One device in the toolbox - EDITORIAL - Magazine | Asia Asse

Exchange-traded funds have become the default choice for many to gain exposure to a new investment proposition. And purveyors of ETFs haven’t be...

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, Exchange Traded Funds Have Become The Default Choice For Many To Gain Exposure Toa New Investment Proposition And Purveyors Of Etfs Haven Amp Rsquot Been Slow Move Into Environmental , Ocial And Governance Space However , He Funds Have Their Own Risks , Uch As Tracking Errors Or Mistaken Country Sector Bets , N Obvious Risk For Thematic Esg Etfs Sceptics Are Also Critical Of The Appropriateness Sustainability Focused Investing Short Termist , Nd Above All Passive , Ost Etfs Do Appear Ill Suited To An Investment Proposition That Urges Active Engagement , Ith Investors Just Following The Index Provider Amp Rsquos Creation Nbsp There Are Also Concerns About , A Business That The Ratings Agencies Have Piled Into Since Global Financial Crisis Amp Ndash Which , F You Recall , As Substantially Blamed On Their Lack Of Independence , Eholden To The Funds And Firms Which They Rated Amp Nbsp Look , For Example , T Moody Amp Rsquos Esg Solutions , Hich Amp Ldquo Enables Index Providers , Investment Banks , Sset Owners And Asset Managers To Develop Custom Indices , Structured Products , Benchmarking , Tfs , Erivatives And Other Index Related Products Amp Rdquo How Independent Objective Are The Resulting Indices Likely To Be Aren Rsquot They Going Inexorably Tied Interests Of Investment Banks Product Developers Promoting Them Nbsp Yes , Tfs Have Low Costs And Fees Yes , Tfs Are Transparent And Easy To Move In Out Of But The Cost Fee Issue Hasn Amp Rsquot Stopped Institutional Investors From Piling Into Private Equity , Ne Of The Most Notoriously High Fee And Cost Asset Classes Around , Nd Also Notoriously Opaque , Ith Long Lock Ups So It Seems That Institutions Are Ready To Pay More And Know Less , Nd Wait Longer When They Feel The Results Are Justified Amp Nbsp It Seems That Investors Have Got Into Habit Of Opting For Etfs Without Thinking , Nd That Many Of Their Advantages Are Historical And Need Reassessment For The Times In An Environment High Volatility , Acro Uncertainty And Rising Inflation , Sa Passive Index Tracking Asset Whose Main Virtue Is Low Cost Really The Type Of Class You Want If Amp Rsquo Re Ready To Pay More For Private Equity , Hy Not For Actively Managed Public Equity Funds Amp Nbsp Above All , F You Amp Rsquo Re Looking To Achieve Positive Esg Results Versus Just Making Your Portfolio Look Green , S Passive Investment Really The Way To Go There Are Patently More Active Approaches , Ll The Way To Activist Investment Amp Nbsp Etfs Can Be One Of Several Instruments In Toolbox Deliver Esg Goals Their Shortcomings Definitely Need Considered Alongside Advantagesa Little Self Assessment By Investors Own Biases , Ssumptions And Ingrained Habits Wouldn Amp Rsquot Come Amiss Either ,