ETF Innovation- Japan & China

The Santa Claus rally looks to be in full force, but in our judgment that that does not mean investors should continue to buy indiscriminately. Broad low cost ETFs offer great strategic solutions, but as an ETF Strategist/PM we look deeper. To explain our process and current thinking towards differentiated ETFs we wrote the attached piece that focuses in on ETFs that are targeted at Japan and China. Of course, a similar thought process exists for Europe.

A quick scan of the piece will highlight the following points:

  1. Our investment due diligence process is more than just looking at the expense fee of an ETF;
  2. Currency hedged ETFs add value and are an effective solution that this PM sees as better than traditional market weighted funds
  3. Innovation in country ETFs – whether broad or narrow – offer investors access to different strategies and going narrow can add value if you get it right. (Frankly, long term we see a lot of opportunity in the sector funds, but we arguably are early on this issue. Sector funds are a large part of the ETF industry and ultimately as investors get more sophisticated they will allocate to sector funds in different countries; especially when central banks are targeting specific areas.)

The full piece can be found by going to: ETF Innovation- Japan & China