When it comes to investing, many look to industry experts for tips, tricks and advice on the markets. As far as the ETF industry is concerned, plenty have weighed in on these popular investment vehicles, though not all of them brought praise to the table. Below, we outline 20 of the most interesting quotes about the ETF industry [for more ETF news and analysis subscribe to our free newsletter].
- “The index investor doesn’t need to be touched by any of the lunacy that is going on in the ETF market. The ETF industry, which has got to be the greatest marketing idea of this age, is not the greatest investment idea of this age, I can assure you.” - Jack Bogle, Vanguard Founder.
- “I don’t know about them specifically, but I would think anything that causes people to think they can trade actively in stocks and do better than if they sat on their rear is a terrible mistake.” - Warren Buffett, on ETFs.
- “For the rest of us mere mortals, we’d all be better served to steer our portfolios away from the pitches of Wall Street and instead follow the move by one of the biggest creators of ETFs–Barclays–which earlier this year dumped its ETF fund operations.” - Neil George, Investment Advisor.
- “They are here to stay. They are parasites on the system. They are blessed. They are another reason to hate the market.” - Jim Cramer.
- “I wouldn’t shy away from ETFs that have low volume or low assets. You just have to be smart about how you trade it.” - Eric Lichtenstein, Managing Director of Knight’s ETF trading desk.
- “The ETF industry has become like a supermarket. You can’t go in and not know what you want–you’ll end up buying all these things that you won’t ever eat.” - Matthew Reiner, runs all-ETF portfolios for Atlanta-based Wela Strategies.
- “Gosh, I wish I did. If I had a tenth of a basis point of the ETF business, believe me I’d be out there sailing a yacht.” - Nathan Most, commenting on the fact that he never received a dime in royalties for creating ETFs.
- “This is really about the clients being aware of cost efficiencies; the average investor is not going to like ETFs when the markets tank, and they’re going to think they’re the best thing since sliced bread when the market’s going up.” - Julie Casserly, President of JMC Wealth Management in Chicago.
- “In the ETF world you can be in any sector at any point. You can now invest more like institutions. Prior to this big explosion, retail investors couldn’t invest that way.” - Nadav Baum, Executive Vice President at BPU Investment Management in Pittsburgh, Pa.
- “We think ETFs can play a very important role in portfolios. They’re a very cost-effective way of getting broad exposure to segments of the market. What we don’t subscribe to is using ETFs that are targeting what we might refer to as fictitious indexes that are designed just to develop an ETF.” - Beth Larson, Principal at Evermay Wealth Management in Washington, D.C.
- “The reason why ETFs are a phenomenal success is that they solved a lot of problems clients faced with mutual funds, namely surrounding transparency, liquidity, costs and tax-efficiency. Remember, we have been working on developing the ETFs for 15 years before it finally caught on and became popular. This alignment of securities features with client needs was achieved after an extended period of product incubation and testing stage.” - Robert S Kapito, President of BlackRock.
- “I think it’s clear that we didn’t foresee how rapid and extensive the adoption curve would be. We thought it could be a good business. We didn’t—at least I didn’t—see just how extensive and how important it could be in a pretty short period of time.” - Jack Brennan, served as CEO of Vanguard from 1996 to 2008.
- “I do love ETFs. I’m not a big stock picker, and I think, generally speaking, you do better with an index.” - Ben Stein.
- “Sometimes supply creates its own demand. But it was certainly more frightening to a lot of people, more confusing to tap into commodities through futures and options contracts in brokerage accounts. So, we can say that ETFs helped, but demand came first. There was a need to access these markets other than the traditional futures pits. The financial industry was just responsive to that demand.” - Bill Tierney, Chief Economist at AgResource Co.
- “The ETF industry in general will pick up market share from actively-managed funds. So you will definitely see a relative growth. But predicting where it will end is like trying to say where the stock market will be in 12 months.” - Steffen Scheuble, CEO of German indexing firm Structured Solutions AG.
- ”I view ETFs as exactly what they are—mutual funds that you can trade intraday. Now, Jack has likened ETFs to giving kerosene to an arsonist. To be sure, you can do yourself serious damage. ETFs are a tool. Dynamite is a tool. Would the world be better off without dynamite? No. Should ETFs have a warning label? Yes. Should people use them carefully? Yes. Can you hurt yourself badly if you misuse them? Yes.” - Rob Arnott, Head of Research Affiliates.
- “Actively-managed ETFs will fit into the existing preference investors have shown for active management but deliver an upgraded experience.” - Christian Magoon, Head of Magoon Capital.
- “You know something, it’s interesting, the data about how much better you do just buying the indexes as compared to trying to pick stocks has only become really overwhelming in about the last 20 or 30 years.” - Ben Stein.
- “I am a huge, huge, huge fan of index funds. They are the investor’s best friend and Wall Street’s worst nightmare.” - Jonathan Clements, Author and writer of the popular Wall Street Journal column “Getting Going”.
- “An index fund dooms you to mediocrity? Absolutely not: It virtually guarantees you superior performance.” - William Berstein, Author of “The Four Pillars of Investing.“
Disclosure: No positions at time of writing.
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