Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Portfolio > ETFs

What's Next for ETFs

Your article was successfully shared with the contacts you provided.

Many advisors see the continuous rollout of new exchange-traded funds and illiquidity as possible stumbling blocks for the product in the future, yet they generally remain upbeat about its prospects.

“We’ve seen a proliferation of ETFs that have since consolidated or have shut down because they don’t have sufficient assets,” says Mark Butterworth, president of Butterworth Financial in Tulsa, Oklahoma.

He and about 110 other advisors participated in a recent online poll conducted by and sponsored by OppenheimerFunds.

“We are getting to a point that we are slicing and dicing the market into far too many sectors, and this has the potential of watered-down results,” explains Alan Myers, president and senior portfolio manager of Aerie Capital Management in Baltimore.

“In other words, a successful strategy could lead to a bubble that would lead to the demise of the strategy,” Myers says.

Rob Shedd, a financial advisor with Addison Avenue Investment Services in Fort Collins, Colorado, adds that using ETFs for index investing has become today’s “fad.”

“It’s not hard to pick winners right now, and those strategies are working for most investors,” explains Shedd.

“The test always comes when we have a downturn, a 5% plus or minus pullback. That’s when the active managers earn their pay, weeding out the losers and hanging onto the winners,” he states.

Rob Hauf, an advisor with Securities Service Network Advisory in Whitefish, Montana, agrees.

“People don’t understand passive management and the risk involved with it,” says Hauf. “They understand cost, but wait until all hell breaks loose, and it will.”

Mack Courter, principal of Courter Financial LLC in Bellefonte Pennsylvania, also is concerned with the ETF illiquidity and volatility during a flash crash. Like many other advisors, though, he still views ETFs as “the best investment vehicle there is.”


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.