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Morningstar gives thumbs up to synthetic ETFs

The investment researcher hits back at criticism of the exchange-traded funds saying the cheap cost more than compensates for the added risk

Regulators have been busy bashing synthetic exchange-traded funds in 2011, but according to a report from Morningstar published today, the cheap cost of synthetic ETFs compensates for the added risk.

The Financial Stability Board said in April that they plan to look into synthetic ETFs, also known as swap-based ETFs, to see whether these products pose any systemic risks. The Bank of England has also weighed in on the debate.

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