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Rating:ETF Roundup: Rick Ferri Isn't a Fan of SEC Ruling Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, August 9, 2013

ETF Roundup: Rick Ferri Isn't a Fan of SEC Ruling

News summary by MFWire's editors

Rick Ferri, CFA and Forbes columnist, covered index ETFs that follow secret indexes for Forbes. Ferri noted the SEC ruling that weakened requirements for self index or affiliated index ETFs, allowing that self-indexing methodology doesn't have to be-rules based and self-index holdings can be kept private. Investors will have to look at ETF holdings posted daily on fund sponsors' websites, Ferri writes. Ferri argues this ruling turns "murky water into mud" as index investing is already unclear.

Charles Schwab's [profile] new lineup of six fundamental ETFs aren't the cheapest of Schwab's ETFs, though they are 25 percent cheaper than the average fundamental ETF,IndexUniverse's Cinthia Murphy writes. Some "smart beta" funds have better pricing than the Schwab ETFs, however, such as Invesco [profile] BlackRock [profile] iShares MSCI USA Value Factor ETF, costing 0.15 percent a year, Murphy writes.

Invesco [profile] PowerShares FTSE RAFI US 1000 costs 0.39 percent and appears comparable to the Schwab ETF focused on large U.S. companies, but Schwab beats on price at 0.32 percent.

Despite ETFs making up a small slice of the overall fund industry, they're causing big ripples by reacting quickly to market news, Yahoo! Finance's Althea Chang writes. Chang interviewed Bob Jenkins, global head of research at Thomson Reuters Lipper, whom she quotes as saying, "In general, the ETF space…is about one-tenth of overall assets under management…And yet is has such sharp and dramatic swings that it can basically drive the entire industry for any given week or month…We're seeing more of an institutional mindset, really reacting very quickly to what's going on in the markets."

To read more, click here, here, here

Edited by: Casey Quinlan

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