MORL - Beware Of Passive Targeted ETFs

Targeted ETFs are those which at least nominally are designed to provide exposure to a particular area or factor. While good in theory, there are many ways these vehicles can go wrong. We have identified 3 major pitfalls of targeted passive ETFs.

1. Designed to sell, not to perform
2. Layered leverage
3. Backward looking

Success of an ETF is not the same as success for the investor. Often ETFs are not designed to generate strong returns for investors, instead being designed to raise as much AUM as possible.

Goal of the sponsor not equal to goal of

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