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USA EFT REITs: Sector Focus
Monday, 29 September 2014 03:48

ETFs / Exchange Traded Funds: The ETF industry has exploded as US ETFs reached USD$1.7t in assets (in 2013) up 33% in a year (with the US market dominating the global ETF space, with roughly 72% of global ETF assets), and it has been predicted that within 10 years, total ETF assets will reach USD$15.5tr and eclipse the size of the whole mutual fund industry. Furthermore, most ETFs do not discriminate between the good, average and bad, which is why they are relatively cheap (there is no need to hire a research team to filter the good and bad). Nonetheless, because ETFs charge fees for the "management" of the fund, they can NEVER out-perform or even meet the return of the index tracked, leading some to call such investments "di-worse-ification." An active manger should invest in only those companies that are the best in class and provide the greatest return.