Fundsmith founder Terry Smith does not believe there should be greater regulatory control over who can buy a swap-based ETF despite his vocal concerns about the risks surrounding the products.
Speaking at an event last week in London, Smith warned again of the misselling risk around swap-based ETFs and suggested clearer labelling was needed.
He said: “My straw pool of financial investment professionals suggested to me that a number of buyers of ETFs have been led to believe they are buying index funds. They are not.
“It is about information and disclosure. I would go for labelling swap-based ETFs but not regulating those who have access to them. I am not a big fan of protecting people from themselves if they want to do things. If people want to hold the wrong end of fireworks, then let them.”
Smith also raised concerns over investing in China. He said: “China is more likely to have a hard landing than a soft landing. The local authority banks in China have already been subject to a rescue programme twice the size of the US Troubled Asset Relief Program programme. China is still quite a poor country. They are not big buyers of consumer products.”