Investment Ideas

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Trade Idea: ETF Volatility - Truths and Misconceptions

ETFSTrade idea:  ETF Volatility - Truths and Misconceptions

In this week’s ETFS Trade idea, we look at the misconceptions around ETFs causing volatility and explain why these are myths. High level observations:

  • ETFs have been unfairly targeted as the cause of market volatility

  • ETFs tracking the ASX 200 have successfully stayed in line with the volatility of the benchmark

  • ETFs can cause movements in the underlying market but so do active funds and investors buying securities directly

  • In nearly all cases ETFs match the volatility of the market they track and this is what should be expected from an index tracking fund