MutualFundWire.com: BlackRock and WisdomTree: ETFs Are Operating Well

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Tuesday, July 2, 2013

BlackRock and WisdomTree: ETFs Are Operating Well

ETFs have been blamed for everything but global warming recently, Todd Shriber of Benzinga jokes, but the instruments have been behaving exactly as they should. BlackRock [profile] agrees. Mark Weidman, global head of iShares, said in a note to investors that ETFs allow investors to move faster:

During the market volatility of the past few weeks, ETFs performed precisely as they are designed to do. Despite extreme stress in underlying markets, ETFs in many cases performed better than ever in allowing investors to move quickly and efficiently in and out of investment exposures.

Though Shriber concedes that BlackRock's statement is self-serving, he points out that BlackRock is doing what it can to educate investors on how ETFs work. More information about how ETFs work should convince investors that ETFs are not the "scourge of financial markets."

Benzinga found that the majority of iShares and PowerShares [profile] funds ETFs rarely traded at premiums or discounts to the NAV, and if so it was one or two percent shy of the NAV.

BlackRock isn't alone in trying to allay fears about the challenges of trading ETFs. In a note to investors, WisdomTree's head of capital markets David Abner said:

"When volatility increases, people use ETFs more for both portfolio protection and for new positioning," said WisdomTree[profile] head of capital markets David Abner. "This is why volumes in ETFs increase in a manner directly correlated to volatility. I believe ETFs continue to prove themselves as a product innovation useful to a large section of the investment community."