PT  - JOURNAL ARTICLE
AU  - Phil Mackintosh
TI  - An Evolution of ETFs
DP  - 2007 Sep 21
TA  - ETFs and Indexing
PG  - 47--60
VI  - 2007
IP  - 1
4099  - http://guides.pm-research.com/content/2007/1/47.short
4100  - http://guides.pm-research.com/content/2007/1/47.full
AB  - Around a decade ago, ETFs were mostly a novelty for investors. But in the past 10 years, ETFs have seen extraordinary rates of growth, and have expanded into more asset classes and sub-categories. We think 2006 provided a turning point, or evolution, of ETFs—from a cheaper beta product to a viable alpha tool. Many of the ETFs launched in 2006 closed previous gaps in asset allocation. It's now possible to build a multi-asset, diversified, tilted portfolio—with a currency overlay—just using ETFs. This article highlights the new wealth of choices for ETF investors, and discusses how investors could build a multi-asset portfolio including style, country, and sector tilts using ETFs. It also highlights recent ETF innovations covering different asset classes, allocating assets into commodity, currency, debt and equity; active strategies like currency harvesting, fundamental and quant stock selection or leveraged up and downside strategies; style and segment selection such as building positions in smaller, more customized industries and investment styles; and country selection and investing more selectively in overseas companies.