Watch out for crash in index ETFs

wealth-within/

12 September 2022
| By Laura Dew |
image
image
expand image

Index exchange traded funds (ETFs) are heading for a crash in the future as there is snowball effect of investors moving into these assets.

Dale Gillham, chief analyst at Wealth Within, said investors were likely to seek higher returns in a down market and could move into index ETFs at an “alarming rate”.

This was likely to lead to a snowball effect and could then lead to a crash if investors subsequently tried to exit them at a similar rate at a later date.

“My prediction is that over the next few years, we will see a snowball effect of money moving into index ETFs at unprecedented levels, as well as investors borrowing heavily to invest in these funds,” he said.

“This will significantly increase the speed of the snowball effect, which will be alarming in years to come. Many of you may remember during the Global Financial Crisis, there were major concerns around index funds with many investors deserting them in droves after they fell heavily.

“Sadly, history is repeating itself and I can confidently say that index ETFs will be at the forefront of the next major crash and not in a good way.”

He cautioned investors  from making knee-jerk movements with their asset allocation as making decisions at the wrong time could negatively affect returns.

“Now is not the time to be changing investment strategies or making knee-jerk reactions, as you might just find yourself missing opportunities when the market starts to rise.”

 

 

 

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

1 month 3 weeks ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months ago

Entireti has unveiled the new name for the AMP financial advice businesses that it acquired last year....

4 weeks ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

2 weeks 6 days ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

1 week 5 days ago

TOP PERFORMING FUNDS