The Problem With ETFs
The Big Short’s Michael Burry has likened index funds and ETFs to subprime CDOs. He is the guy who made a small fortune betting against CDOs in 2007-2008.
We have all heard about the untested nature of exchange-traded funds in a market downturn, and as fears for a precipitous market sell-off bubble under the headlines, it’s probably worth having a quick look at what he thinks the problem is.
He says a bubble has blown up in passive investing, its not a contention, its a fact:
It has happened for all sorts of reasons, the inability of active fund managers to outperform is the most obvious marketing line for ETFs and passive funds, but having chatted to some US fund managers and stockbrokers one of the major drivers has...Continue Reading