Despite their popularity and growing importance in U.S. capital markets, exchange traded funds (ETFs) are incredibly difficult (at times even impossible) to accurately compare side-by-side. In a new article, I show how a variety of discretionary industry practices undermine simple “apples to apples” comparisons in ETFs. Comparative challenges are compounded by the limitations of disclosure and the ability of investors to understand the information disclosed.
For instance, there is significant diversity in the number of indices, and wide discretion in how an index is replicated. My article illustrates how similarly named ETFs often perform (and are constructed) … Read more