A gap in education is the key risk in ETF markets

Deborah Fuhr Hi, this is Deborah Fuhr, managing partner of ETFGI. This is ETF TV – a platform for insights on the use and trading of ETFs. Today, we are doing an interview with Eric Pollackov, the global head of ETF Capital Markets at Invesco, and he will be sharing some insights with us on his views in the market.

Hamish McArthur Eric, what’s your take on the, I guess, battle between active and passive management playing out right now?

Eric Pollackov So, at Invesco we have both flavors and we manage over a trillion dollars US now after our recent acquisition of Oppenheimer Funds, and the capabilities that we now have, and have built out over the life cycle of our firm, allows for both passive and active. So we don’t look at it as either. Differently, we look at it more as a collaboration of solutions that we can offer to our clients. So its capabilities now in both the active and passive space that we can show to our clientele.

Hamish McArthur Interesting, and what risks do you see in the ETP space?

Eric Pollackov I think the risks for any type of investment is really just around education and not understanding what you own. So I think it behooves us to make sure that we’re illustrating and educating our client base around what our products are doing. So I don’t think the wrapper, so to speak, is so inherently risky vs, say, a mutual fund or a closed-end fund. But again, I think it’s more important for us as the asset builders to kind of help and educate our clientele.

Hamish McArthur Great. And finally, what innovations in the ETP space are exciting you the most these days?

Eric Pollackov So there’s a couple out there, at least in the US that we’re talking a lot about. One is around a non-transparent, actively managed ETF that recently just got approved by the SEC; the wrapper, so to speak. So that’s something where a portfolio manager doesn’t have to disclose their portfolio on a daily basis the way current exchange-traded products work in the United States now. The other side or the other innovation that we’re kind of excited about to watch is the cryptocurrency kind of wrapper being put into an ETF wrapper, so to speak. So there’s actually applications at the SEC to talk about things like Bitcoin in an ETF wrapper. So these types of new innovations are exciting, I think, for the entire industry, not just for Invesco.

Hamish McArthur Eric, thank you very much.

Deborah Fuhr Thank you for watching ETF TV. To view our other shows, please go to ETFTV.NET and follow us on LinkedIn and Twitter. Thank you.

Published on August 23, 2019