ETF Prime Archive

Warburg Pincus Sees the Light

New York-based private equity firm Warburg Pincus, a leader in the development of financial services companies, recently announced the appointment of former iShares CEO Lee Kranefuss as executive in residence.  According to the press release, Kranefuss will “work to help Warburg Pincus identify and evaluate investment opportunities in the areas of exchange-traded funds (ETFs), index investing and asset management”.

Kranefuss spearheaded the growth of iShares from its inception in 2000 to over $600 billion in assets by 2010.  With ETFs on pace for record inflows this year, it’s clear that Warburg and Kranefuss recognize the enormous opportunities the industry presents.  For a firm that counts several financial service providers emphasizing mutual funds among its portfolio of investments, it’s certainly noteworthy to see a shift in focus towards ETFs.  As Kranefuss commented, “ETFs and passive investing are powerful investment tools globally, and continue to see long-term inflows. However this is a time of flux and opportunity in the ETF industry. The time is ripe to create a large-scale, global, and independent ETF provider that will provide the truly attractive and innovative product – and the support behind it – that ETF investors demand”.

On Wall Street, private equity firms are often referred to as “the smart money”.  By bringing Kranefuss into the fold, it appears that Warburg is placing that smart money on Exchange Traded Funds.  And as we’ve said for years at The ETF Store regarding ETFs – “invest with the smart money”.

A Record Year for ETFs

Listen to The ETF Store Show every Tuesday at 9am on ESPN 1510 as we cover everything you need to know about Exchange Traded Funds and the world of investing.

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On our most recent radio broadcast, we explained why 2012 has been yet another record-breaking year for ETF growth, with U.S. ETF assets eclipsing $1.3 trillion.  With the underperformance of actively managed mutual funds and the challenges of trying to select individual stocks and bonds, investors are gravitating to low cost, index-based ETFs.  And it should be noted that it’s not just “everyday” retail investors who are flocking to ETFs.  Consider the elite “Tiger 21” group of investors with at least $10 million in investable assets who now count ETFs among their top holdings.  You might be surprised to learn the biggest reason why these wealthy, sophisticated investors prefer ETFs and where they rank mutual funds on their list of investments.

In our weekly market update, we discussed the Fed’s latest round of monetary stimulus and whether Ben Bernanke has any tools left his toolbox should the economy fail to respond or worse, plummet over the dreaded fiscal cliff.  In our ETF spotlight segment, we delved into an ETF offering exposure to both developed and emerging countries in Asia (ticker AAXJ).  We also compared this ETF to a similar mutual fund that can levy a significant toll (see load) just for the privilege of investing in it.

Obstacles to Capturing Investment Returns

Listen to The ETF Store Show every Tuesday at 9am on ESPN 1510 as we cover everything you need to know about Exchange Traded Funds and the world of investing.

On our most recent radio broadcast, ETF Store Investment Advisor Kit Barnes joined us to discuss four major obstacles that most investors face to capturing returns in their portfolios and how he has worked with clients to reduce or overcome these obstacles.  While the S&P 500 Index has returned 7.8% from 1992 – 2011, many investors have failed to capture anywhere near that return.  Investment fees, poor investment decisions, inflation, and taxes have all conspired against investor portfolios to eat away at market returns.  On the show, we explained how investors can tackle each of these obstacles by using exchange traded funds and having a sound investment plan in place.  Below is a quick summary of our tips and recommendations from the broadcast: