Looking at the ETF industry growth as more advisors and investors jump on the investment vehicle, many still anticipate that ETFs have more room to run.
“It’s getting bigger by the day and advisors, investors are faced with a huge amount of choice, so the Reformed Broker… he said if anything, now is a terrible time to be an investor because there’s too much to choose from,” Johnson said.
There are now about 2,000 U.S.-listed ETFs on the market with many different products from various fund sponsors, and many cover the same types of investment themes. Basically, investors are spoiled for choice.
“It’s difficult to choose,” Johnson said. “You’ve got all these different types of strategies, all of which from face value looks to be very similar that produce very different outcomes. It creates a real challenge for advisors when it comes to fund selection.”
Consequently, Johnson suggests that investors and advisors should just keep it simple. Look for the strategies that are easy to use and easy to understand while focusing on those that also come with low costs to optimize returns or have the “best odds of driving good outcomes for investors,” Johnson said.