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Ashish Arora, CFA

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  • Using ETFs in Lieu of Mutual Funds for Real Return Portfolios [View article]
    Many thanks for your comments!
    The excellent editorial team deserves most of the credit for the article's readability. I look forward to sharing more insights & analysis with SA readers.
    May 4, 2011. 11:57 PM | Likes Like |Link to Comment
  • Using ETFs in Lieu of Mutual Funds for Real Return Portfolios [View article]
    Thanks much for your great comments and questions.

    Just as you mentioned, longer maturity TIPS have higher duration risk, and over the short-intermediate term the duration impact often wipes out the favorable effect of rising inflation on the bond's value. For example, longer maturity TIPS are more sensitive to Fed rate hikes which have a negative impact on the bond's value and hence offset the gains made due to positive changes in the CPI. Due to such factors, longer maturity TIPS might not correlate strongly with the CPI unless the investor holds these bonds over a full economic cycle and allows the changes in real yield to net out.

    To your question on economic projections and if inflation remains low, it is important that the investor continues to hold a broad based TIPS ETF over the full economic cycle since the bond's linkage to inflation will most likely be reduced by the duration impact and returns might suffer during a period when positive accruals due to rising inflation are low. Nevertheless, the ETF is very likely correlate strongly with inflation over the long term.

    Hope that helps!
    May 4, 2011. 11:24 PM | Likes Like |Link to Comment
  • PIMCO's Total Return ETF Is a Winner for Investors [View article]
    Hi Robert, Thanks for sharing the article!
    As you mentioned, Front-running due to disclosure requirements is the biggest issue with actively managed ETFs. Due to its size PTTRX is not known for its nimbleness and Gross significantly relies on the derivatives market to maintain the portfolio's exposure to the fund's targeted sectors. I'm guessing the fee & tax benefits of the ETF will outweigh the implied trading costs since this fund by itself has been dealing with these issues for a while.
    Apr 25, 2011. 03:21 PM | 3 Likes Like |Link to Comment
  • Seeking Diversification Through Small Cap ETFs [View article]
    Hi Jim,
    Thanks for sharing the article,
    I'm curious if there is a reason why u didn't use the respective benchmarks to further your time series analysis.
    Also the less efficient Emerging / Frontier small caps favor the active investor and funds like GBFAX considerably incorporate this perspective in their investment process.
    This trend is likely to persist until the AUM for these passive small cap products reaches a more respectable level.
    Any thoughts?
    Mar 31, 2011. 01:33 AM | 1 Like Like |Link to Comment