Active antagonism | Fin24
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Active antagonism

Jun 22 2010 08:42
Globally, exchange-traded funds (ETFs) have been around for a while, first launched in the United States and Canada in 1993.

Growth has been phenomenal and ETFs can now be found on worldwide on most stock markets because ETFs are the same as listed company shares and can be traded in the same way.

As ETFs have grown in number overseas some have become rather esoteric, tracking just about anything that can be tracked – from the price of wool to commodities (where a number of ETFs have taken a smack in Europe this year).

That’s the brief history.

What’s a bit surprising is that ETFs took so long to arrive in a relatively sophisticated investment market like South Africa (towards end-2000).

There are conspiracy theories: that the providers of more expensive investment products kept them out, threatened by the low-cost structure of these passive, mainly index-tracking funds.

ETFs invite controversy because the products are cheaper than most if not all other beta tracking options and a lot cheaper than the actively managed funds ETFs often outperform.

There are some drawbacks, discussed on the pages that follow.

However, ETFs offer a welcome addition to the armoury available to the sassy investor.

 - Finweek

etfs  |  invest


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