Mifid II prompts shift from traditional funds to ETFs

Author: Olly Jackson | Published: 28 Feb 2018

European investment platforms are shifting their focus from traditional funds, like mutual funds, towards exchange-traded platforms (known as ETFs) on the back of the new Markets in Financial Instruments Directive (Mifid II).

The landmark directive, which went live on January 3, mandates greater transparency in trade reporting and disclosure, especially when it comes to pricing and liquidity. This could well help uptake of passive investments funds, such as ETFs, which had until then been considered too opaque for some investors. ETFs are also cheaper to run than some of their counterparts, another factor which could also work in their favour. 

A lawyer at a UK-based law firm told IFLR that clients are looking to promote the ETF business more into the spotlight at the expense of more traditional funds. Clients are said to be shifting their focus because of Mifid II and the increased amount of competition for traditional funds. The long-term potential...



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