Will Star Managers Be Able To Transition Into The Burgeoning World Of ETFs?

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October 3, 2009 8:49am NYSE:DENT NYSE:GVT

star-manager“So is there still a future for active fund managers? Sure — there will always be investors who prefer to have a human being run their portfolios. But it’s unlikely active managers


 will ever enjoy the same rock-star status that they once did. Question is, will star managers be able to transition into the burgeoning world of ETFs? The first ETF that allowed its managers to choose their own stocks, Grail American Beacon Large Cap Value (GVT), began trading in May; Grail is bringing out four more actively managed ETFs this month. Another new offering is Dent Tactical, (DENT), run by forecaster Harry Dent, which invests mainly in ETFs based on his view of economic trends,” Penelope Wang Reports From CNN Money.

“So far, both of the new actively managed ETFs have attracted few investors — Grail, for example, has only $4 million in assets. And both carry expense ratios exceeding those of many regular  funds — 0.79% for Grail, while Dent charges 1.6%. That expense hurdle will make it tough for any ETF to beat its benchmark. Unless actively managed ETFs can reduce their costs and deliver the returns investors demand, star managers will continue to fade,” Wang Reports.

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