ETF Updates Archive

The Debt Problem in Bond ETFs

International bond ETFs are an asset we can no longer ignore, but as some industry experts have brought up in the past, bond ETF construction has many inherent flaws.

The construction flaws in ETFs often stem from the methodology of the indexes which the ETFs track.  Bond indexes use a method similar to market cap weighting, sometimes called market value weighted, in which bonds are weighted by debt outstanding, rewarding companies and countries that have more debt with a higher percentage of the index’s allocation.

Below is a chart of the growth in the iShares Barclays Aggregate Bond Fund (AGG) compared to the two international Treasury bond funds,  Continue Reading »

Inflation and ETFs

ETF MarketPro recently connected with Salvatore Bruno, Chief Investment Officer of IndexIQ, to learn more about inflation hedging and the firm's new funds - IQ ARB Global Resources ETF (GRES) and  IQ CPI Inflation Hedged ETF (CPI).

ETF MarketPro (ETFMP): For your latest product launch, why did do you decide to focus on solutions that help investors hedge against inflation? 

Bruno: With the large increase in fiscal and monetary stimulus coming out of Washington over the last year, we believe that the seeds

Index Optimization

Investable indexes are designed to be realistic representations of actual market spaces (the S&P 500 index represents the securities in the S&P500), however, in some asset classes, indexes are too idealistic to be managed as ETFs in a cost effective and efficient manner.  Many Exchange-Traded Fund companies employ index sampling techniques called index optimization to help track the index more effectively.  This is where the index will not attempt to purchase every stock in the index, but purchase a sampling of securities.  There are drawbacks and benefits to optimization techniques which vary among asset classes and ETF issuers.

The main reasons that an index would need to be sampled by an ETF are liquidity, trading costs, and large numbers of holdings.  There are many

Canadians Embrace ETFs

Investors in Canada are contributing substantially to a worldwide trend that has seen global exchange traded fund (ETF) assets hit an all time high according to the latest report from Barclays Global Investors (BGI).

"There has been a visible shift in the investing habits of Canadians over the past six months as net inflows have increased and investors join a global trend," according to Deborah Fuhr, Global Head of ETF Research & Implementation Strategy at BGI.

Independent Advisors Turn Optimistic and Gain Ground

9 out of 10 independent advisors added new clients in Q3 and intend to take more risk with their client's assets.

According to the semi-annual Independent Advisor Outlook Study, independent RIAs plan to move client assets out of cash (48% of advisors) and into emerging market equities (37%) and small cap U.S.