LIVE FROM Conference: Expert Bashes ETFMs

Markets Muse senior staff dumped their snow boots and instead, has boots on the ground at the Florida ETF boondoggle hosted by One of the more reportable take-aways (so far) is our capturing the following comment about the much talked about new product trend focused on non-transparent, hedge fund-esque ETFs,  courtesy of one industry expert (who chooses not to be cited for fear of having to check under his car every day before starting the engine):

“Actively-Managed ETFs aka ETMFs will only benefit ‘Issuers’ and respective ‘managers’ who promote HF-style styles under the guise of a so-called “index.” At best, this is a marketing ploy to capture AUM and fees for a product that is completely counter-intuitive to the premise that made ETFs attractive in the first place (transparency and hence liquidity). Hedge Funds such as those managed by the Jeff Gundlach’s of the world charge “2 & 20” but can only target a relatively small universe of investors. With the assortment of ETMFs on the drawing board, the only thing that is clear and transparent is that these ‘ETMF innovators’ are merely trying to ‘scale’ their secret-sauce models by targeting millions of less-sophisticated investors (via a 50% reduction in typical management fees) and folks who would otherwise not pass the institutional investor litmus test (QUIB) for a typical hedge fund that changes its positions more frequently than most folks change their underwear.”