ETFs are generally more expensive than many institutional index products and are an unattractive long-term investment option for most pension funds, according to Watson Wyatt.
The consultant says ETFs may also have tax implications that require specialist advice and often contain counterparty risks which investors may not be compensated for. Increasing development within the indexation space would offer passive investors a broader range of options and better risk-adjusted returns than those currently available, according to the firm. Watson Wyatt senior investment consultant Chris Sutton, who is former chief executive of iShares, says the case for including ETFs in institutional investment portfolios was "not yet obvious as we wait to see more competitive f...
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