Fixed income ETFs have 'inherent problems'

Jose Garcia-Zarate, an analyst at Morningstar, says a lot of work has been done on index construction, but providers are still faced with many issues. The fixed income portion of the European ETF market has expanded rapidly over the past two years, growing assets by 45% according to BlackRock figures. Garcia-Zarate says that has more to do with the economic crisis than any improvement in underlying benchmarks. He says: "Fixed income ETFs took their time to gain traction and in my view one of the reasons for this was the indices being used had a number of imperfections. Many, particula...