ETF's will lag active investors when the market turns.
So called passive ETF's funds have outperformed over the recent past, but take a closer look and ask why this is so.
Over the past several years ETF funds have done well and beat most (but not all) money managers in total returns. This is because major stock markets around the world have had huge asset-inflation run ups, on the back of mega quantitative easing and ever lower interest rates. Any money manager or hedge fund which prudently had any cash on hand, so lagged. It will be interesting to see what happens to all the acclaimed fanfare on or around ETF's, when stock markets inevitably turn bearish.
Just about no ETF fund owns any smaller cap stocks in emerging markets, like Thailand. As these make up a minuscule percentage of the index. Yet in Thailand some 70% of the economy are generated by such (far more in numbers) secondary companies. These in fact often are leaders in their respective industries. Yet complete ignored by definition by ETF funds.
Currently the only boom sectors here in Thailand are renewable 
energy, infrastructure spending and IT connectivity broadening. Most leading choices in those sectors are stocks which are just not part of any ETF fund.
Astute investors would be wise to unload some of the acclaimed enthusiasm for ETF's and start taking things in their own hands by owning what is ignored along with some cash on hand.
Best Regards,
Paul A. Renaud.
