"Not all ETFs are created equal. A worrying and common misconception in the market is the expectation that ETF's are a homogonous product set without looking into the assets backing the portfolio or the quality of the third parties involved in managing the price in the market.
"ETF houses need to make it clearer to the mass public that their exposure is not only the investment risk to the underlying asset but also the risks in having third parties involved in the value chain whose activities are largely outside the control of the product provider.” So said Simon Ellis, managing director of L&G Investments recently in response to the FSA’s thoughts on ETFs. And of course he is right, and moves to address some of the issues he is referring to have begun, as has the new wave of innovation coming to the market. All of this is part of what might called the secon...
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