provide investors access to asset classes that are not easily accessible. On top of ETFs delving into these new asset classes, she also believes that there are plenty of areas that ETFs will soon cover. Areas such as coroporate loans and hedge fund-like ETFs are possibilities. Although there are emerging market debt ETFs, she feels that we could see these type of ETFs denominated in local currency.
Other strategies, too, may evolve in the future, as opposed to basic exposure to asset classes. With regard to actively managed ETFs, she feels that they have their advantages, especially when compared with actively managed open-end funds. Bush also points out that a lot rides on the managers, because if they can’t outperform open-end funds, there is no point to move from open-end funds to ETFs.
As ETFs of different varieties become more popular everyday, the success of these financial instruments is apparent and there is much more that lies ahead in the future.
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.