Are ETFs the new active management?

Nicholas Cregan

Evans and Partners International Asset Management

In this report we address the Exchange Traded Fund (ETF) market, with a focus on how these products are increasingly moving away from providing a passive exposure to the broad financial market, and toward “active management”. These products have grown to represent between 5-7% of the total global share market capitalisation, and in 2016 accounted for one half of the trading volume in US stocks. We look at two examples, amongst a list of many possibilities, where investor expectations could be misplaced when investing in the ETF market. Firstly, Low volatility ETFs, that may ultimately prove to be negatively correlated with rising interest rates; and secondly, Leveraged & inverse ETFs, where daily returns and long-term returns can diverge meaningfully from each other. Click below for the full report, in which we also look at the case for passive and active funds management, and how taking a concentrated, yet risk-adverse approach may help investors enhance investment returns.


Nicholas Cregan
Nicholas Cregan
Portfolio Manager
Evans and Partners International Asset Management

Nicholas began his career with JPM Ord Minnett as an Australian Equities Analyst in 2003 before being recruited to Schroder Investment Management in 2006 to cover small and micro-cap stocks. Nicholas was part of a two man team awarded Lonsec’s...

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