Was the financial crisis and the mistrust of complex structured products actually good for ETFs?
Nick Good – The financial crisis of 2008-2009 was really an eye-opener for a number of people, where they realised the importance of liquidity and being able to get their money back and the importance of transparency. Things like the Madoff scandal made it clear to people that they need to know exactly what their money is invested in. Those are the core dynamics of ETFs and as such it has been a big driver of demand. The fact that these are easy to use and very versatile has helped too. For a retail investor the fact they can be a low cost, long investment, and for an institutional investor they are very flexible, they can be used for short term positions, for transition trades when institutions are moving money between managers. Innovative Investor – A recent review from BlackRock said it expected more products from traditional active asset managers and alternative asset class exposures to become available to ‘mainstream’ retail and institutional investors through standardized and reg
