CEO and Founder of Sun Global Investments, Mihir Kapadia, has commented on why investors are increasingly choosing ETFs over hedge funds.
“ETFs already outstrip hedge funds by about USD3.4tr, or by over 10 per cent,” Kapadia (pictured) says. “The ETF industry has attracted assets from the hedge fund sector as hedge funds find it harder to justify their higher fees and inconsistent performance numbers verses a passive ETF investment which can offer diversified exposure at a fraction of the cost of a hedge fund. Add to this the instant liquidity or exchange traded component of an ETF and the ETF offers certain investors a more predictable investment return with lower volatility.”
Kapadia is behind the Sun Global Zyfin Indian Fixed Income ETF that has recently passed USD10 million. He says: “Previously, hedge funds were the go to solution for investors looking for uncorrelated or entry points too hard to access asset classes such as Indian onshore fixed income, now with ETFs such as the Sun Global Zyfin Indian Fixed Income SOE UCITS ETF, asset managers can access the asset class via a UCITS approved structure with exchange traded liquidity and lower fees. Throw into the mix physical backing as well and the investment case for such ETFs can be compelling.”