CFP^®, CIMA^®, CPWA^®, CIMC^®, and RMA℠ Eligible Ideal for: Participants who want to understand why ETFs are displacing mutual funds, improve their understanding of the ETF due diligence process, and learn to evaluate passive investments.  If you’ve ever wondered how to choose among seemingly identical products, worried about ETF trading, or scratched your head about tracking error, this is the class for you. Buy-side due diligence teams, risk managers, wealth managers, and active equity and fixed income managers can all benefit. Exchange-traded funds have grown enormously over the past decades, capturing market share from mutual funds, hedge funds, and separately managed accounts.   One out of every five dollars in publicly available equity funds is now in ETFs, up from one in eight just five years prior, and zero twenty-five years ago.  The active-to-passive trend is even starker, with active management losing ground every year since 2014. As investors embrace passive management and the exchange-traded fund structure, fiduciaries can find themselves facing new questions.  Often, simple rules of thumb such as looking for the fund with the highest asset level, lowest expense ratio, or highest daily inflows can lead to costly mistakes. This session will cover the fundamentals of ETF due diligence, with case studies, lively lectures, and Q&A.  Topics will include in-kind creation/redemption, which is the key differentiator between ETFs and mutual funds and the driver behind ETF’s competitive advantage; holding cost and risk analysis; liquidity evaluation and trade analysis; and, most importantly, index construction as the most critical driver of long-term performance. Learning Objectives:

• Explain how ETF creation/redemption drives ETFs’ competitive advantages in expenses and tax efficiency
• Measure an ETF’s total annual cost of ownership
• Assess ETF primary and secondary liquidity (institutional and retail points of view) and trading costs
• Link index construction methodology to investment outcomes