Not all ETFs are the same and part of our work is involved in the analysis and monitoring of ETFs to ensure that the ones we include in clients’ portfolios are suitable and meet our criteria. We recognise that some ETFs are not attractive for the following reasons and will not invest in them:
- Some ETFs may not track the index closely and have a large tracking difference.
- Some ETFs may be small and less liquid with wider bid/offer spreads.
- The index which is being tracked may not reflect the performance of the asset class the investor wants to track.
- Short (inverse) ETFs and Leveraged (x2, x3) ETFs are only suitable for intra-day trading and may not behave in the way expected over a longer period.
- ETFs are not covered by the Financial Services Compensation Scheme if they are bought direct by private individuals instead of either under advice from an FSA authorised entity or as part of a professional investment management service.
