Exchange-Traded Funds-ETF's-Exchange Funds News Canada
(firmenpresse) - TORONTO, ONTARIO -- (Marketwired) -- 07/23/13 -- Editors Note: There is a photo and video accompanying this press release.
Exchange Traded Funds (ETF's) are becoming somewhat nebulous. Once they were somewhat passive ways to invest in the whole market. More often today, however, many are actively managed, which introduces a whole host of elements that were not present when opinions about how to use the investment vehicles were first formed.
Creeping fees and investment costs enter into the picture at one end of the spectrum. At the worst case, other end of the spectrum, there are cases like the one where Laurentian Bank was forced by financial industry regulators, to pay $150,000 in penalties for selling leveraged ETF's that were far different than those early, "plain vanilla" ETF's, and which were generally inappropriate for ordinary investors.
(Last September the bank agreed that even supervisors of those selling the leveraged products did not have adequate training to understand the product's features and risks - leverage, that is borrowing to invest, typically amplifies both gains and losses in a portfolio.)
Outside of these somewhat more complex products, there is also an increasing proliferation of specialty ETF's on the market today that allow investors to be incredibly specific, by investing in very narrow markets (gold, energy, tech, specific bonds, etc.).
As with many individual stocks or highly specialized mutual funds, this high level of specialization or concentration once again gets away from the diversification needs that ETF's were once supposed to address. Some ETF's, reportedly, are not invested proportionately to the indices they intend to emulate. At the same time, others are invested proportionately, which leads to other concentration issues when certain companies make up an exceptionally large part of the index being tracked - a problematic situation, particularly if you think about example like Nortel or Research in Motion.
With the substantial growth seen in this particular product lineup, Canadians do have access to more choice, but the passive mentality established when ETF's first hit the market needs to be revisited, and investors need to look closely at what exactly it is that they're buying for their portfolios and why.
To view the photo accompanying this press release, please visit the following link:
To view the video accompanying this press release, please visit the following link:
Contacts:
MONEY.CA
James Dean
416-360-0000
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Datum: 23.07.2013 - 07:00 Uhr
Sprache: Deutsch
News-ID 1247886
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