Morgan Stanley is entering the crowded ETF industry with six new products, including two actively managed ETFs. Steve Johnson reports in the Financial Times: In a parallel universe Morgan Stanley might be Europe’s pre-eminent exchange traded fund provider. In this one it is the wet-behind-the-ears newbie, beaten to the punch by the more than 400 issuers globally that have already entered the ETF fray. Despite its tardiness Morgan Stanley, the 18th-largest manager in the world with assets of $1.3tn, and the biggest without ETFs, has ambitious plans. Six ETFs were unveiled in the US … [Read more...]

In the Financial Times, Mohamed El-Erian suggests that for now at least, passive investing's time in the sun is over. He writes: Should the vehicles that investors choose to place their money be a function of the investing environment? This question is not asked often enough by investment committees, which tend to focus on asset allocation issues, model portfolios and manager selection. Yet it is a question that has become a lot more important for generating high risk-adjusted returns, particularly given the massive shift of money from active to passive investment strategies in recent … [Read more...]

Through a comparison of venture capital to Kathie Wood's Ark Innovation ETF, Daniel Rasmussen, suggests in the Financial Times that institutional investors are "lured by promises of higher returns and lower volatility," but are "lulled into complacency, paying an illiquidity premium for the “phoney happiness” of private marks." He writes: Consider an institutional investor looking to add growth/tech exposure at the start of 2020. They could choose between allocating to Cathie Wood’s Ark Innovation exchange traded fund or to a VC fund. The ETF was on a great run, beating both the Nasdaq and VC … [Read more...]

Fidelity has announced that it will convert six of its mutual funds into exchange traded funds (ETFs), joining other mutual fund companies in a growing trend. The ETFs will come with lower fees for customers. Sonya Swink reports for the Financial Times: Fidelity plans to convert a set of six “disruptive technologies” mutual funds to exchange traded funds next June, the firm has disclosed. These will be the first mutual funds that Fidelity will turn into ETFs, a company spokesperson said. The $96mn Fidelity Disruptors, $91mn Fidelity Disruptive Automotive, $80mn Fidelity Disruptive … [Read more...]

According to Mikkel Svenstrup, chief investment officer at ATP, Denmark's largest pension fund, the private equity industry is looking more like a pyramid scheme. Kaye Wiggins reports for the Financial Times: A top executive at Denmark’s largest pension fund has compared the private equity industry to a pyramid scheme, warning buyout groups are increasingly selling companies to themselves and to peers on a scale that “is not good business”. Mikkel Svenstrup, chief investment officer at ATP, said he was concerned because last year more than 80 per cent of the sales of portfolio companies by … [Read more...]

Is it time to talk about the defects of index funds now? That's the question being asked by Hunter Lewis in Barron's. He writes: Index funds have had a spectacular run. They collected $8.5 trillion in retail investment dollars by the end of the first quarter of this year, according to Morningstar, more than all active strategies together. Along the way, they became the dominant investment idea. Yet the stock market’s recent dip into bear-market territory raises new questions for these popular funds. Will indexing recover and go on to scale new heights? Or has the time come to consider its … [Read more...]