The ETF selection should be carried out in a second step and requires understanding how well ETFs perform compared both to their benchmarks and their peers. It is determined by the Tracking Difference, which is the difference between an ETF and its official benchmark total return on a given period.
Customise your TrackInsight environment with tailor-made ETF lists, monitor their evolution at a glance and make the appropriate adjustments to your portfolio to always own the best ETF.
This Monday Morning Memo is written based on a speech by Jean-René Giraud, CEO at TrackInsight during the TrackInsight Investor Summit–Germany in Frankfurt on March 29, 2017.
Smart beta has been a hot topic for investors this year as they seek to maximise returns in a low-yield world, but despite its growing popularity some investors remain unconvinced smart beta products can outperform the traditional market-cap weighted approach.
The issue of physical versus synthetic replication has left investors with more questions and suspicion than clear responses. However, to focus on the above would be narrow minded when choosing the right investment for your portfolio.
The Exchange Traded Fund (ETF) market is growing, and passive investors need to have reasonable grounds for choosing this investment vehicle as well as robust selection criteria. Mr Bonelli highlights that Exchange Traded Fund selection should be carried in an investor-specific framework founded on statistical measurements related to tracking quality relevant to each investor.