The Due Diligence Process

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  • 01 mins 26 secs
Ahmed Farooq of Franklin Templeton Investments Canada emphasizes why it is necessary to make sure investing in an ETF aligns with your philosophy and methodology.

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MASTERCLASS: ETFs - November 2019

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It's the due diligence process. I mean, just like anything you do, you buy a new home, you buy a car, you're buying anything that's important to you and you put some money into it, you've got to make sure that the bells and whistles and the features and benefits work for you. I think that's the most important thing, is does the philosophy or the methodology jive with how you're running your business practice? I think that's very important. And once you figure that out, then you can carve into what are the spreads and who is the manufacturer? Will this manufacturer be around 10 years or five years from now? And we're seeing a lot of new providers coming in, and the worry is that are they going to be around five years from now? Or are they just having the most hottest product that makes sense today? So, you have to look at all that stuff. And I think the other big thing is you have to look at who are the market makers and behind the scenes to ensure that you're going to have that liquidity? Because a lot of people still get spooked on the fact that newer products don't trade that much. But is there is a liquidity issue, or they may not have enough knowledge about the primary and secondary markets that occur in ETFs land.
 


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