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SPDR boss Ross: my beef with smart beta
by David Campbell on Oct 28, 2013 at 11:06
The rapid rise of mega-ETFS in recent years has of course occasionally proved controversial, particularly when the products are invested in relatively illiquid asset classes.
Following much attention on fixed income products in June as the US Federal Reserve administered a rate shock to the market, playing havoc with many funds’ tracking variances, BlackRock caused its own controversy with a note to clients implying that ETFs were now the real reference point for pricing.
As you might expect of someone who sits on top of more than a third of a trillion dollars, Ross says he is relatively sanguine about the statement.
‘Realistically, ETFs can be the more liquid, so I can see [BlackRock’s] perspective. [Are they] market leading or market following? When they are more liquid than the underlying then that is where people will go to – for instance, they still traded through [the crash] of 2008.
‘People are going to be looking for premiums and discounts they can trade and are going to be taking all the information across the market to trade in one place, so people are going to be making the market in ETFs.’
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