The range of new ETFs coming to market is changing the complexity of the industry by tracking less well-known benchmarks, according to Morgan Stanley Smith Barney Research.
The firm's latest report on the US-listed ETF market for the third quarter says funds replicating new or non-mainstream benchmarks have heightened the importance of industry analysis, to help differentiate among products. The report says: "We believe investors should carefully consider the investment objectives, design and structure of ETFs as their performance might deviate meaningfully from established benchmarks." For example, the report identifies some of the newer fundamental or rules-based indices may have a tilt towards small or large cap growth or value stocks, that have shown...
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