ETF need to remember fiduciary responsibility

The rumpus over ETFs just will not die down. Every week or so, another new skirmish breaks out, with the latest bruising delivered by expert pugilist Terry Smith of Fundsmith.

It is generally a force for the good, obliging the index-tracking industry to defend some of its more questionable practices and think about making itself even more transparent. That higher level of transparency will not come cheap of course – how much will all this general buffing up cost the end investor? There is one word that needs constant repeating in this debate and it is a word that has lost a great deal of its meaning in many other sectors of the financial services sector. The word is fiduciary. The OED defines fiduciary as a legal term involving trust, “especially with...