More research information on the $3.2 trillion exchange-traded fund market is a good thing, advisors say. On Friday, President Trump signed legislation that will give broker-dealers the ability to deliver research on exchange-traded funds to investors for the first time.
The law, the Fair Access to Investment Research Act of 2017 (S. 327), gives broker-dealers the same legal protection that B-Ds have when they deliver stock, bond and mutual fund information to investors and clients.
“There is very little good, solid information on ETFs, and even Morningstar, which I use and love, doesn’t put out enough, despite their annual ETF conference,” says Steve Goldberg, a partner in the advisory firm Tweddell Goldberg Investment Management in Washington, D.C.
“There are some good ETFs and they really stand out,” says Goldberg, a veteran advisor who uses Vanguard and BlackRock's iShares. “But there are some ridiculous ones too, so hopefully publishing this research and getting it into investors’ hands will help them.”
Sen. Dean Heller, R-Nev., who introduced the legislation, said the bill will provide “parity in the law by allowing broker-dealers to publish public research reports on ETFs, which millions of households invest in.”
Total ETF assets stand at $3.2 trillion, with some $344 billion flowing into ETFs since the beginning of the year, according to etf.com.
The safe haven that the bill gives B-Ds will ensure that greater research and comparison can be done before investors buy ETFs.
Morningstar has two new research reports on ETFs due out later this month, which are expected to shine a light on practices by managers and larger firms like BlackRock.