With all of the hullabaloo over exchange-traded funds and all of the major indexes taken as ETF benchmarks, more and more of these funds are creating custom indexes or tracking little-known indexes, The Wall Street Journal reports.
Further many of the newer ETFs are based on indexes to which they apply rules for weighting the stocks or selectively picking stocks from the index. And that has some analysts wondering if these niche and rules-based ETFs will succeed.
“The fear is that with more active products, some investors could get burned, and that could cast a cloud over all indexing, said John Pestbo, editor and executive director of Dow Jones Indexes.
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