ETFs emerge as not so passive

ETF interviews and news stories in the past week reveal that ETFs are creeping out of their passive domain and reassembling themselves as very active creatures indeed. The two interviewees in this week’s etfexpress newsletter employ active strategies and in the case of Rex Shares, adds in three times leverage to boost up performance.

Leveraged ETFs are being used as trading devices, Rex Shares’ President Scott Acheychek reports, driven by the usual roll call of advantages of ETFs, transparency, liquidity and cost efficiency, and a greater understanding of how they work.

Of course, the very opposite of that celebrated transparency is examined in Cerulli’s report on the US active managers who are looking to launch non-transparent ETF products on the back of the recent news from the SEC. Of the asset managers surveyed by Cerulli, 46 per cent indicated that they would build out non-transparent ETF capabilities should a proposal be approved by the SEC. A further 55 per cent of those respondents indicated that they would launch an equity strategy within a year.

There could be big changes ahead for the not so passive ETF world.

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Read this week’s etfexpress Newsletter here.

Beverly Chandler,
Managing Editor, etfexpress




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