NEW YORK, Nov 3 (Reuters) - BlackRock Inc Chief Executive Laurence Fink on Tuesday challenged a rival fund manager who criticized exchange-traded funds as “not safe,” saying his counterpart at AllianceBernstein should “learn more” about them.
Fink was responding to a New York Times interview with AllianceBernstein CEO Peter Kraus to be published on Thursday.
ETFs “may have low fees, but they are not safe and your clients need to understand that,” Kraus said in a quote that AllianceBernstein spokesman Jonathan Freedman verified was accurate.
Kraus was apparently referring to a bout of market volatility on Aug. 24 that sent a group of ETFs down some 30 percent from their prior-day close, often far below the value of their underlying stocks. Trading in 327 such funds was halted that day.
“He should learn more about ETFs,” Fink responded on a panel at the New York Times’ DealBook Conference, when asked about Kraus’ comments in the upcoming article. “I would not be as hysterical.”
Fink, whose iShares division manages $1 trillion in ETFs, said the trading issues on Aug. 24 were temporary and limited, but “a good wake-up call” nonetheless.
Fink repeated his company’s view that fixing the issues requires a reexamination of a variety of rules and practices, including those governing when and how trading in stocks and ETFs are halted. (Reporting by Trevor Hunnicutt; Editing by Richard Chang)