How to Safely Navigate Through Crowded ETF Waters
by David Fry
I once interviewed a successful exchange-traded fundsponsor and had the temerity to offer some suggestions where some ETFs were needed.
The response from this person was: “Look, we’re not interested in filling needs as much as we are in building a business.” This made an important point: Investors must align their investments to match their needs versus the business interests of sponsors.
The market for exchange-traded funds has never been more robust and expansionary. The most prominent activity for sponsors is similar to a game of Battleship in which the winner fills all the slots before the next guy. Why? Because the “first mover advantage” to a sector and index cements their brand as “the go-to shop.”
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