Dusseldorf Elon Musk and Cathie Wood agree: ETFs are overvalued and hurting growth. Growth would come from active investments in individual stocks.
The star investor and the Tesla boss recently said this publicly on the short message service Twitter. The fund expert Detlef Glow from the financial analysis house Refinitiv Lipper is of the opinion in the podcast Handelsblatt Today: “In essence, the investor is right.”
In her tweet, Wood pointed out the weaknesses of passive products and the strengths of active management. In doing so, she agreed with many critics who warned of the market overheating or an ETF bubble. It also warns that passive index funds endanger the efficiency of the capital market.
However, the fund expert points out: “In recent years it has often happened that top investors criticize the passive investment strategy in ETFs, for example because they cannot take rallies and the like in the index with them.” Also that the eccentric large businessman Elon Musk in agrees to this, Glow doesn’t think it’s a coincidence. Musk was only recently able to push through the takeover plan to take over Twitter for 44 billion dollars from the management of the Internet group. It is believed that with such a statement he wanted to tactically side with the investors.
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The ETF market is particularly popular with many private investors and beginners due to the low barriers to entry and the good long-term risk/return ratio. However, there can be no question of an ETF bubble in Europe, the fund expert explains further: “The USA are about five to seven years ahead of us in terms of growth rates. Here in Europe, 80 percent of the assets are still actively invested and only nine percent as ETFs.”
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