Issues Financial Advisors Face When Looking Into ETFs

The exchange traded fund universe is continuously evolving as innovative strategies and investment styles are translated into the efficient investment wrapper, and financial players have also changed to adapt to the quickly shifting industry.

Tom Lydon, Editor and Publisher of ETF Trends, was on The Resilient Advisor with Jay Coulter to speak about changes in the ETF industry.

The U.S. ETF industry has almost three trillion in assets under management. Over past decade, the industry has seen a trend where more investors and advisors have shifted away from traditional actively managed mutual funds into passive index-based ETFs.

“It really is exploding,” Lydon said.

Further fueling the growth, the industry has not only seen an explosion in growth of pure beta or traditional passive ETFs but also rising interest for smart beta or factor-based strategies, rules-based indexing methodologies that specifically screen for specific factors.