Related: How ETF Traders Are Repositioning After August Selling
McNabb also acknowledged these concerns, but he mostly directed them towards more thinly traded funds and those that contain leverage.
“I am more worried about ETFs that you don’t know what they mean,” McNabb said. “Leverage is one of those topics that average investors don’t understand the negatives [of].”
On the other hand, more liquid ETFs will have enough cushion to break the fall if the market crashes. In the event of a major sell-off, ETFs with more liquid markets will be able to meet large redemptions.
“The kinds of ETFs that we are going to support are going to be broad based and highly liquid. I don’t see the bubble issue,” McNabb said.
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