ETFs Are ‘Weapons of Mass Destruction,’ FPA Capital Managers Say
- The rise of passive investing distorts stock prices, they say
- They question how ETFs will hold up in major market selloff
Are ETFs Weapons of Mass Destruction?
This article is for subscribers only.
Exchange-traded funds are “weapons of mass destruction” that have distorted stock prices and created the potential for a market selloff, according to the managers of the FPA Capital Fund.
“When the world decides that there is no need for fundamental research and investors can just blindly purchase index funds and ETFs without any regard to valuation, we say the time to be fearful is now,” Arik Ahitov and Dennis Bryan, who run the $789 million fund, said in an April 6 letter to investors in the actively managed fund.