Real Dangers with ETFs
September 2015, when large highyield bond issuer Sprint was downgraded several notches, spurring a furious selloff that bled into broader markets.
Meanwhile, some asset managers are arguing that active managers now have a better chance than they have had in years to outperform indexes, especially for those who steer clear of bonds and stocks that are included in ETFs.
ETFs will continue to attract a substantial proportion of all new investor money coming into stock and bond markets. Investors appreciate these funds’ low fees and easy accessibility.
While the perceived perils have indeed not fully manifested themselves, it is clear that ETFs are transforming the behavior of markets. And this may end up exacerbating mini corporate bubbles that pop in unpleasant ways.