Merrill Lynch's O'Neill: ETFs could trigger more volatility

Bill O'Neill, chief investment officer at Merrill Lynch Wealth Management, has attacked exchange traded funds (ETFs) for adding to the volatility they aim to avoid.

According to O'Neill, increased uncertainty and volatility in global markets has prompted investors to question the use of ETFs in their portfolios. "While ETFs may allow clients greater flexibility in navigating high volatility markets, evidence by one investment bank suggests ETFs and financial futures may be exacerbating high correlations and elevated volatility," he said. "Given the close relationship between excess correlation (correlation over and above that implied in the market pricing of options) and ETF volumes, more widespread use of ETFs may add to the very volatility inve...