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Different Back Test Rules While securities regulations prohibit the use of back-tested performance data for most U.S. mutual fund and ETF sponsors, index providers are not held to the same rules.Should mutual fund and ETF sponsors should be given the same rules? “I’ll leave it up to the regulators to decide what or even if they’re able to do anything about it," Dickson said.Dickson suggested that before investing in an ETF, investors should observe the long-term endurance of the investment and see if it fits into their investment plans. Also, they should not view indices as objective and unbiased representations of market segments. “Instead, recognize that indexes are being created because those areas have performed well and that facilitates the marketing and development of new investment products—largely ETFs—that track those areas,” Dickson said.ETFs are popular with investors. More than $1.2 trillion is invested in about 1,400 U.S.-listed ETFs as of March 31, according to Strategic Insight’s Simfund, an Asset International company.Dickson said ETFs are projected to grow at double the rate of traditional mutual funds.Click here for the full report.
Different Back Test Rules
While securities regulations prohibit the use of back-tested performance data for most U.S. mutual fund and ETF sponsors, index providers are not held to the same rules.
Should mutual fund and ETF sponsors should be given the same rules? “I’ll leave it up to the regulators to decide what or even if they’re able to do anything about it," Dickson said.
Dickson suggested that before investing in an ETF, investors should observe the long-term endurance of the investment and see if it fits into their investment plans. Also, they should not view indices as objective and unbiased representations of market segments.
“Instead, recognize that indexes are being created because those areas have performed well and that facilitates the marketing and development of new investment products—largely ETFs—that track those areas,” Dickson said.
ETFs are popular with investors. More than $1.2 trillion is invested in about 1,400 U.S.-listed ETFs as of March 31, according to Strategic Insight’s Simfund, an Asset International company.
Dickson said ETFs are projected to grow at double the rate of traditional mutual funds.
Click here for the full report.
Jay Polanskyeditors@plansponsor.com