Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

 

 

Invest

Is it time to put a food-style label on investment products?

  • June 08 2020
  • Share

Invest

Is it time to put a food-style label on investment products?

By Cameron Micallef
June 08 2020

Much like the food people eat, investors are being told they need to know what they are buying before purchasing exchange-traded products, as many are unaware of the ramifications if they don’t.

investment products

Is it time to put a food-style label on investment products?

author image
  • June 08 2020
  • Share

Much like the food people eat, investors are being told they need to know what they are buying before purchasing exchange-traded products, as many are unaware of the ramifications if they don’t.

investment products

Blackrock Australia’s head of iShares ETF, Christian Obrist, explained that just like the food industry that was forced to put labels on products, ETP providers should be forced into stricter classifications. 

“ETFs have typically been used as that catch-all. Thinking locally, you’ve seen a surge of money going into levered and inverse products,” Mr Obrist said. 

“When you think of retail investors, which Australia has a high percentage of personal investors and for [Blackrock] it is important they know what they are buying. 

“The danger is everything gets canvas as an ETF or an exchange-traded fund when in fact there are many different expressions,” he said. 

Advertisement
Advertisement

The ETF provider explained that many of these products that are being listed as ETFs are not, instead performing different functions for sophisticated investors.

“In fact, a lot of products that have been listed on an exchange have been categorised as an ETF.”

“Whether that is an exchange-traded note, which is really a debt security issued by a corporate entity, or an exchange-traded commodity, could be physical, could be synthetic.

“Again, very different risk profile and also very different investment objective,” Mr Obrist told the media.

While highlighting that Blackrock is not against the use of other types of exchange-traded products, the ETF provider pointed out they need to be used correctly, otherwise investors could lose.

“The reality shows us these products typically work in a short-term manner if you execute, but if you hold longer, they decay in value, Mr Obrist concluded.


Did you enjoy this article? You may also be interested in: 

Is it time to put a food-style label on investment products?
investment products
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

About the author

author image

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

Join the nestegg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

Join The Nest Egg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

more on this topic

From the web

Recommended by Spike Native Network

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.