Jamie Harrison, Head of ETF Capital Markets at MFS, joined Keith Black, Managing Director of RIA Channel, to debunk common myths about ETFs.
MFS, a pioneer in the investment space that launched the first mutual fund over 100 years ago, recently expanded its offerings with five new ETFs, continuing its tradition of providing innovative products and solutions to investors.
Harrison recently published Debunking Five Common ETF Myths. He notes that an ETF’s liquidity is determined by its underlying basket of securities, not by the ETF’s average trading volume or bid-ask spread. He recommends that advisors considering a large trade of an ETF should contact the trading desk at their custodian or the ETF’s issuer to inquire about the process of creating and redeeming shares with authorized participants. Harrison also discussed the distinction between active and passive ETFs. While passive ETFs aim to mirror the performance of a benchmark, active ETFs strive to outperform, providing more flexibility to avoid the concentration risks often seen in passive ETFs. He pointed out that there is little difference in the cost or complexity of trading between the two, with many or most ETFs offering the same key advantages: tax efficiency, intraday tradability, transparency, and liquidity.
ETFs continue to attract interest from a wide range of market participants, including financial advisors, model portfolio builders, individual investors, and institutional clients, all seeking to benefit from their diverse advantages.
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