ETF Investors Might Not Really Know What They’re Buying Anymore
- ETNs, like XIV, shouldn’t be confused with other securities
- Industry executives are calling for better classifications
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What’s in a name? When it comes to exchange-traded funds, the answer could mean the difference between surviving a volatile market and getting wiped out.
ETFs have tripled their assets to $3.4 trillion over the last six years, capitalizing on demand for cheaper alternatives to mutual funds during one of the longest bull-runs in U.S. stocks in history. But along the way, the meaning of those three letters has blurred, lumping together simple portfolios that track the S&P 500 Index with complex combinations of securities that promise to deliver, say, three times the move in the price of oil.