Matt Camuso, Head of ETF Solutions at BNY Investments, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss the growing popularity of ETFs, key misconceptions, and the benefits of active ETFs in portfolio construction.
There are several misconceptions about ETFs, according to Camuso, who emphasized that ETFs are more similar to mutual funds than most investors realize. Both ETFs and mutual funds are open-ended investment vehicles, meaning they both offer flexibility in liquidity. The main difference, Camuso explained, is how investors interact with them—ETFs trade on exchanges, while mutual fund investors interact directly with the fund sponsor. He encouraged advisors to understand this similarity to help retail investors feel more comfortable exploring ETFs.
Active ETFs offer added tax efficiency over mutual funds. This could make active ETFs a better fit for those seeking to minimize capital gains taxes, he said. Camuso also pointed out that daily transparency in ETFs is an advantage, as investors can see exactly what the fund holds, making it easier to complement existing portfolios. He urges advisors to “…look beyond ETF’s averaged daily volume; look at the underlying liquidity and see if that’s something you’re more comfortable with.”
BNY’s active and passive ETFs strategically blended can be beneficial to portfolio construction. BNY Investments offers tools such as BNY PinPointSM, which analyzes an existing portfolio using a comprehensive range of risk and portfolio analytics, thus enabling users to identify opportunities and structural weaknesses. PinPoint can help advisors assess the fit of ETFs within portfolios, providing a clear view of hypothetical outcomes.
Camuso also shared that BNY will be launching more active ETFs later this year.
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