Niche Passive Funds, WSJ Frowns on Thee
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Wednesday, April 10, 2013

Niche Passive Funds, WSJ Frowns on Thee

The more complicated and niche the index fund or ETF, the more some of its passive investing advantages may be eroded.

That's a warning the Wall Street Journal shared earlier this week in the monthly investing in funds Journal Report. The pub notes that on price, tradeoffs, trend-lagging and hidden costs, specialty index-based products can bite investors who turn to them.

The WSJ specifically highlights issues with the IQ Hedge Multi-Strategy Tracker ETF, some new SPDRs, the PowerShares S&P 500 Low Volatility ETF [profile], the First Trust ISE Cloud Computing Index ETF [profile], the IQ Merger Arbitrage ETF and First Trust Nasdaq Technology Dividend Index ETF. PowerShares managing director Ben Fulton, Anthony Hohmann of S&P Capital IQ, First Trust ETF strategist Ryan Issakainen, Morningstar passive funds research director Ben Johnson, Vanguard [profile] investment strategy unit principal Francis Kinniry, IndexIQ Advisors [profile] CEO Adam Patti and SSgA [profile] global ETF sales strategy chief Kevin Quigg all weighed in for the article.

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