FTAdviser.com

Advertising

The company, which just launched a campaign under the theme “not all ETFs are created equal”, said education was now more important than ever as the worldwide ETF market was set to boom

According to the company, global assets under management for ETFs are expected to surpass the $1trn (£568bn) figure next year for the first time ever, while European assets under management, which currently stand at $155bn, are expected to surpass the $200bn barrier.

Rory Tobin, chief executive at iShares Europe, said the critical question for investors was whether they clearly understood the key differences among the various ETFs being offered, particularly with respect to differences in structure, cost, risk and return.

“For example, do investors understand the structural differences between swap-based ETFs and physical-based ETFs and are they aware of the various trade offs?” he asked. “The reason ETFs have grown in popularity is because of the advantages they offer over other products, such as simplicity, transparency and liquidity. We are concerned that, as the market evolves, the diversity of products may not always reflect these values.”

According to iShares, investors should consider a number of key criteria when evaluating ETFs, including transparency, client service, product choice, portfolio management and liquidity.

On the last two issues, investors should determine whether a given ETF is “fine-tuned" to optimise performance and whether the provider will work proactively with all market participants to maximise liquidity in the market, iShares said.