Terry Smith attacks 'pernicious danger' of ETFs

In his blog, entitled ETFs - Worse than I thought, Smith reiterated his earlier concerns that retail investors will assume ETFs are synonymous with index funds and in particular fail to understand the implications of leveraged and short strategies. He also claimed synthetic replication entails "obvious dangers" as regards counterparty risk and collateralisation, warning "it might be interesting" if investors in a swap-based fund tried to liquidate their positions at speed. Smith added: "There is another and perhaps more pernicious danger with ETFs than misunderstanding or mis-sellin...