How did the model portfolios on which ETFs are built fare five years after launch when compared to three years before? measured relative to the benchmark selected by the managers themselves.
The results aren’t pretty.
Thematic strategies that added 3-5% a year pre-launch, lost 4-5% a year in the five years after.
It seems that hype in various areas, leads to a launch of ETFs which then don’t add any alpha.
So be careful when you invest in the next hot thing via ETF.
Note this is just the model portfolio performance (e.g. index) and NOT the ETF itself (though it should track very closely after costs).
