As if ETFs were not doing well enough, new regulations are set to make the asset class completely unstoppable. Europe’s new Mifid II regulations are roiling the markets in all sorts of places, but the new rules, along with the fiduciary rule, and the new NAIC rules for insurers, are set to give passives even more momentum. In their own way, all three incentivize more flows into ETFs. Mifid exposes true fees, which is seen as likely to push investors into passives, while the new NAIC rule allows insurers to jump into the ETF market like never before.
FINSUM: ETFs have been the huge growth asset class since the Financial Crisis, and regulators seem to be blindly putting more and more incentives in place to encourage them. We think that deep down many expect that ETFs will be at the epicenter of the next Crisis.