“Such diversification mitigates daily volatility compared to less diversified equity investments,” Dillard said. “In our view, holding the ETNs doesn’t materially change the portfolios’ risk profile.”

Ripple Effect
At least five banks have issued notes branded with Fisher Investments’ ‘FI’ moniker, data compiled by Bloomberg show. For customers, the ETNs don’t come cheap. The banks charge management fees to structure, issue and run these products, plus a chunky spread to cover their funding costs. Some of Fisher’s ETNs ended up charging at least 4%, according to two bankers that worked with the firm on these offerings. The average ETF costs 0.48%, data compiled by Bloomberg show.

Any ETN-downsizing by Fisher could ripple through the industry. Fisher accounts for about 70% of assets in Goldman Sachs Group Inc.’s small ETN business and half of assets in UBS Group AG’s notes. UBS and Goldman declined to comment.

“It’s possible they would close or de-list,” James Seyffart, a New York-based Bloomberg Intelligence analyst who has researched Fisher’s investments, said of the firm’s ETNs. While other notes would continue to trade normally, “if he pulled all of that money, it would certainly be a big hit to the industry.”

--With assistance from Carolina Wilson.

This article was provided by Bloomberg News.

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