Retail investors warned over ETFs

THE CHIEF of stockbroker Tullett Prebon yesterday warned retail investors against the use of some exchange traded funds (ETFs).

Terry Smith said the rise of ETFs as a popular vehicle for investors had become “worse than I thought”.

Writing on his blog, he added: “I suspect a lot of retail investors think that ETFs are the same as index funds. Some of them are, but many aren’t.”

The City veteran is concerned that the growth in the popularity of some ETFs could become dangerous should the global economy be faced with a fresh credit crisis.