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July 2011: Are ETFs the CDOs of This Decade?

Exchange Traded Funds (ETFs) in Emerging Markets. Do they need hazard cones?

Wherever you are in the investing world, Exchange Traded Funds (ETFs) are already, or increasingly will be, part of the furniture.

In Europe pension and other retirement focused-funds are as likely to be using ETFs as not and that will be the case here in the Asia Pacific.

Australia, mature as it is, is lagging behind, at least according to recent Russell Investment research. And if that’s down to caution, then that’s probably a good thing.

All ETFs are not the same and here you get the candid advice, from some seasoned professionals, to look before you leap.

Chuck Prince used the analogy of when the music stops, look out. But another children’s parlour game is more appropriate.

In “Pass the Parcel” players remove a layer of wrapping every time the music stops until the last person is left holding the prize.

In the case of some synthetic ETFs, as Albourne’s Richard Johnston demonstrates, you don’t want to be left with the unwrapped present when the music stops.

Stirling Finance’s Stuart Leckie, who has more experience in pension and retirement systems than just about anyone else in the Asia Pacific, says hazard cones are needed on some products which should not be allowed into civilised society.

But, stay that beating heart, because if you listen to iShares’ Sandra Lee all waters are NOT shark infested and ETFs are the way forward, on so many different levels, for institutional and retail investors alike.

Read full transcript or add your voice.

CrossBorder Partners

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