One device in the toolbox - EDITORIAL - Magazine | Asia Asset Management
Published: May 3, 2022
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...
Source: asiaasset.com
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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 EnvironmentalOcial And Governance Space HoweverHe Funds Have Their Own RisksUch As Tracking Errors Or Mistaken Country Sector BetsN Obvious Risk For Thematic Esg Etfs Sceptics Are Also Critical Of The Appropriateness Sustainability Focused Investing Short TermistNd Above All PassiveOst Etfs Do Appear Ill Suited To An Investment Proposition That Urges Active EngagementIth Investors Just Following The Index Provider Amp Rsquos Creation Nbsp There Are Also Concerns AboutA Business That The Ratings Agencies Have Piled Into Since Global Financial Crisis Amp Ndash WhichF You RecallAs Substantially Blamed On Their Lack Of IndependenceEholden To The Funds And Firms Which They Rated Amp Nbsp LookFor ExampleT Moody Amp Rsquos Esg SolutionsHich Amp Ldquo Enables Index ProvidersInvestment BanksSset Owners And Asset Managers To Develop Custom IndicesStructured ProductsErivatives 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 YesTfs Have Low Costs And Fees YesTfs Are Transparent And Easy To Move In Out Of But The Cost Fee Issue Hasn Amp Rsquot Stopped Institutional Investors From Piling Into Private EquityNe Of The Most Notoriously High Fee And Cost Asset Classes AroundNd Also Notoriously OpaqueIth Long Lock Ups So It Seems That Institutions Are Ready To Pay More And Know LessNd 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 