ETF industry hits back at Terry Smith

Supporters of ETFs counter Fundsmith founder's short selling claims.

In his latest note, ETFs – Worse Than I Thought, Fundsmith founder Terry Smith warned ETFs risk being mis-sold, with retail investors potentially mistaking them for index tracker funds. Smith raised a number of concerns about ETFs, including the swap-based funds. However, he said the more “pernicious danger” with ETFs is the ability to trade them in the secondary market, allowing traders to short the funds. However, investors believe Smith’s short-selling argument is flawed. We offered ETF supporters the chance to respond. "In an ETF a short seller can always rely on the process o...